This chapter clarifies the concept of illegal employment of foreign workers by looking at the various forms of irregularities and illegalities that it may entail, and at its relationship to informal employment. It also provides some evidence on the scope and characteristics of the phenomenon across OECD countries. However, given the scarcity of data, precise quantification is challenging. Most of the chapter is instead focused on policy measures implemented by OECD countries to prevent, control and sanction the illegal employment of foreign workers based on answers to a short questionnaire addressed to OECD members countries. General policy measures for reducing informal employment and irregular migration is also discussed.
International Migration Outlook 2018
International Migration Outlook
Chapter 4. Addressing the illegal employment of foreign workers
Abstract
This chapter was prepared by Sandrine Cazes. The author would like to thank Martina Lubyova, Anna Triandafyllidou, Laura Bartolini, and Michele Tuccio for their background documents in the context of the preparation of this chapter.
The statistical data for Israel are supplied by and under the responsibility of the relevant Israeli authorities. The use of such data by the OECD is without prejudice to the status of the Golan Heights, East Jerusalem and Israeli settlements in the West Bank under the terms of international law.
Introduction
The illegal employment of foreign workers is a source of concern for economic and migration-related reasons. From an economic perspective, it may entail lost revenues for the State, put the legally employed – both foreign and native-born – at a disadvantage, and lead to the use of migrant workers by employers to cut labour costs. From the viewpoint of migration policy, countering the illegal employment of foreign workers helps deter irregular migration for which it acts as a major pull factor (OECD, 2015[1]; Reyneri, 2003[2]). Such action is also important for preventing the overall stigma and backlash irregular migration brings against migration in general. More importantly, however, there are human, social and ethical arguments for combatting the illegal employment of foreign workers. They are often among the most vulnerable segments of the labour force and may be exploited, enjoy little or no access to basic welfare services, and be denied their fundamental rights.
Various pull and push forces contribute to the illegal employment of foreign workers, among which sizeable informal economies in the receiving countries as offering wide work opportunities to migrants in an irregular situation (even if not only to them), or potential mismatch between genuine labour shortages in some labour intensive sectors and restrictive immigration policies towards low-skilled migration. Poor employment prospects in the origin countries or sudden circumstances pushing people to forced migration without allowing time to formally apply for visas and work permits can also explain why migrants end up in illegal employment. More generally, the megatrends that affect labour markets – such as globalisation and the rise of flexible jobs1 – generate additional pressures that may lead employers to look for the cheapest and most flexible labour force.
Fighting illegal employment of foreign workers is not a new topic and the issue has been high on policy makers’ agenda over the last twenty years (OECD, 2000[3]). However, several developments have brought it under greater national and international scrutiny in recent years. In European countries, the political and security issues related to the large recent increase in the number of migrants and asylum seekers crossing the Mediterranean in an irregular way has had a powerful resonance in the media. And the fact that, Europe‑wide, an average of one-in-two asylum seekers may be denied protection prompts the dual question of the return and illegal employment of foreign workers. Furthermore, the economic and financial crisis of 2008‑09 may have pushed a number of legally employed foreign workers over the boundary into illegal work, at least temporarily, either because they lost their permit or because they lost their formal job.
This suggests that many OECD countries, particularly in Europe, may be experiencing a growing pool of undocumented or semi-documented migrants who work illegally because:
They entered the host country illegally.
They have had their applications for refugee status rejected and have not left the country.
They are breaching the conditions of their work or residence permits.
They may be eligible for work permits but do not have the necessary administrative knowledge to apply for a work permit.2
Combinations of these situations are likely to yield highly heterogeneous foreign worker profiles. What is more, since the illegal employment of foreigners is by definition a hidden phenomenon, deriving reliable estimates of its magnitude in OECD countries is challenging, if not impossible. Consequently, this chapter seeks not to attempt any such assessment, but to bring together the different pieces of a complex puzzle. It also discusses policy action for combatting the illegal employment of foreign workers and examines the forms such action may take. It looks both at broad measures to curb informal employment and irregular migration and at more specific measures that seek to enhance compliance and workplace enforcement through prevention, detection and sanctions.
The chapter is organised as follows. First, it clarifies what makes the employment of foreign workers illegal in light of the various forms of irregularities and illegalities that it may entail and articulates it with regards to informal employment. Second, it introduces the main measurement challenges for assessing illegal employment of foreign workers and provides some evidence on its scope across OECD countries. Given the scarcity of data, however, it devotes more attention to characterising illegal employment of foreign workers. Drawing on the answers to a short questionnaire addressed to OECD member countries, the chapter reviews and discusses OECD countries’ policy measures to prevent, control and sanction the illegal employment of foreign workers. It also examines general policy for reducing informal employment and irregular migration. The final section wraps up the chapter with a summary of the chapter’s main findings and its chief recommendations.
Main findings
The illegal employment of foreign workers is a complex, multi-faceted issue. It may come about through non-compliance with either migration rules (foreign workers with no residence permit, not in full conformity, or no longer valid, e.g. in breach of their residence status) or labour rules (foreign workers with no work permit, not in full conformity, or no longer valid, e.g. in breach of their work status). In light of the wide spectrum of illegalities this may entail, it is likely to include people in very different circumstances.
In order to design adequate policy responses, it is crucial to differentiate between the illegal employment of foreign workers and informal employment. On one hand, foreign workers in breach of their residence status may have formal jobs. On the other hand, both the native-born and immigrants may work informally.
Estimates suggest that there were about 11.3 million unauthorised immigrants in the United States in 2016 (3.5% of its total population) and between 1.9 million and 3.8 million irregular migrants (between 0.4 and 0.8 % of the total population) in the European Union (EU27) in 2008. Unfortunately, a more recent estimate is not available for the European Union, although it would be reasonable to presume that the current number is higher than in 2008, though still far below the US figure.
Despite the scarcity of comparable data, the available information – obtained from sources such as regularisation registries – suggests that illegal employment of foreign workers is most likely to affect men of fairly young age. Such illegal employment is most likely in agriculture, construction, manufacturing and domestic services.
Policies for combatting the illegal employment of foreign workers should draw on a broad set of measures, including both labour market and migration policies in order to reduce informal employment and facilitate legal pathways, as well as measures specifically designed to enhance compliance and enforce existing regulation in the workplace.
When the issue has become prominent or structural, regularisation programmes may appear as an unavoidable solution. However, they must be carefully designed and backed by policy changes that address the root cause of the phenomenon.
Status verification involves employers checking to ensure that foreign worker’s right to work has been duly authorised. To that end, some governments provide a verification service which may be optional or mandatory for employers to use. Such systems can help raise employer awareness and facilitate inspections, though efforts to develop them are still modest in OECD countries. Nevertheless, some countries have introduced secured online verification platforms that allow employers to check free-of-charge the employment authorisations of their foreign employees and job applicants. Such systems may offer good practices to emulate.
Labour inspection practices in most OECD countries involve combining targeted inspections in specific sectors with broader, random controls. Inspections are generally infrequent, however, and therefore unlikely to deter employers from illegal employment of foreign workers. Improving the efficiency of inspections requires closer, better co-ordination and co-operation between the different government agencies which work to curb the illegal employment of foreign workers, e.g. the police, immigration authorities, tax and customs administration, labour inspectorates.
OECD countries adopt very different approaches to sanctions and penalties against illegal employment of foreign workers, with the amounts of fines and the severity of criminal charges varying widely. Nevertheless, sanctions against employers are a crucial part of efforts to deter them from hiring foreign workers with irregular legal status. How effective sanctions are depends both on their severity and whether employers believe they are likely to be enforced.
Illegal employment is multi-faceted
What are we talking about?
The illegal employment of foreign workers may result from irregularities/illegalities linked to the content of the work itself (for instance illicit activities), the form of employment (for instance un/under-declaration of certain activities to public authorities, e.g. informal employment3), or to the worker’s personal situation which may be an irregular situation such as breaching immigration or labour laws, or both. It is however important to distinguish between the illegal employment of foreign workers and informal employment, the latter potentially concerning both the native-born and immigrants, with no clear-cut evidence that foreign workers are overrepresented. Besides, foreign workers in irregular situations may also have formal jobs4 – e.g. be on employers’ official payrolls and even pay income tax and social contributions (employers may or may not be aware of their legal status).
Furthermore, degrees of illegality may vary widely – from the absence of any proper work or residence authorisation to non-compliance with the requirements therein (such as length of stay or the duration of a job, number of working hours, limiting a worker to a particular employer, sector, occupation or region). In other words, the illegal employment of foreign workers applies to situations that range from relatively minor permit infringements to criminal activities like trafficking of people and forced labour.
This chapter refers to the illegal employment of foreign workers in terms of breaching and non-complying with certain legal or administrative regulations, either migration or labour rules. This means employment of foreign workers with no residence or work permit, or who are not in full conformity with the conditions of their permits, or who hold permits that are no longer valid.
