People with foreign background are increasingly significant in the Helsinki Metropolitan Area labour market

Pasi Saukkonen
Senior Researcher
City of Helsinki, City Executive Office, Kaupunkitieto

Statistics Finland defines a person with a foreign background as someone whose parents, or the only known parent, were born abroad. At the end of 2019, there were approximately 210,000 people with a foreign background in the Helsinki Metropolitan Area. Of these, four fifths have immigrated to Finland and approximately one in five were born in Finland. The share of people with a foreign background of the entire working age population (20–64-year-olds) has grown rapidly and has now reached nearly 20 per cent in the region and already exceeded that in Vantaa.

International immigration has shaped the Helsinki region considerably, and the labour market in the region can no longer be considered without taking foreign labour force into account. People with foreign backgrounds who have moved to Finland, that is, immigrants, are more prevalent in specific sectors. In the Helsinki Metropolitan Area accommodation and food service sector, people with foreign backgrounds constituted nearly one third of all employees at the end of 2018. Their share of employees in administrative and support services was also high, 28 per cent.

Administrative and support services, the sector that includes services such as cleaning, is relatively the biggest employer of immigrants in the Helsinki Metropolitan Area. Nearly one in five people with a foreign background in the Helsinki Metropolitan Area worked in the sector. At the end of 2017, half (56%) of cleaners, domestic helpers and other cleaning employees were immigrants. They also comprise a considerable share of construction workers (38%) and food preparation assistants (32%).

Most people who have moved to Finland work in sectors and occupational groups that do not require a high level of education or good language skills. The salary level for such positions is also low, which is reflected in the salaries of immigrants, which are clearly lower than those of people with Finnish backgrounds. At the end of 2018, the average taxable income in the Helsinki Metropolitan Area was EUR 26,348 for people with a foreign background and 44,932 for people with a Finnish background. Especially women who have immigrated to Finland are often found to have low salaries.

However, it is incorrect to think that immigrants only hold less valued positions in the Helsinki region. Their share among professionals and experts has also clearly increased. In 2018, the taxable income of Helsinki Metropolitan Area residents with an Indian background was similar to that of residents with a Finnish background. Well over half (61%) of men in this group of background by country belonged to the top quartile of income classes for the entire country. The corresponding share was 43 per cent for people with a Finnish background.

There is a lot of public discussion about issues immigrants face in finding employment. In some respects, the situation is indeed of concern compared to people with a Finnish background. The activity rate of foreign-born people with a foreign background has been lower than that of people with a Finnish background for all of the 2000s, with a lower employment rate and higher unemployment rate (Figure 1). Finding employment has been especially challenging for people who have immigrated from Iraq, Somalia and Afghanistan, among others. Many women remain outside the labour force long-term or permanently and finding employment at a later stage is often difficult.

Figure 1. Activity rate, employment rate and unemployment rate (%) of 20–64-year-old immigrants and people with a Finnish background in the Helsinki Metropolitan Area 2000–2018.

Source: Statistics Finland.

However, Figure 1 also demonstrates that over the last two decades development has been positive although slow. While immigration has continued and even increased, the activity rate has risen to approximately 70 per cent and employment rate to approximately 60 per cent in the Helsinki Metropolitan Area. The unemployment rate was still much higher than for the native population but had dropped to under 20 per cent by the end of 2018. Despite changing financial prospects, development was positive from 2000 to 2018 also for people with Finnish backgrounds. This explains why differences between the population groups have decreased only a little.

One clear difference between immigrants and people with a Finnish background is that financial upward and downward turns impact the employment situation of the Helsinki Metropolitan Area immigrant population more acutely. There are many reasons for this. People who have immigrated to Finland are more likely to work in sectors such as construction and logistics, which are more prone to changes. Fixed-term employment relationships are also more prevalent. In addition, financial developments impact international migration flows. During an economic upswing, more people move to Finland strictly to find employment and during downturns there is less work-based immigration. As Estonia joined the European Union, the number of people with an Estonian background and their share of the Helsinki region population started to grow sharply.

Nonetheless, reviewing the data per country of origin also shows positive developments for population groups that face more challenges in entering the labour market. People who have lived in Finland for a long time are more likely to be employed than those who have stayed in the country for a shorter time. A higher percentage of women are part of the labour force, and many also find employment. With time, people’s language skills, education and other skills increase along with growing social networks and their understanding of Finnish society. Figure 2 demonstrates the development of the unemployment rate among men and women of Somali background between 2000 and 2018 in Espoo, Helsinki and Vantaa. Although unemployment is still regrettably common, the situation has improved compared with the beginning of the current millennium, especially for women, but also for men.

Figure 2. Unemployment rate for foreign-born 20–64-year-old people with a Somali background according to gender (%) in Espoo, Helsinki and Vantaa in 2000–2018.

Source: Statistics Finland.

Due to an ageing population and the decrease of labour force with a Finnish background, there is a need for labour force in Finland, which, in the Helsinki region, is considerable and structural especially in some sectors. Therefore, Finland needs to implement immigration policies that bring more skilled labour force to the country in order to get as many immigrants that live here as possible in the labour force and employed. It is also important that as many people as possible are able to work in positions that correspond to their education and skills. Various studies show that most immigrants coming to Finland are overqualified for their tasks.

In addition, a so-called second generation of immigration of Finnish-born children of immigrants is growing in Finland. For a considerable share of these, one parent has a Finnish background, but it is increasingly common for both parents to have been born abroad. Many are not yet of working age, but every year many young people move from compulsory education to secondary and higher education and working life. Based on the current data, it seems a phenomenon familiar to other countries will also occur in Finland. Second generation immigrants will do better than first generation immigrants but will remain behind the native youth population. The reasons for this phenomenon need to be studied closely.

The COVID-19 pandemic reduced global immigration flows considerably globally. In many countries it also exposed their strong dependence on foreign labour force, and the need for seasonal labour force was discussed also in Finland. We will only get statistics regarding immigrant employment in 2020 that are comparable to the data presented here at a later time. Based on preliminary data gathered from various sources, it would seem that immigrants have not been shielded from the economic impact of the pandemic. We hope that once the wheels of economic life start turning again in earnest, the generally positive developments of the previous years will continue. That is in the interest of the entire Helsinki region.