ETLA: Immigrant-run businesses create jobs, but pay low wages

The new report highlights the high volume of jobs created by immigrant-owned companies, but shows that they pay less than average.

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A new report from the Research Institute of the Finnish Economy ETLA finds that businesses run by immigrants create a lot of jobs, but pay lower wages that businesses run by non-immigrants.

According to the Institute, immigrant-owned firms account for a few percent of all companies in the country, and just 1% of all labour in the business sector.

Those companies are smaller on average than non-immigrant owned companies with 4.4 workers, and at €36,000 the wage costs are lower than what ETLA calls “local domestic businesses”.

However, ETLA’s research reveals that while the job creation rates for immigrant-owned businesses are “exceptionally high”, the jobs they are creating are low productivity and low wage jobs.

“The explanation for the increase in the pay gap is that companies with an immigrant background are constantly creating new low-paid jobs, either through new companies or through the increase of staff by old low-wage companies” says ETLA Research Director Mika Maliranta.

In 2016 the number of companies in Finland with immigrant backgrounds was less than 4000 – or 4.6% of all companies.