Such scope is wider than the European Union’s definition of the illegal employment of third-country nationals, set out in the Employers’ Sanctions Directive 2009/52/EC,5 as including also those legally staying but working without a work permit or a fully valid one,6 or in the informal economy. Figure 4.1 illustrates those various configurations. By combining migration status and form of employment, it draws up profiles of foreign workers. Strictly speaking, the sole category that can be considered “legal” is Profile [6]. Yet the focus of this chapter is on Profiles [1] to [4], given that the situation of a person in Profile [5] is, from a migration perspective, in order, even though breaches labour market and tax regulations.
Figure 4.1. Foreign workers’ migration status, forms of employment and profiles
Note: Formal employment relates to employees who have a proper contract and whose social contributions are fully paid and to self-employed workers whose business is properly registered and pay social contributions. Informal employment relates to registered but under-declared labour and to labour that is not registered at all.
Fine tuning foreign workers’ profiles: histories and trajectories
The illegal employment of foreign workers has a time dimension as it can be defined by its duration. While Figure 4.1 displays workers’ situations at a given point in time, it does not track their trajectories over time, before they entered the labour market, or how often they may have slipped in and out of legal status. Yet time has important implications for measuring and characterising illegal employment of foreign workers and for formulating and implementing policy.
On the measurement front, any estimate of stocks of illegal foreign workers is made difficult by the elusive nature of the phenomenon and by the fact that accounting for flows in and out of regular/legal status is based on assumptions as to the average lengths of time that workers spend in irregular/illegal status. Such computation involves a wide margin of uncertainty, though it is possible to produce figures that lie within a confidence interval. Tracking individual trajectories also yields information that helps detect path dependence and stigma linked to personal histories of past infringements and how serious they were. Such information is also very important when it comes to spotting certain categories of foreign workers – notably those who overstay (e.g. persons who entered with a tourist or other temporary visa and overstay the allowed period) or more generally those who remain in the country despite an obligation to leave the territory.
The histories and trajectories that lead to the irregular residence status of foreign workers range widely:
They may never have had any regular status because they entered the country illegally.
They may have entered the country with forged IDs or with false identities using bona fide papers.
They may have legal temporary status (e.g. tourist visa) but breached the terms and conditions of their temporary visa.
They may have applied for asylum but were denied any protection status and are required to leave the country.
They may have lost their residence status because they no longer met the requirements under which their residence permit was initially granted.
Similarly, the irregularity regarding the employment status can take multiple forms, including:
working in a sector/occupation, region or employer that is not allowed by the work permit, particularly when a worker is working several jobs at once
working longer hours and/or more days than a visa allows, which may be the case of international students or working holiday makers
working informally despite having a lawful residence status.
Foreign workers may also move in and out of legal employment status over time, often finding themselves in situations that involve multiple combinations of work and residence infringements, each of which may last for different lengths of time (Annex Table 4.1).
In sum, various configurations of illegal employment of foreign workers can be identified that either result from the residence status of the person, e.g. foreign workers in an irregular situation (illegally staying), thereby working without permission in both formal and informal employment (categories [1] and [2] of Figure 4.1); or from work authorisation status, e.g. lack of permit, or with permit not in full conformity such as people working longer hours or in other sectors than allowed or people entitled to a work permit but have not requested it nor received one; here again, foreign workers may work in both informal and formal employment (categories [3], [4] and [5] of Figure 4.1).
What drives the illegal employment of foreign workers?
The illegal employment of foreign workers is determined by an interplay of “pull and push” factors generated by the labour market and migration policies. They include:
The size of the host country’s informal economy. If it is large, it offers foreign workers opportunities of illegal work, even if it also employs native-born and legal foreign workers (Reyneri, 2003[2]).
The mismatch between the demand for low-skilled labour – which may be particularly acute in some labour-intensive sectors like agriculture – and immigration policies that restrict or even ban low-skilled immigration.
Potential gaps, inadequacies or inconsistencies in administrative rules and frameworks, such as legislation enabling foreign workers to move into a regular status (e.g. legislation allowing status change) or slow, complex administrative procedures. Language and cultural barriers may also cause workers to struggle to access information on administrative procedures, labour laws and rights. As a result, they may involuntarily find themselves in an irregular situation or in non‑compliance with work or residence papers.
Low incentive for employers to hire legal workers due to weak workplace enforcement and employer sanctions. Employers may choose to employ foreign workers illegally not only because such workers accept low wages, but because employers can evade other costly regulations and taxes (Sumption, 2011[4]).
The underlying drivers behind the illegal employment of foreign workers vary by sector. In the domestic and care sector, for instance, illegal foreign work has developed under the combined effects of overall growth in demand for care services – due to population ageing and growing female participation in the labour force – and the abuse of care arrangements, such as cash-for-care programmes7 and au pair services. The gendered area of domestic and care activities may also have particularly attracted foreign workers whose permit is linked to their spouse or those who do not necessarily need to prove they are employed in order to keep or renew their residence permit (Triandafyllidou, 2013[5]). Generally speaking, the private, personal nature of the domestic care sector, and the prospect of informal work arrangements that it offers, have been key factors in attracting illegal foreign workers.
The high levels of flexibility required in the agriculture sector, particularly for seasonal work, and the informal arrangements it allows, have also led to high concentrations of illegally employed foreign workers. Moreover, strong pressure to keep production costs low and stay competitive has increased the demand for low-paid work, especially among small producers who generally have little room for adjustment. On the supply side, the native-born in some countries have become more and more reluctant to engage in poorly paid menial jobs, where workers often have to be on call and work under adverse conditions with little prospect of upward mobility. Moreover, seasonal work permits may involve complex and long bureaucratic procedures, making both employers and foreign workers reluctant to use available temporary visa programmes. Some uncapped seasonal work programmes have seen relatively low uptake – for example, the H-2A programme in the United States – with employers complaining of the complexity (Martin, 2016[6]).
Compared to the two previous sectors, construction tends to be more protected as it requires more specialised skills. Upward mobility is sometimes possible notably by the creation of an independent enterprise for subcontracting. Activities however, remain hard, often dangerous and physically demanding, and natives are generally quite reluctant to engage in them.8 While highly regulated by legislation and collective agreements, the sector is also deeply segmented due to the extensive use of temporary employment, false self‑employment and chain subcontracting which can obscure the link between the principal employer and the employee, potentially leading to evasion and abuse of some contract forms such as posted arrangements.9 A relatively small, well protected workforce thus co-exists with a large peripheral, unregulated segment that is likely to include a large number of foreigners in irregular situations (Krings et al., 2011[7]).
The illegal employment of foreign workers across OECD countries
Measurement issues
Due to the elusive nature of the illegal employment of foreign workers, statistics are scarce, unreliable and hard to compare across countries.10 Patchy information can be found in ad hoc reports and newspaper articles, which paint only an impressionistic picture of the phenomenon. Moreover, it is usually very difficult to distinguish irregularities linked to residence status from those related to work status, or to obtain data broken down into formal and informal employment. Hence, assessing the composition of illegal employment of foreign workers across countries as depicted in Figure 4.1 is not possible.
Statistics on irregular migration can serve as a benchmark for evaluating the magnitude of the illegal employment of foreign workers. In fact, while not all migrants in an irregular situation are of working age or manage to find a job, most decide to migrate in search of work.11 As those in an irregular situation generally do not have access to benefits and income support, they have in practice no other option than to work. That being said, focusing on this category fails to capture those who are legal residents but in an irregular situation workwise (Profiles [3], [4] and [5] in Figure 4.1).
Researchers have developed different methods of estimating the size of migrants an in irregular situation, using direct measures of individuals in an irregular situation or considered likely to be so, either at the time of border crossing (e.g. apprehensions and managed departures), during residence (e.g. apprehensions and regularisations), as well as at work (e.g. inspections). Those direct measures are generally based on administrative statistics, but can also be based on surveys with or without sampling, using various techniques (e.g. “snowball”, “Delphi”, “capture-recapture”) which may be subject to selection bias and strong hypotheses (Box 0.1). In parallel to these direct methodologies, indirect estimates have also been developed by demographers, based on expected population and gender ratio methods that integrate additional information derived from data supplied by host countries (for an overview, see (OECD, 2000[3])).
All these various methods and measures have shortcomings, however, and need to be handled with caution. Statistics on detections and apprehensions, for instance, relate to events and should be adjusted to account for the number of times an individual may have attempted to cross the border. Furthermore, such data may primarily reflect the effectiveness of the host country’s police and immigration authorities in enforcing immigration legislation. Regularisation programmes, too, can yield interesting information, though it relates only to a given point in time and only to individuals who apply to be regularised.
Box 4.1. The capture-recapture survey method: Estimating illegal working migrants in Denmark and the Netherlands
Two surveys – from Denmark and the Netherlands – illustrate how certain assumptions as to remigration and turnover rates in the illegally resident migrant population produce a wide range of figures (and no more than a range) within a specified confidence interval.
