Closer link between employers and employment services speeds up the employment of immigrants

An experiment based on a new type of agreement model had a positive long-term impact on the employment, confirmed income and the amount of taxes paid by immigrants participating in the experiment. According to the interviews conducted in connection with a recent evaluation, the close contacts between employers and employment-promoting services were particularly useful.

The experiment aimed to speed up the employment of immigrants by connecting companies with employees and by tailoring integration training to the needs of workplaces. The results of the pilot carried out in 2016–2019 were promising already at the end of the experiment. For that reason, the Ministry of Economic Affairs and Employment commissioned an external evaluation to assess the experiment’s effects on the employment and integration of immigrants in 2017–2023.

A total of 2,217 immigrants took part in the experiment. The employment rate of those sampled for the pilot group in 2017–2019 was approximately five percentage points higher during the programme than according to an impact assessment based on the randomised test of the control group.

The average earned income of the sample group was EUR 4,500, or 18 per cent, higher than in the control group over a three-year follow-up period. In addition, they paid an average of EUR 1,330 more in taxes and received EUR 1,340 less in income transfers than people in the control group. On average, the pilot generated public sector savings of EUR 2,670, or 12 per cent per immigrant over three years.

According to the interviews conducted in connection with the evaluation, the most important ways to lower barriers to employment were developing language skills especially at the workplace, enabling encounters between the employer and the client, and investing in individual services.

“The evaluation shows that results are achieved when immigrants and workplaces receive strong and diverse support,” says Sonja Hämäläinen, Migration Director at the Ministry of Economic Affairs and Employment.

The evaluation was carried out by Owal Group Oy and VATT Institute for Economic Research.

Private investors fund the pilot – Government pays if results are achieved

A form of impact investing called Social Impact Bond (SIB) was used in the experiment. In the SIB model, the public sector defines the performance targets for the experiment and pays the private service provider only if they are achieved. Such pilots are financed with private capital and the government pays a return on the investment if the performance targets are met. The model will also be tested for employing the long-term unemployed.

Inquiries:
Susanna Piepponen, Senior Specialist, Ministry of Economic Affairs and Employment, tel. +358 295 047 990
Matti Sarvimäki, Associate Research Professor, VATT Institute for Economic Research, tel. +358 40 304 5515 
Risto Karinen, Director, Owal Group Oy, tel. +358 50 535 1820