Labour Market Integration of Immigrants in Hungary: Does Country of Origin Matter?

Irén Gödri, Hungarian Demographic Research Institute

The socio-economic integration of immigrants is a challenge for most European countries. The labour market integration is considered the most crucial element of integration process. Immigrants, especially from less developed third countries, are in general in a worse labour market situation than the native population. Hungary is among the few European countries where the labour market indicators of immigrants are better than those of the native population. Behind the overall better labour market situation of immigrants there are considerable differences according to country of origin. Are these differences explained by the heterogeneity of immigrant population in terms of social and demographic composition, place of residence, time of arrival, or do the country-specific peculiarities exist regardless of the above characteristics? This paper investigates the labour market integration of immigrants in Hungary based on data from the 2011 Population Census. The census is the most comprehensive data source on immigrants: it constitutes a cross-sectional database of both foreign-born population and foreign citizens staying for over 12 months in the country. We analyse in detail the main indicators of labour market integration (employment, unemployment, overqualification and self-employment) by sociodemographic characteristics and country of birth of immigrants. Then, based on multivariable analyses, we present the factors explaining the probability of being employed and of being overqualified in the foreign-born population. The results indicate that the higher employment rate of immigrants in Hungary are in fact due to their composition (mainly their higher educational attainment), but important differences by country of origin are detected, and gender differences are also revealed. However, the overqualification among immigrants is higher even after controlling for the aforementioned variables. Differences by country of origin are not reduced even when – in addition to socio-demographic composition – other characteristics (i.e. Hungarian language skills, holding Hungarian citizenship) are taken into account.

The socio-economic integration of immigrants is a challenge for most European countries. The labour market integration is considered the most crucial element of integration process. Although immigrants, especially from less developed third countries, are in general in a worse labour market situation than the native population, there are significant differences according to country of origin (Münz, 2008, Keeley, 2009, Koopmans, 2016).

Hungary is among the few European countries where the labour market indicators of immigrants are better than those of the native population. Both the employment rate and the activity rate are higher in the foreign population, especially among those born abroad, than in the total population, while the unemployment rate is significantly lower. However, overqualification – the share of highly educated employees employed in jobs that require low or medium-level qualifications – is higher among immigrants, and the self-employment is also more widespread.

Behind the overall better employment situation of immigrants there are considerable differences according to country of origin. For example, while the employment rate in the foreign-born population aged 15–64 is 65.5%, in the case of various countries of origin it ranges from 40.5% (Greece) to 79.5% (China). Considering overqualification and self-employment there are also remarkable differences by country of origin. Although the labour market indicators of immigrants from EU member states are on the whole better than those of immigrants from third countries, there are considerable differences even among countries within the two groups.

Are these differences explained by the heterogeneity of immigrant population in terms of social and demographic composition, place of residence, time of arrival, or do the country-specific peculiarities exist regardless of the above characteristics? This paper investigates the labour market integration of immigrants in Hungary based on data from the 2011 Population Census. The census is the most comprehensive data source on immigrants: it constitutes a cross-sectional database of both foreign-born population and foreign citizens staying for over 12 months in the country. First, we analyse in detail the main indicators of labour market integration (employment, unemployment, overqualification and self-employment) by sociodemographic characteristics and country of birth of immigrants. Then, based on multivariable analyses, we present the factors explaining the probability of being employed and of being overqualified in the foreign-born population. Using logistic regressions, we explore

1) how the probability of employment and of overqualification in the active age group of the total population are influenced by a foreign birthplace and foreign citizenship, after controlling for socio-demographic composition (gender, age, educational attainment) and place of residence (region, type of settlement);

2) how the probability of employment and of overqualification in the active age group of the foreign-born population are influenced by the country of origin, after controlling – in addition to socio-demographic composition and place of residence – for the length of time since arrival, holding Hungarian citizenship, ethnicity (Hungarian vs non-Hungarian) and Hungarian language skills.

In the case of employment, the value of the dependent variable is 1 if the interviewee was in employment and 0 if he/she was either unemployed or dependent (but not in education). The aim of this definition was to also include hidden (passive) unemployment, which in the case of immigrants – especially immigrant women – is often masked by the dependent status. The analysis is restricted to the more economically active 25–64 age group (who are likely to have completed their studies).

The results indicate that the higher employment rate of immigrants in Hungary are in fact due to their composition (mainly their higher educational attainment), but important differences by country of origin are detected, and gender differences are also revealed – and both confirmed by multivariable analyses. However, the overqualification among immigrants is higher even after controlling for the aforementioned variables. Differences by country of origin are not reduced even when – in addition to socio-demographic composition – other characteristics (i.e. Hungarian language skills, holding Hungarian citizenship) are taken into account.

Since the labour market integration of women is influenced by specific factors, we have analysed the effects of the above factors in separate, gender-based models. It becomes clear that both foreign citizenship and foreign birthplace improves the employment prospects of men but reduces the employment prospects of women. This implies that immigrant women (regardless of their socio-demographic composition and place of residence) are more likely to be excluded from the labour market than both immigrant men and native women. In addition to gender inequalities, in the case of some ethnic groups it may result from cultural and social norms as well as traditional gender roles which limit the labour market opportunities and strategies of women. Moreover, holding Hungarian citizenship, the Hungarian ethnicity and Hungarian language skills increase the employment probability for women, and decrease the overqualification probability for both sexes.

Presented in Session 1090: International Migration and Migrant Populations