A recent study by the Rockwool Foundation in Denmark sought to measure the number of migrants staying illegally in Denmark from data on apprehensions at police checkpoints (Tranæs and Jensen, 2014[8]). The method used was a capture‑recapture estimation initially developed to evaluate the size of the trout population in a lake through repeat registrations of individually identified fish. The methodology relied on the assumption that it was feasible to proxy the size of the illegal migrant population from the number of repeat offenders registered by the police. In brief, the higher the chance that the police apprehended the same people, the fewer illegally staying migrants there must be. The authors of the study estimated that there were 10 000 people working illegally in Denmark in 2013 – a significant increase from the 2008 figure of 2 800. What is more, the rise was observed during a period of overall deterioration of the labour market. Almost one-third of all illegally working migrants in Denmark in 2013 came from Nigeria and China, the vast majority of whom (72%) were men. It is worth noting, however, that these estimates have not been confirmed officially and are subject to debate.
Van der Heijden et al. (2006[9]) employed a similar capture-recapture method to estimate the number of migrants residing illegally in the Netherlands. They, too, drew on apprehensions recorded by the police, with information on gender, age, country of origin and reason for registration by the police. The authors of the study used a linear Poisson model to estimate the individual likelihood of being (repeatedly) apprehended, which allowed them to infer the size of the illegal migrant population. Where possible, the authors distinguished between migrants who were returned and those who stayed on after being apprehended. However, migrants who were returned could not be “recaptured”, and not accounting for that fact may have led to substantial overestimation. Findings put the total number of migrants residing illegally in the Netherlands in 2005‑06 at between 75 000 and 185 000. Of those, between 62 500 and 115 000 come from non-European countries, including 10% who became illegally resident after filing for asylum in the Netherlands.
The diversity and limitations of measurement techniques and data sources, together with the inherent difficulty of measuring an unobservable phenomenon, suggest that available statistics on a particular topic can yield only very heterogeneous information of mixed quality. In light of these constraints, the rest of this section takes stock of existing data in OECD countries while considering alternative indicators. It also deepens analysis where reliable, detailed information is available, even if restricted to only a few countries, such as the United States, or regions, e.g. Lombardy in Italy (see section on the case of Lombardy, Italy). Finally, it focuses not on numbers of illegally employed foreign workers, but on their characteristics.
Magnitude and trends of irregular migrant population, overstayers and apprehensions
Magnitude
Keeping in mind the measurement challenges aforementioned, Table 4.1 shows various estimates of migrants in an irregular situation that draw on different methodologies and sources in a number of OECD countries. Figures vary widely from one country to another. The 11.3 million unauthorised immigrants in the United States in 2016,12 or 3.5% of the population, stand out. Estimates for the European Union (EU27),13 which date back to 2008, produce much lower figures – between 1.9 and 3.8 million people, or 0.4% to 0.8% of the total population. Unfortunately, no more recent estimate has been calculated for Europe as a whole, although it would be reasonable to presume that the current number is above that of 2008, while remaining far below the United States figure.
A number of OECD countries – Australia, Israel, Japan, Korea and New Zealand – supply figures on those who have overstayed their permits (overstayers) drawn from statistics on double-card entry and exit data. Although recent figures show that overstayers in those countries represent between 0.2% and 0.5% of their total populations, they paint only a partial picture of illegal employment of foreign workers as they do not cover, for instance, those people who entered the country illegally.
Partial indications of trends
Information on trends is scarce and hard to compare as there is such a wide variety of indicators. In countries where double-card entry yields information on overstayers, yearly figures make it possible to track changes over time. In Australia, for instance, estimates showed a rise in numbers of overstayers between 2010 and 2015, albeit at a decelerating rate14 between 2010 and 2014, followed by a slight decrease (Figure 4.2). In Korea, figures also point to an increase over the period, with a significant spike in 2014 over the previous year,15 while in Israel16 they suggest rather stable rates. At the opposite end of the spectrum, figures for Japan and New Zealand point to a decrease in the number of overstayers over the period, though at different rate: it slowed down in Japan till 2014, and then increased between 2014 and 2015,17 while it steadily accelerated in New Zealand between 2010 and 2015 (SOPEMI (Permanent System of Observation of International Migration), 2015[10]).
Table 4.1. Estimates of irregular migrant populations in selected OECD countries, latest year available for non-EU OECD countries and 2008 for the EU
Note: Methods of calculation vary from country to country: HWWI figures are extrapolated from available national sources; US figures are derived using the residual method. For Israel, 78 500 overstaying tourist visas and 15 660 were foreign workers in violation (Ministry of Interior).
Source: For EU countries, Hamburg Institute of International Economics (HWWI) Database, www.irregular-migration.hwwi.net; Ministry of Migration for Lithuania. Continuous Reporting System on Migration (SOPEMI) 2015 country reports for Australia, Israel, Japan, Korea and New Zealand; Pew Research Center (2016[11]) for the United States.
Figure 4.2. Overstayers in selected OECD countries, 2010-15
Source: SOPEMI country reports (2015).
For the EU, patterns can be identified based on detections and apprehensions figures released yearly by Eurostat since 2008 (third-country nationals found to be illegally present and who were apprehended or otherwise came to the attention of national immigration authorities). Bearing in mind the important caveats that hedge the use of such data for assessing irregular migration, the number of foreign nationals found to be illegally present in the EU28 countries rose from 429 050 in 2013 to 669 575 in 2014, and skyrocketed to 2 152 340 in 2015. This general increase in apprehensions is attributable to the EU member states’ commitment to combatting irregular migration and containing the growth in illegal border crossings driven by the humanitarian crisis in 2015.18 In the EU context this implies a major overestimation of the issue because people who seek international protection cease to be in an irregular legal situation from the time that they apply for asylum to when they obtain it or have it denied.19 People may also be counted twice in the same or different EU member states.
Although other OECD countries also supply statistics on apprehensions at their borders, international comparisons are hindered by differences in irregular migration management practices and in geographic situations (Table 4.2). Generally speaking, although data on apprehensions are readily available and cover lengthy periods of time, they paint a distorted picture of the evolution of the phenomenon as they fail to take into account exits and status changes.
In the United States, the estimate of 11.3 million unauthorised immigrants in 2016 had remained largely unchanged since 2009. Prior to 2009, the unauthorised immigrant population had risen through the 1990s and early 2000s, peaked in 2007 at 12.2 million, then declined over the next two years during the Great Recession (Pew Research Center, 2006[12]). The number of unauthorised immigrants in the labour force also grew sharply, by nearly 2.7 million from 2000 to 2008 alone – before peaking at 8.3 million in 2008. It has remained broadly stable at about 8 million since then (Annex Figure 4.1).
Table 4.2. Detections and apprehensions in selected OECD countries, 2008‑15
Note: “Apprehensions” refers to total numbers of illegal aliens apprehended at the border by fiscal year.
1. “Detections and apprehensions” refers to the third-country nationals found to be illegally present and who were apprehended or otherwise came to the attention of national immigration authorities.
Source: Eurostat Database, Enforcement of Immigration Legislation (migr_eipre), http://ec.europa.eu/eurostat/cache/metadata/en/migr_eil_esms.htm. Department of Homeland Security.
Illegal employment of foreign workers: Workers’ characteristics and sectors
Workers’ characteristics: Gender, age, skills and country of origin
Data from past regularisation programmes, while only part of the picture, show that people who were in an irregular situation tend to be men of a fairly young age. In Italy and Spain, for example, three-quarters were under 40 years old (OECD, 2000[3]) (Table 4.3). Although the main nationalities that account for the bulk of illegal foreign work evolve over time, they tend to be determined by geographical proximity or language (see Box 4.2 for profiles of regularised workers in France). Finally, detailed information is available in the United States that allows comparing the profiles of undocumented immigrants with those of the native-born and other immigrants (Box 4.3).
Table 4.3. Regularisation programmes in selected countries
* Based on first 60% of applications processed.
Box 4.2. Who are the regularised immigrant workers in France?
France regularised 5 300 non-EU foreign workers annually in 2014 and 2015 and a further 6 400 in both 2016 and 2017. During the last five years, four–in-five were men, against two-in-three among other labour migrants legally recruited from abroad. In 2015, on average they were regularised after seven years of residence in France and at an average age of 35 – five years older than other labour migrants. Almost 60% of regularised foreign workers are African nationals, mainly from Mali (12%), Morocco (10%) and Tunisia (9%). Although nationals from Africa still account for the bulk of regularisations, the regions of origin of regularised foreign workers have been far more diverse since new regularisation rules in 2012. Since then, there has been a significant rise in the number of those from South Asia, especially from Bangladesh and, to a lesser extent, Sri Lanka. There has also been a significant increase in regularisations of Southeast Asian workers, mostly Filipino women. The Paris area accounts for the vast majority of regularisations of foreign workers – 84% in 2015, for example.
Residence permit data are stored in the Interior Ministry’s foreign national management system, AGDREF. They do not include the socioeconomic characteristics of their holders. The 2010 Longitudinal Survey on the Integration of First-Time Arrivals (ELIPA) does, however. It is the only source of socioeconomic profiles of regularised foreign workers.
Non-EU national foreigners who have been regularised work in lower-skilled occupations and are concentrated in sectors that employ the highest shares of irregular migrants – 63% of regularised foreign workers in 2009 were blue-collar workers (of whom 34% held low‑skilled positions) and 27% were service workers. Only one regularised worker in ten found a more highly-qualified job, such as technician or associate professional. Overall, 39% of regularised foreign workers in 2009 worked in the retail, hotel and catering industry, 22% in construction, 12% in services to companies and 12% in services to households. Regularised foreign workers have low-skilled jobs because they have a markedly lower level of education than other labour migrants: 53% had no degrees at all, against 39% of the other labour migrants with low‑skilled jobs, and 27% of other labour migrants with higher-skilled jobs. Only one-tenth of regularised foreign workers had a tertiary degree, four times fewer than other labour migrants (and twice as few as even non-labour migrants). This is also due to the fact that 52% of labour migrants in France are higher-skilled. Regularised foreign workers’ profiles may affect their employability in the French labour market, especially since 31% of them reported that they do not speak French fluently, a higher proportion than among other labour migrants recruited from abroad (21%), including the low-skilled.
The ELIPA survey found that 54% of regularised foreign workers in 2009 entered France legally, although four-fifths of them had visas (chiefly tourist visas) that did not allow them to work. They overstayed their visas, sometimes by applying for asylum (one‑in‑four cases). The remaining 46% entered France illegally (with no visa) and had no residence permit before they were regularised. Two-thirds did, however, have some kind of resident document at some point through their asylum applications. Sixty per cent of regularised foreign workers had job contracts prior to regularisation. Finally, among those that entered France legally, 37% of foreign workers were regularised while working in their first job – i.e. with the support of their first employer in the country. The share was 44% among those who entered illegally.
Source: French Ministry of Interior, AGDREF database and Longitudinal Survey on the Integration of First-Time Arrivals (ELIPA) 2010; OECD (2017[13]).
Box 4.3. Who are the unauthorised immigrant workers in the United States?
In 2014, unauthorised immigrants made up 3.5% of the United States (US) population, 5% of its workforce and 26% of foreign-born residents. They represented a higher share of the US labour force (5%) than of the total population (3.5%) partly because they were disproportionately likely to be of working age: 92% were between 18 and 64 years old, against 60% of the native-born population and 76% of lawful immigrants, and 67% were between 18 and 44 years old. Only 1% was 65 or older, and 7% under 18.
Compared with US-born national and lawful immigrants, unauthorised male immigrants were more likely to be in the labour force and their female peers less likely. Of all unauthorised immigrant men aged 18 to 64, 91% were working or looking for work, compared with 79% and 84 % respectively among native-born and legally resident immigrant men in the same age bracket. Among unauthorised female immigrants, labour force participation was 61%, against 72% among their native-born peers and 67% among lawful immigrants. One reason for the disparity is that unauthorised immigrant women who are not in the work force are far more likely than other groups to have young children at home.
Unauthorised immigrants in the United States come from across the globe, though Mexico has long accounted for the bulk of them. Nevertheless, the number of unauthorised immigrants from Mexico, at 5.8 million in 2014 (52% of all unauthorised immigrants), is lower than its peak of 6.9 million in 2007. In 2014, there were 1.7 million unauthorised immigrants from elsewhere in Central America, 1 million from South America and the Caribbean and 1.4 million from Asia. Smaller numbers were born in Europe and Canada (600 000) as well as the Middle East, Africa and other nations (500 000).
Although unauthorised immigrants are geographically widely dispersed, most (59%) lived in the six most populous US states in 2014. They are California, Florida, Illinois, New Jersey, New York and Texas.
When it comes to educational attainment among adults aged 25 and older, unauthorised immigrants were less likely to have completed high school or college in 2014 than either native born adults or lawful immigrants. Only 27% had completed at least some college education, compared with 58% of native‑born adults and 53% of lawful immigrants.
Finally, some two-thirds of unauthorised immigrant adults lived in nuclear families in 2014 – i.e. with a spouse or partner and/or with children. Of the 3.9 million unauthorised immigrant adults who did not live in such families, about 800 000 lived alone or in group-living arrangements. Unauthorised immigrants’ families made up a total of 17.1 million people, including the 11.1 million unauthorised immigrants themselves. The additional residents were largely the native-born children of the unauthorised immigrants – 5 million under‑18s and 400 000 adult children. About 4.5 million unauthorised immigrants – 43% of adults – lived with their US-born children under the age of 18.
Source: Passel, J. (2016[14]); Pew Research Center (2014[15])
Sectors and occupations
The illegal employment of foreign workers can be found throughout the economy, particularly in industries reliant on flexible, low-pay arrangements, seasonal activities (such as fruit picking), and in workplaces (like farms and internet-based services) or for employers (e.g. households or small family businesses) that are harder to monitor and inspect.
In the United States, data make it possible to profile unauthorised immigrants by industry. They tend to be concentrated in agriculture, construction, and the leisure and hospitality sectors (Table 4.4). Data obtained from regularisation programmes reveal that unauthorised foreign workers were particularly overrepresented in sectors like domestic work, construction, manufacturing, agriculture and hotel and catering (Table 4.3 and Box 4.2). However, as already pointed out, such data do not reflect the full spectrum of the illegal employment of foreign workers.
Table 4.4. Industry profiles by migration status in the United States, 2014
Percentages
Note: The distribution is from Passel et al., (2016[14]) and is obtained by applying also the distribution by industry of the foreign-born observed in the American Community Survey 2014, who are working or looking for work, to the estimates of unauthorised immigrants aged 16 and older, taking into consideration their age, regions of birth, family relationship and other socio-demographic characteristics.
Source: Pew Research Center (2014[15]) estimates.
With the data available in the United States, it is also possible to break down the distribution of unauthorised foreign workers by occupation (Table 4.5). Among all unauthorised immigrant workers, about one-third (31.9 % in 2014) were employed in service occupations, compared with 17.4% of their native-born peers. Construction jobs accounted for about 16%, three times the share of native born workers (5%). Production and maintenance jobs employed 14% of unauthorised immigrant workers in 2014, compared to just 9% of the native-born. Thanks to the detailed nature of the data from the United States, specific occupations with particularly high concentrations of unauthorised immigrant workers can be identified: drywall installers (31%), miscellaneous agricultural workers (30%), roofers (29%), construction painters (26%) and brick masons (26%).
In European countries, data on regularised non-EU nationals suggest they have lower‑skilled occupations and are concentrated in the sectors that employ the most irregular migrants (Box 4.2 for France).
Table 4.5. Occupation profiles by migration status in the United States, 2014
Percentages
Note: The distribution is from Passel et al. (2016[14]). They obtained it by applying the 2014 American Community Survey’s distribution by occupation of foreigners who are working or looking for work to estimates of unauthorised immigrants aged 16 and over, taking into consideration their age, regions of birth, family situations, and other socio-demographic characteristics.
Source: Estimates from the Pew Research Center (2014[15]).
Getting the whole picture of illegal employment of foreign workers: The case of Lombardy, Italy
As already pointed out, the data generally available paint only part of the picture, since they often fail to capture and identify foreigners who are legally resident but without a work permit or in full conformity, as well as those without permits at all. That is, data do not generally allow identifying the different profiles of workers nor do they differentiate illegal employment of foreign workers from informal employment.
When such data are available, analysis thereof provides key findings for policy action, not only by confirming earlier findings, but by revealing important patterns in earnings gaps, remittances and integration. Just such data are produced by a unique survey conducted annually in the Italian region of Lombardy by independent Italian non-profit organisation Foundation for Initiatives and Studies on Multi-Ethnicity (ISMU). The findings from its 2016 survey, which covered almost 3 300 individuals, enable the analysis below of illegal foreign workers in Lombardy (for more on ISMU surveys, see (Guriev, Speciale and Tuccio, 2016[16])). A particular advantage of ISMU’s comprehensive dataset is that it clearly distinguishes between foreign workers in irregular situations (irregularly staying in Italy) and those with visa and residence permits (regularly staying), as well as between formal and informal employment.20
Analysing findings from Lombardy
Lombardy is Italy’s largest region in terms of income, accounting for one-fifth of its GDP, and its most populous region, making up one-sixth of the population. It is also the region with the largest migrant population – almost a quarter of Italy’s migrants with regular legal status lived in Lombardy in 2005. Since 2001, the NGO ISMU has conducted a yearly survey of immigrants residing in Lombardy. Thanks to this unique source of information, it is possible to apply the conceptual framework of Figure 4.1 to the Lombardy case.
In 2016, for instance, 82% of the migrant population in Lombardy were legally resident and worked in formal employment (Profile [6] of Figure 4.1). Nine percent had valid residence permits but worked in informal employment (Profile [5]). Of the remaining 9%, who had no valid residence papers, approximately half worked informally (Profile [1]) and half had formal jobs, possibly using forged papers and fake identities (Profile [2]).21
Panel A in Figure 4.3 shows considerable variations in the distribution of foreign workers by country of origin. Among citizens from East European members of the EU, who enjoy full legal residence and employment rights in Italy, one out of 10 is in informal employment (Profile [5]). The situation is slightly different for non‑EU Eastern European country nationals. Half work formally and half informally, while 11% are illegally staying migrants (working equally between formal and informal employment). Among immigrants from sub-Saharan Africa, only 67% have valid permits and are in formal employment (Profile [6]), 18% have valid permits but are in informal employment (Profile [5]), while 15% are in illegal employment (Profiles [1] and [2]).
Figure 4.3. Foreign workers’ regions of origin and educational attainment, Lombardy, 2015
Source: OECD Secretariat based on ORIM (2017[17]).
A profiling of foreign workers’ characteristics suggests that those in legal and formal employment are on average older (39 years), more likely to be women (43%) and married (62%) – and consequently to have more children – compared to foreign workers in illegal employment, who are on average 33 years old, men (only 32% of them are women), and single (38% of them are married). There are also wide disparities in how long they have been in Italy. The average length of stay among illegally resident migrants in informal employment is only five years, whereas those who are legal residents in formal employment have been in the country for 14 years.
Levels of educational attainment vary, too (Figure 4.3, Panel B). While most illegally resident informal workers (53%) have lower-secondary education, 40% of legally resident formal workers have attained upper-secondary education, with 26% of them boasting post-secondary qualification, compared to only 6% of foreigners in illegal employment.
Illegally resident foreign workers in informal employment earn only 42% of the monthly net wage of their legally and formally employed counterparts (Figure 4.4, Panel A). Although the disparity is partly attributable their lower education levels, legal residents with informal jobs earn only half of the earnings of their formally employed peers despite their similar levels of educational attainment. A closer look at the data suggests that the earnings penalty is, at least partly, due to the instability of the informal economy: formally employed foreigners work about 40 hours a week (regardless of their legal status), compared to the 25 hours of workers in informal employment.
Lower earnings of foreign workers in illegal employment, however, do not translate into lower remittances sent back home: illegally staying migrants in informal employment send on average over a fourth of their monthly earnings to their left-behind communities, while individuals in legal and formal employment send only 18% of their wages. Professions also vary widely (Figure 4.4, Panel B): for example, 26% of migrants in regular situation (legally staying) in informal employment work as a part-time housekeeper, while the figure drops to only 4% for their counterparts in formal employment. Interestingly, 29% of workers in illegal employment practice a commercial activity in the black market, whereas the share remains much lower for the other categories of workers. Foreign workers in an irregular situation (illegally staying) in informal employment are also much more likely than those in regular situation and formal employment to work in construction (16% versus 8%) and in cleaning services (13% versus 5%).
Insights into integration
Finally, when it comes to integration in the host society, informally employed illegal residents are the least integrated (Annex Table 4.2). Whilst only 2% have mostly Italian friends, the share rises to 10% among workers in legal, formal employment. Similarly, illegally resident migrants in informal jobs tend to congregate with foreigners of similar origin, which further fuels their isolation and the asymmetry of labour market conditions. Not surprisingly, over 95% believe (correctly) they do not enjoy the same opportunities as Italians, whereas only 38% of foreign workers in legal and formal employment think so. The struggles of living in precarious conditions may be one reason why a higher share of illegally resident migrants in informal employment wish to leave Italy – 19% intend to go back to their country of origin and 21% would like to move to a third country, compared to respectively 4% and 6% of legally resident foreign workers in formal employment.
Figure 4.4. Foreign workers’ earnings and remittances and their professions, Lombardy, 2015
Source: OECD Secretariat based on ORIM (2017[17]).
Combatting the illegal employment of foreign workers
The fight against the illegal employment of foreign workers is both an economic and migration policy objective and, as such, requires a broad set of measures. This section considers general policy measures to curtail informal employment (among migrants and the native-born) and irregular migration. It also examines measures aimed specifically at curtailing the illegal employment of foreign workers by improving compliance and workplace enforcement (through information campaigns, verification systems, inspections, sanctions and penalties, etc.). Discussion draws on the literature and is enriched by new information collected through a short policy questionnaire submitted to OECD member countries on measures they have undertaken to prevent, detect and sanction the illegal employment of foreign workers.22
Reducing informal employment
Measures to curb informal employment, even if not explicitly designed for that purpose, need to be considered as part of the policy package for combatting the illegal employment of foreign workers. The OECD has produced several studies and recommendations on promoting formalisation and curbing undeclared work (OECD, 2004[18]; OECD, 2008[19]). The main policy recommendations are:
Firms and workers need to clearly recognise the benefits of formalisation. Accordingly, governments should seek to improve the quality of the public services they deliver, as well as strengthen the link between contributions and benefits in social protection schemes. Providing better public services will increase people’s trust in their governments and give them greater incentive to join the formal sector.
Reduce the costs of formality for employers and the self-employed. Simplified tax and administrative systems, streamlined registration processes and a reduction in red tape are crucial steps in this direction. Labour regulations should also be carefully designed to offset their potentially adverse effects on hiring and job creation in the formal sector.
Scale up detection and enforcement measures, such as information exchange, co‑operation between labour, social security and tax inspectorates and improved enforcement methods. In particular, enforcement agencies, such as labour inspectorates, should enjoy sufficient resources to carry out their work effectively.23
As already mentioned, labour market regulations, such as employment protection legislation (EPL), may create, if too high, incentives for informal hiring. Empirical evidence of the link between labour regulations and informality is, however, disputed and depends on a wide range of institutional and macroeconomic factors (Djankov, Lieberman and Mukherjee, 2003[20]; Schneider, 2013[21]). Effects on the composition of employment, though, are more clear-cut.
Evidence shows that asymmetries in regulations (such as the protection provided by EPL24) deepen segmentation and widen labour market inequalities between protected workers with permanent contracts (insiders) and those with flexible contracts (the outsiders) – particularly in highly-regulated labour markets such as those of Southern Europe and Korea (OECD, 2014[22]). Accordingly, there is the risk of a displacement effect, whereby employers increasingly turn to the illegal employment of foreign workers, as the most flexible, unprotected group in the labour force – notably in high-risk sectors, such as construction.
However important they may be, efforts to reduce the informal economy and employment are not a cure-all for the illegal employment of foreign workers. Countries like France and the United States, for example, have substantial numbers of unauthorised immigrants but relatively little informal employment.
Curbing irregular migration
There are a number of migration measures available for reducing irregular migration. The three main ones include more restrictive border controls, the creation of legal migration channels and regularisations.
Border control and in countries detections
An important policy tool for stemming irregular migration is to control borders and prevent illegal entries. This response can take two major forms: stricter border controls to intercept foreigners trying to enter illegally, and policies that expedite the detection of migrants in an irregular situation in the country. The settlement countries (Australia, Canada, New Zealand and the United States) and island states – like Ireland, the United Kingdom and Japan – tend to emphasise the enforcement of border checks at airports and sea ports to curb irregular migration. In this context, efforts and resources are focused on restricting the entry of foreigners, at ports and airports. European countries have also tightened up the control at external borders. However, border controls will not solve the problems of overstayers who represent the bulk of irregular migration. Data for Italy and Japan suggest than about 70% of migrants in an irregular situation are overstayers (OECD, 2009[23]); even in the United States it is estimated that fully 45% of the unauthorised population in the mid-2000s entered the country legally and overstayed (Pew Research Center, 2006[12]).
In recent years, OECD countries, particularly in Europe, have stepped up the removals/expulsions of persons found to be illegally present. In general, however, these measures tend to be costly, both socially and economically, often involving detention and accompanied returns. In the United States, removals stood at 380 000 to 400 000 between fiscal years 2008 and 2012, when they peaked at 410 000 before falling to about 240 000 in 2015 and 2016, and 216 000 in fiscal year 2017. In Europe, according to Eurostat data, slightly less than half of the 494 000 non-EU citizens (about 226 000) who had been issued with an order to leave an EU member state in 2016 were returned to their country of origin.
Creating legal migration channels in certain sectors
In theory, and if regular and irregular migration were perfect substitutes, expanding regular labour migration would be associated with less unauthorised migration. If evidence to support that hypothesis is scarce and weak (Clemens and Gough, 2018[24]) past country examples, in Europe, Asia or the Americas, show that the absence of appropriate legal migration pathways when the demand for labour goes unmet for protracted periods generally leads to rises in the illegal employment of foreign workers over time.
More generally, if larger legal labour migration flows can be expected to reduce illegal hiring in the short-run, it is not clear, however, how many regular entry visas it would take to bring about a meaningful reduction in irregular flows. In fact, in large informal labour markets and/or countries where inland identity checks are limited, there is a risk that expanding regular flows without accompanying efforts to deter the illegal employment of foreigners may actually result in a stable, if not increasing, stock of unauthorised labour migrants.25
To meet the demand of employers who may otherwise have turned to illegal employment of foreign workers, action to improve legal labour migration should be targeted; for instance, opening up legal migration channels for workers in agriculture and the care and domestic sectors, where demand is high and local supply is low, would generally be easy to pass, since it is often seen more favourably in the public opinion than in other sectors (Ambrosini, 2013[25]; Triandafyllidou and Marchetti, 2013[26]). Indeed, several countries26 have developed employment-based, generally temporary, visa programmes for certain sectors. Such programmes can be based on bilateral agreements, possibly with a commitment by the country of origin to reinforce control. EU legal migration pilot projects with such an approach are currently under consideration (European Commission, 2017[27]).
Another important way of improving legal migration would be to foster efficiency in the permit delivery process (for instance rapid processing time) so that employers can take on workers swiftly and according to need – one reason why companies, particularly small ones, turn to illegal labour. Permits could offer more flexibility in the length of temporary migration programmes, as strict expiry dates can actually increase illegal work when there is no prospect of permanent legal status (OECD, 2009[23]). Generally speaking, simplifying regulatory requirements, shortening waiting times for employers and workers, and thereby easing visa application and renewal procedures, could improve compliance and prevent some of the irregularities outlined in the section on the multi-faceted aspect of illegal employment.
Regularisation programmes
Offering immigrants the chance to regularise, or legalise, their status so that they can work legally is one of the earliest-developed and most widely used responses to illegal employment of foreign workers. Yet, regularisation remains hotly debated in that it is an ex post remedy rather than a proper strategy that addresses the fundamental issues behind the illegal employment of foreign workers. As a result, the very concept of regularisation has come under close scrutiny and, indeed, disrepute. (For a more detailed discussion of the arguments, see (OECD, 2009[23]; Rosenblum, 2010[28]).
The primary argument in favour of regularisation is that it is a pragmatic tool for reducing stocks of unauthorised foreign workers and can deliver economic and social benefits by moving migrants from informal to formal employment. Indeed, in many instances, it is, at some point in time, the only way to address the cumulative effects of labour migration policies’ failure to respond to locally unmet labour market needs.
Conversely, the most commonly advanced argument against regularisation is that it “rewards” illegality and penalises those queuing and following the legal channels to entry and work.27 Regularisation, particularly on a large scale, is also blamed for undermining ongoing migration control efforts. Another criticism is that it gives rise to a type of moral hazard by encouraging “speculative” irregular migration in anticipation of future regularisation programmes. Such a risk can, however, be mitigated if regularisation is backed by policies to address the root causes of the increase in the illegal employment of foreign workers.
However, once a government has decided to conduct a regularisation programme, it must consider a number of policy parameters:
Eligibility rules. Should regularisation apply to individuals or groups and with reference to migration histories and employment records?
Additional requirements. Should further criteria be met, such as fines, fees and back taxes all being paid, proven language proficiency and demonstrable integration?
Frequency. Should regularisation be a one-off scheme or a continuous programme?
Benefits. What form would an immigrant’s newly legalised status take? Would permits be temporary only, temporary but possibly renewable, provisional, or permanent? This point is extremely important as experience has shown that, when the illegal employment of foreigners is structural, addressing it with temporary visas may lead to a vicious circle of recurrent, ever-larger regularisation programmes over time.
Enhancing compliance and workplace enforcement: Prevent, detect and sanction
Drawing on international agreements and regulations as a general framework for combatting the illegal employment of foreign workers (for instance, the EU directive relating to employers sanctions (Directive 2009/52/EC), and ILO conventions28) many OECD countries have introduced national measures to prevent, control and sanction – the three essential pillars of a well-managed workplace enforcement system.
Building awareness
Prevention measures – such as raising awareness of the risks of employing workers in irregular situations – rest on the premise that people will comply voluntarily if they fully understand their responsibilities and the consequences of non-compliance. Many OECD countries have taken a range of measures to inform, educate and warn employers, employees and organisations as part of their drives to deter illegal employment of foreign workers. These measures include information campaigns, support and advice for employers and employees on their rights and duties, partnership agreements with social partners, and notification obligations. However, OECD countries’ efforts to inform vary substantially and generally remain modest.
While almost all have sought to inform through at least one medium (e.g. flyers, websites, guides, leaflets, newsletters or comprehensive information campaigns), there are considerable disparities in the range of tools that they use and how widely they disseminate them (which includes translation). Furthermore, broad information campaigns quite often fail to explicitly target the illegal employment of foreign workers or social welfare fraud and illicit activities.
Finally, OECD countries engage and co‑operate to varying degrees with social partners, NGOs, local actors and municipalities in preventive and support activities, e.g. seminars, training courses, the sharing of best practices and helplines for employers and employees (Table 4.6).
Encouraging the use of status verification systems
Verification procedures and systems are particularly instrumental in raising employer awareness and facilitating inspections. They act as support mechanisms by encouraging employers’ voluntary compliance and as proof or a “safe harbour” device – in other words without a verification system, employers may be able to deny any wrongdoing and avoid the penalties.
Verification policies typically involve checking that employment authorisations are in order and, to that end, providing (and sometimes requiring) the use of a government verification service. In all EU member states, employers have to keep – for at least the duration of a worker’s employment – a record of authorisations in the event of inspection. They must also notify the relevant authorities (e.g. local public employment services, social security office, tax authorities), usually within a specified period, when they start and terminate the employment of a third-country national. Most EU countries require employers to complete such formalities a few days before the start of employment and the termination of the contract. If they do so, they are free from liability, unless it transpires that they knew their documents were forged.
Table 4.6. Preventive measures in OECD and accession countries
Note: Not applicable is denoted by “n.a.”.
Source: OECD questionnaires.
It is, however, a challenge to produce a status verification system that is fraud-proof, cost‑effective and protects against false negatives (or false positives). Several OECD countries have, for instance, introduced electronic online registers and tools. They include Australia, Greece, Japan,29 Korea,30 Luxemburg, Netherlands,31 New Zealand, Turkey,32 United Kingdom and the United States (Table 4.6). Some systems are more comprehensive and user-friendly than others. Australia, New Zealand33 and the United States, for instance, have developed good systems that provide secure free online services for checking foreign workers’ employment authorisations.
Australia’s Visa Entitlement Verification Online (VEVO) is a free, secured online34 service introduced in 2004. It keeps employers and visa holders up-to-date on the work entitlements and restrictions of prospective employees. The system does not require employers to file any mandatory report for employers in the event of employment permission being denied. Indeed, regardless of the result, VEVO automatically generates a record which serves as proof that employers followed the right procedure for employing legal workers. Data on VEVO’s use suggest that the system is functioning well and that employers have steadily made greater use of it – from 1 489 122 checks in 2010‑11 to 2 641 245 in 2014‑15 (SOPEMI (Permanent System of Observation of International Migration), 2015[10]).
The United States’ Department of Homeland Security (DHS) also runs a free online service, E‑Verify.35 It allows employers to check the eligibility of their employees to work in the United States. Employers submit information (name, social security number, alien registration number, etc.) which is then cross-checked against the databases of the Social Security Administration (SSA) and the DHS. If a final non-confirmation is issued, then the employer can find the employee is not authorised to work and terminate the employee’s employment. If the employer continues to employ the employee after receiving a final non-confirmation, then the employer is subject to rebuttable presumption that it has knowingly employed an unauthorised foreign person. In 2017, there are more than 700 000 employers enrolled in E-Verify. Additionally, more than 34 million queries were run through E-Verify by employers in 2017. Although E‑Verify started off slowly, it has rapidly expanded in recent years, in part because of federal, state, or local government requirements. While evaluations of the program point to some inaccuracies in status assignment and a limited ability to detect identity fraud, they also acknowledge that it has improved: according to Westat E-Verify survey, most E-verify employers believe that E-Verify is effective (92%) and 89% perceive it as highly accurate (Westat, 2014[29]).
Luxembourg and, recently, France have introduced electronic identification badge schemes in some sectors, such as construction. Finland and Norway also use ID badges to manage chain subcontracting and improve transparency in sectors like construction and cleaning. Luxembourg introduced the badge chiefly to check potential malpractices in posted work. It contains a bar code allowing the labour inspection service to access all relevant information. Concern over posted workers in Luxemburg prompted it to simplify the posting procedure and introduce the electronic transfer of all required documents through an online platform, called e‑Détachement. It allows foreign businesses to submit declarations of postings through a person of reference of their choice.
Ensuring effective and adequate inspections
Aside from allotting greater resources to labour inspection agencies to enhance overall labour regulation enforcement (as part of key measures for reducing informal employment), governments should seek to identify and target risk sectors and to foster co‑operation and co‑ordination between enforcement agencies if they are to be more effective in curbing the illegal employment of foreign workers. Moreover, enforcing labour standards regardless of foreign workers’ labour status is critical for protecting workers from abuse and exploitation. Clearly, if foreign workers with irregular status cannot claim unpaid wages or sue their employer for unfair practices, unscrupulous employers have a greater incentive to hire them. If workers are unable to claim unpaid wages following expulsion, this is also an incentive for employers to seek to have them removed. The possibility of labour courts or other representation to pursue these cases even for expelled workers could address this risk. Of course, there is a trade-off between, on the one hand, disentangling immigration and labour inspection functions and, on the other, making more efficient use of labour inspection resources and personnel.36
There is room for improving enforcement practices – for instance, through improved reporting activities and faster transmission, as outlined by the European Commission in its communication on the application of the EU Sanctions Directive (European Commission, 2014[30]) Furthermore, labour inspectors should be properly qualified and familiar with modern statistical techniques if their work is to be more efficient. Such techniques include statistical profiling, which helps identify the workers and firms most prone to informality and select the most appropriate enforcement action. Accordingly, the competent national authority should draw up a risk assessment to identify the sectors of activity most likely to employ foreign workers illegally. It should then develop a strategy, singling out the most high-risk sectors for the most inspections.
Most OECD countries do target sectors for inspection (Table 4.7), drawing on intelligence gathering, risk assessment, past inspection activities, complaints, whistleblowing, and other practices. In parallel, though, they continue to carry out random checks.37
Available data on numbers of inspections carried out reveal contrasting figures from country to country.38 However, data are often not fully comparable, as some countries may produce statistics on absolute numbers of inspections conducted, while others provide percentages or list targets set and the inspections carried out accordingly. Having information on the share of foreign workers identified in inspections would be particularly informative. Unfortunately such data are difficult to find and compile. All in all, figures on the numbers of inspections performed remain generally low and seem unlikely to deter employers from hiring foreign workers illegally.
Furthermore, while labour inspections gain growing importance in the fight against the illegal employment of foreign workers,39 improved co‑ordination and co‑operation between different government agencies is also essential. Various agencies, like the police, immigration services, and labour inspectorates, are involved in enforcement and share responsibility for curbing the illegal employment of foreign workers. However, they are sometimes unsure which agency should take the lead because there is no clear mandate, prerogatives are ill-defined, and overall co‑coordination inadequate (Table 4.7).
In some countries, the labour inspectorate plays a central role in co‑ordinating activities in the field, while in others it works closely with other agencies, particularly in enforcement and social assistance. In Luxembourg, for example, the law establishes that the Inspectorate of Labour and Mines (ITM) is the authority tasked with inspecting businesses to check whether they employ irregular third-country nationals. The ITM conducts inspections in collaboration with the Customs and Excise Administration, focusing heavily on posted workers.
Trade unions, too, may also be involved in inspections. Slovakia and the Czech Republic, for example, delegate oversight and inspection powers for workplace health and safety to trade unions. And while there is no special focus on the illegal employment of foreign workers, elected trade union representatives do enjoy wide-ranging powers and status, which implicitly makes them competent to inspect other workplace issues, including the working conditions of foreign workers.
Table 4.7. Inspections in OECD and accession countries
Note: “n.a.” indicates that the information is not available.
Source: OECD questionnaires and European Migration Network ad hoc queries, 2015.
Making employer sanctions more effective
Both workers and employers are liable to sanctions and penalties in OECD countries (Table 4.8). However, sanctioning employers, be it through fines or criminal charges, is one of the main deterrents against illegally employing foreign workers. Sanctions are designed to level the playing field by increasing the punitive cost of using illegal foreign labour and reducing the incentive to do so. How effective they are, though, depends on their severity and whether employers believe they are likely to be enforced.
Sanctions vary with the seriousness of the offence, i.e.:
How exploitative working conditions are
Whether minors are involved
The number of illegally employed foreign workers found, with sanctions increasing for every worker detected or if their number exceeds a certain threshold
Whether the employer is a repeat offender
The legal status of the employer, e.g. individual or corporate body.
Some countries require employers to pay a fine for each worker or a fixed amount. Others may also require employers to pay the costs of deportation on top of the fine.
OECD countries take different approaches to sanctioning the illegal employment of foreign workers. Even within the EU, and despite member states’ efforts to transpose the EU Sanctions Directive40 into national legislation, wide disparities remain. For instance, in EU countries where fines increase with every worker detected,41 the minimum statutory amount per worker varies from EUR 800 in Belgium to EUR 10 001 in Spain. In others, where the law gives a general indication of the fine to be levied, but leaves the actual amount up to the courts, it can range from EUR 500 in Latvia to EUR 500 000 in Germany, according to the number of illegal workers involved (European Commission, 2014[30]; European Migration Network, 2017[31]). The huge disparity in financial sanctions shows that they may not always outweigh the benefits of illegally employing foreign workers, which raises the question of their actual enforcement.
The severity of criminal sanctions also varies considerably across OECD countries – from no more than six months of imprisonment in Latvia and the United States to seven years in France, Spain, Portugal and New Zealand, and up to 14 years in Canada. Many OECD countries couple imprisonment with a fine, while others replace it with a fine. Penalties may also apply to legal persons, with companies being wound up, being stripped of their entitlements to public benefits, made ineligible for public contracts, or having their equipment or property confiscated (European Migration Network, 2017[31])(Table 4.8).
Finally, to drive home the seriousness of the offence, the law in many OECD countries – notably the EU member states42 – has provisions for sanctioning all employers, irrespective of their legal relationship with the illegal workers, and all suppliers in the event of any abuse by suppliers or subcontractors. Such provisions may be particularly critical in light of the growing use of intermediaries (such as temp agencies) and in sectors, like construction, that rely heavily on subcontracting and migrant workers. Although this chapter does consider them, sanctions for assisting or abetting illegal entry or residence are in place in many OECD countries and also have an important part to play in tackling the broader issue of irregular migration.
Table 4.8. Sanctions against workers and employers in OECD and accession countries
Note: “n.a.” indicates that the information is not available.
Source: OECD questionnaires and European Migration Network ad hoc queries, 2015.
Conclusions
This chapter has sought to shed some light on the illegal employment of foreign workers in OECD countries, looking closely at the various forms of illegality and irregularity that it entails. The chapter has, in particular, tried to show how the illegal employment of foreign workers relates to informal employment. It finds that, while they are clearly linked, it is important to distinguish illegal employment of foreign workers from informal employment as illegal employment may also exist in formal employment while informal employment may not necessarily involve foreign workers.
Furthermore, tracking the illegal employment of foreign workers over time helps to understand the histories and trajectories of foreign workers, and how they slip in and out of legal status and whether it is because of their residence or work permits. The time dimension reveals how very varied the illegal employment of foreign workers is, both in the different forms it takes and the seriousness of offences.
While all these findings are essential for policy design and monitoring, the scarcity of reliable, detailed data on the illegal employment of foreign workers generally precludes the distinction between illegal and informal employment of foreign workers. Governments clearly need to make an effort on the statistics front. Disentangling the different categories of illegally employed foreign workers, as this chapter has unpacked them, could yield important findings with regard to individual profiles and sectors of activity. More importantly, it would deliver insights into their employment conditions and integration, as do the annual surveys carried out by ISMU in Lombardy. Generally speaking, drawing the distinction between illegal and informal would also allow better‑targeted policy and more effective policy action.
Addressing the illegal employment of foreign workers is both an economic and migration policy objective. Governments should therefore address it with a broad set of labour market and migration policy tools. And, in order to foster a strategic, integrated approach, they should use policy tools in mutually reinforcing ways. In light of limited resources, they should particularly seek to improve co‑ordination and coherence between enforcement authorities.
OECD countries should also take awareness-raising action and use improved status verification systems as part of measures to prevent the illegal employment of migrant labour. Improved regulation design, too, would be a key element in better compliance and enforcement.
However, when the illegal employment of foreign workers becomes a highly prominent issue or is deemed structural, regularisation programmes may emerge as an unavoidable solution. They need to be designed carefully and, in order to address the root causes of the problem, accompanied by appropriate changes in legal labour migration channels and stronger enforcement measures.
Finally, policy action to fight the illegal employment of foreign workers should be conducted not only at national and sector levels (there is strong sector-related dimension to the issue), but internationally, too. Governments should particularly seek to promote international co‑operation as an essential part of action to address the issues of forged papers and the prevention of unfair competition.
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Annex 4.A. Supplementary tables and figures
Annex Table 4.1. Employment of foreign worker by residence status and work authorisation
Source: Compiled from OECD (2000[3]), Kovacheva and Vogel (2009[32]), and Triandafyllidou and Bartolini (2016[33]).
Annex Figure 4.1. Estimated number of unauthorised immigrants in the US labour force, 1995‑2014
Source: Pew Research Center (2016[11]).
Annex Table 4.2. To what degree are foreign workers integrated into Italian society? 2015
Estimated characteristics of the foreign nationals found to be illegally present, percentages
Source: OECD Secretariat based on ORIM (2017[17]).
Notes
← 1. The complexity is due to the multiplicity of new forms of work and contracts (i.e. the development of posted workers, dependent self-employed workers, or other non-regular employment, etc.) which may also allow or facilitate abuses or even generate fraudulent behavior (Pallini and Pedersini, 2016[47])
← 2. This latter group includes asylum seekers whose application is in process, migrants in irregular situations who cannot be returned to their countries of origin, people with some sort of temporary, tolerated or indeterminate status, etc.
← 3. For a comprehensive survey of informal employment, see Chapter 5 of the OECD Employment Outlook (2004[18]). Informal employment entails employment in household production for own use (unpaid work, family workers), wholly undeclared or under-declared work (among dependent employment) and/or black market work and pure tax evasion (among the self-employed). (International Labour Office, 2002[46]; Hussmanns, 2004[45]).
← 4. In the United States, for example, it was estimated that more than 75% of unauthorised migrants were actually declared by their employers under fictitious or borrowed social security numbers in 2005 (OECD, 2009[23]). A similar situation can be found in France, where anecdotal evidence refers to cases of undocumented foreign workers with a work contract, who receive the minimum wage, pay taxes and contributions, and could go to the labour court over unfair treatment or dismissal.
← 5. The Employers’ Sanctions Directive 2009/52/EC defines illegal employment as the employment of an illegally staying third-country national (i.e. any person who is not a citizen of the Union and does not enjoy the Community right of free movement, as defined in Article 2(5) of the Schengen Borders Code). “Illegally staying” means present on the territory of a member state, but not or no longer fulfilling the conditions for stay or residence in that member state.
← 6. The definition is close to the concept of “unlawful workers” in New Zealand, “unauthorised workers” in the United-States, and “undocumented workers” used in the literature.
← 7. Van Hooren (2012[41]) found, for instance, that the Italian family care regimes which provide cash allowances to families without checking how they spend the funds provides are incentives for a “migrant in the family” model of care workers.
← 8. Sarris and Zografakis (1999[40]) show that in two-thirds of cases in Greece, immigrants take up jobs that natives reject, but immigrants also contribute to the creation of new jobs (or help maintain existing ones) as their work makes some small and medium enterprises economically viable, revitalises the economy and, by depressing low-skilled worker wages, it increases skilled wages comparatively. Reyneri (1998[39]) points to similar dynamics in the Italian economy and labour market.
← 9. In Germany, posted worker arrangements and the massive arrival of foreign workers in the construction sector already took place in the mid- to late‑1990s despite trade union protest (Fellini, Ferro and Fullin, 2007[36]). The practices of subcontracting and bogus self-employment have been rife in the sector (Forde, MacKenzie and Robinson, 2009[37]; Krings et al., 2011[7]).
← 10. Former studies have often examined non-random samples of migrants in irregular situations, such as detainees in US prisons or Mexican return migrants (Angelucci, 2012[34]; Rivera-Batiz, 1999[35]; Chiswick, 1984[43]). Understanding of the phenomenon, however, is still heavily constrained by lack of data.
← 11. Several surveys on undocumented migrants find that migrants in irregular situations have an employment rate of around 90%, of whom 70% are single men (e.g. Migrant Rights Centre Ireland [2014]; Swiss Federal Migration Office (2015[42])).
← 12. The figure comes from Pew Research Center estimates based on augmented American Community Survey data (IPUMS). The center produces its unauthorised immigrant estimates using a multistage method that first subtracts the estimated lawful foreign-born population in the United States from the total adjusted foreign-born population in order to derive a residual estimate of the unauthorised immigrant population. The residual estimates serve then as control totals in assigning legal status to individual respondents in the survey. The main source of data for 2005‑2014 is the American Community Survey, conducted by the US Census Bureau. (For further detail, see the methodology annex in Passel, J. (2016[14]).
← 13. CLANDESTINO project, 2009.
← 14. From 53 900 in 2010 to 62 000 in 2015 in Australia.
← 15. From 183 106 in 2013 to 208 797 in 2014, and back to 214 168 in 2015.
← 16. Estimated at 95 000 in 2010, 90 000 in 2013 and 91 000 in 2014 in Israel.
← 17. The number of overstayers even halved in New Zealand between 2000 and 2016. As for Japan, it fell between 2010 and 2014 and was about 60 000 in 2015.
← 18. Even though increased border security and criminalisation will hardly stop migration (De Haas, 2011[44]). Major steps taken by EU Member States include: tightening up borders, extending the mandate of Frontex and EASO, enforcing the EURODAC system for the co‑ordinated collection of fingerprints of all asylum seekers, discussing the possibility of suspending the Schengen Agreement (1985), and discussing amendments to the recently updated Dublin Regulation (1990, 2003 and 2013).
← 19. The dramatic increase in the number of apprehensions of third-country nationals “found to be illegally present” in Greece between 2014 and 2015 typically illustrates this and is the result of the refugee surge in 2015, which was reduced after the EU-Turkey Statement of 20 March 2016.
← 20. Informal employment covers: i) employees with contracts but with under-declared social contributions; ii) self-employed workers who do not pay social contributions or whose business is not registered; iii) employees with no contract at all.
← 21. In the case of Italy it is not possible to estimate the magnitude of Profiles [3] and [4], given that most of the permits and visas the country delivers authorise work – the case of residence permits for family reasons, humanitarian and social protection permits, and residence permits for study.
← 22. This short ad hoc query was sent to the OECD Working Party on Migration and collected information available in December 2016. It includes three sections: i) preventive measures in place (excluding legislation); ii) compliance and enforcement measures (by employers and inspections); iii) penalties and sanctions applicable to employers, intermediaries and workers.
← 23. Concerns about insufficient resources and inspection staff are common to all OECD countries, even if the situation varies dramatically from country to country – from 4 000 workers per labour inspector in Greece to 65 000 in the United States in 2014 (OECD, 2016[38]).
← 24. In particular, wide statutory disparities in hiring and firing rules that govern, on one hand, permanent contracts and, on the other, temporary, casual and seasonal ones.
← 25. There is a particular concern with workers who overstay temporary labour programmes with limited job mobility.
← 26. The United Kingdom’s Sector Based Scheme for food-processing workers, which ran until 2013, is one example. Israel and Canada have schemes for the care sector. Many OECD countries have seasonal programmes for agriculture.
← 27. In many countries, in fact, there is no queue as the prospects of entry are either non-existent or very limited. Many migrants in irregular situations arrive legally as tourists and overstay once they have found a job.
← 28. For instance, ILO conventions on labour administration and inspection (ILC 81, ILC 129), on migrant workers (ILC 97 and ILC 143) and on domestic workers (ILC 189). Other relevant EU directives include those that relate to the conditions of entry and stay of third-country nationals for purposes of employment and the employment of posted workers.
← 29. In Greece and Japan, there is no online platform, only tools to check the validity of the residence permit presented by the foreigner.
← 30. Accessible to public job centres only, not employers.
← 31. In the Netherlands, employers can use a self-inspection tool to verify if they comply with rules on work permits and other requirements.
← 32. In Turkey, employers can apply for work permits for their employees. During application, the e‑Government Gateway system can check eligibility for work permits.
← 33. In New-Zealand, VisaView allows employers to check whether a person has the appropriate visa to work for them, the expiry date of any work entitlement, and whether any conditions attach to their work entitlement. The system builds a history of all enquiries made by each employer. VisaView is not compulsory, but employers who use it can refute charges of unlawful employment under the Immigration Act. The system does not set out what action an employer must take if they discover that a potential employee is not entitled to work for them, other than not employing them.
← 34. VEVO can also be accessed by downloading a free mobile application, allowing the visa holder to email his/her current visa conditions directly to an employer as proof that he/she is allowed to work in Australia.
← 35. Created in 1997 and authorised by the Irregular Immigration Reform and Immigrant Responsibility Act of 1996.
← 36. This means that labour inspectors could also check workers’ migrant status, but doing so risks undermining their relationship with workers.
← 37. Indeed, continuing to conduct a small number of random inspections may keep employers on their toes and have a strong effect on compliance.
← 38. In the EU, for instance, it varies from less than 1% of all employers in all the sectors inspected in Poland and Sweden to about 17% in Austria, the Czech Republic and Italy, and up to 29% in Slovenia in 2012, according to the European Commission (op. cit.).
← 39. Notably in EU countries, backed by Article 14 of the EU Sanctions Directive.
← 40. Particularly, Article 5 of the Directive (which provides that sanctions for illegal employment shall include financial sanctions, with the amount rising proportionately to the number of illegally resident third-country nationals employed), and Articles 9 and 10 (which provides criminal sanctions for particularly serious cases of illegal employment).
← 41. Sixteen OECD member states, of which the European ones are Austria, Belgium, Estonia, Greece, France, Hungary, Italy, Lithuania, Luxemburg, Netherlands, Sweden, Spain and Slovenia.
← 42. As required by Articles 8 and 9(2) and 11 of the EU Sanction Directive.