Migrant Entrepreneurship in OECD Countries

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Presentation by Josep Mestres Domenech (OECD, Directorate for Employment, Labour and Social Affairs International Migration Division) on the occasion of the SOC section hearing on Migrant entrepreneurs’ contribution to the EU economy on 24.11.2011 in the framework of the Permanent Study Group on Immigration and Integration.

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Migrant Entrepreneurship in OECD Countries

  1. 1. Migrant Entrepreneurship in OECD Countries European Economic and Social Committee Brussels, 24 November 2011 Josep Mestres Domenech OECD Directorate for Employment, Labour and Social Affairs International Migration Division
  2. 2. Outline1. Introduction2. Migrant Entrepreneurship in OECD Countries 1. Extent of Migrant Entrepreneurship 2. Profile of Migrant Entrepreneurs 3. Contribution to Employment 4. Factors Behind a Migrant’s Entrepreneurship Decision3. Policies in OECD countries to manage the migration of foreign entrepreneurs and investors4. Concluding Remarks
  3. 3. 1.Introduction• OECD work on Migrant Entrepreneurship: – Conference on Migrant Entrepreneurship (2010) – Publication “Open for Business: Migrant Entrepreneurship in OECD countries” (2010) – Special chapter in “International Migration Outlook” (2011)• Objective: analyse migrant entrepreneurship in a cross- country comparative framework including its contribution to employment.• Definition: Migrant entrepreneur• Data: Labour Force Surveys (LFS) (Eurostat LFS, US CPS, National LFS)
  4. 4. 2. Migrant Entrepreneurship in OECD countries2.1. Extent of Migrant EntrepreneurshipShare of Self-Employment in Total Employment, 2007-2008, percentage. Foreign-Born Native-Born 30% 25% 20% 15% 10% 5% 0%
  5. 5. Dynamic measures of entrepreneurship• There has been an increase in the number of new migrant entrepreneurs during 1998-2008. Average yearly number of new foreign-born entrepreneurs 1998-2000 2001-2003 2004-2006 2007-2008 France 29 000 35 000 38 000 35 000 Germany 49 000 55 000 88 000 103 000 Italy 6 000 12 000 36 000 46 000 Netherlands 7 000 .. 8 000 11 000 Portugal 4 000 4 000 5 000 7 000 Spain 13 000 27 000 42 000 77 000 Sweden 2 000 3 000 3 000 5 000 United Kingdom 45 000 55 000 62 000 88 000• Migrant entrepreneurs create more new businesses in relative terms than natives• However, these businesses have lower survival rates.
  6. 6. 2.2. A Profile of Migrant Entrepreneurs• Migrant entrepreneurs are older and have stayed longer in the host country than migrant wage and salary workers (but they are younger than their native counterparts).• They are, on average, – More educated than their native counterparts and than migrant wage employees; – Have mostly managerial occupations; – Work in a wide range of sectors, not just ethnic businesses ->
  7. 7. 10 Main Activity Sectors of the Self-Employed (NACE) in Europe by Place of Birth, EU LFS, 2008. Self-employed foreign-born Self-employed native-born Wage employment foreign-born Wage employment native-born2520151050 Wholesale and Construction Accomodation Professional, Human health Manufacturing Administrative Transport and Repair Information retail trade and food scientific and and social work and support storage ohousehold and services technical service goods and communication activities service activities
  8. 8. Migrants from different regions of origin have different propensities to become entrepreneurs• Migrant Entrepreneurs of Asian origin have the highest propensities to become entrepreneurs, those of Latin- American and African origin the lowest. Percentage of migrant self-employed by region of origin, 2007-2008 Latin America and Caribbean Africa EU27 Other Europe Asia Native-born 30 25 20 15 10 5 0
  9. 9. 2.3. Contribution of Migrants to Employment Creation • Migrant businesses are on average smaller than their native counterparts. • Their overall contribution to employment has been increasing over time in most OECD countries. • Migrant entrepreneurs employ on average 2.4% of the total employed population in OECD countries. • Every self-employed migrant creates on average between 1.4 and 2.1 additional jobs (compared to between 1.8 and 2.8 for natives).
  10. 10. Average Number of Jobs Created by Each Foreign- and Native-Born Self-Employed for Firms Under 50 employees, 1998-2008. Average Foreign-Born Native-Born Number Jobs Min Max Min Max Ratio FB/NBCzech Republic 1.9 3.1 1.3 2.1 146%United Kingdom 1.5 2.6 1.3 2.1 120%Slovak Republic 1.3 1.7 1.1 1.6 112%Hungary 1.8 2.6 1.6 2.5 108%Portugal 1.6 2.4 1.7 2.5 96%Ireland 0.9 1.4 1.0 1.5 93%Poland 1.5 2.4 1.8 2.7 90%Spain 1.1 1.5 1.2 1.9 81%Norway 0.7 0.9 0.8 1.2 79%France 1.3 1.9 1.7 2.6 77%OECD Average 1.4 2.1 1.8 2.8 77%Belgium 1.2 1.7 1.5 2.3 76%Greece 0.8 1.0 1.1 1.5 69%Switzerland 2.3 3.3 3.1 5.2 68%Luxembourg 2.1 3.1 3.0 4.9 65%Germany 1.8 2.5 2.6 4.0 64%Netherlands 1.4 2.2 2.0 3.5 63%Italy 1.1 1.4 1.7 2.4 62%Austria 1.6 1.9 2.5 3.5 59%Sweden 1.4 1.9 2.3 3.6 56%Denmark 1.8 2.5 3.0 4.8 55%Source: Eurostat LFS Survey 1998-2008.
  11. 11. Employment Creation by Self-Employed Foreign-Born Persons employed in firms of Share of employment in firms of all immigrant entrepreneurs entrepreneurs 1998-2000 2001-2003 2004-2006 2007-2008 1998-2000 2001-2003 2004-2006 2007-2008 Thousands Per centAustria 52 54 59 73 7.8 8.3 7.3 8.5Belgium 74 94 107 100 15.7 11.8 10.2 9.2Czech Republic .. 45 50 72 .. 3.7 4.0 5.3Denmark 11 24 27 50 1.6 3.5 4.3 7.4France 396 475 309 382 12.6 11.7 10.3 12.8Germany 529 593 664 757 5.9 6.8 7.5 7.7Greece 21 31 34 41 2.1 2.9 3.0 3.4Hungary 7 23 34 33 1.8 3.4 3.3 3.9Ireland .. 28 49 79 .. 8.0 9.5 20.5Italy 41 95 190 282 0.4 0.9 2.7 4.1Luxembourg 10 12 11 14 22.5 36.8 34.9 41.0Netherlands 71 36 121 115 5.1 7.6 7.4 6.3Norway 4 8 8 14 3.7 10.3 10.2 11.2Poland .. .. 15 56 .. .. 0.6 2.0Portugal 57 71 79 61 4.7 5.5 6.3 5.7Slovak Republic .. 1 8 3 .. 0.1 0.4 0.2Spain 131 201 185 487 4.0 5.9 6.3 8.8Sweden 46 61 76 84 6.0 8.1 9.4 10.7Switzerland .. 228 315 243 .. 20.8 20.2 19.2United Kingdom 579 667 621 530 12.3 14.3 13.1 10.9 Source: Eurostat LFS Survey 1998-2008. Employment by Self-Employed Foreign-Born Entrepreneurs is the estimated minimum number of individuals employed in a firm owned by a foreign-born self-employed. Ratio of Employment created by Self-Employed Foreign-Born Entrepreneurs is the ratio between the estimated minimum number of individuals employed in a firm owned by a foreign-born self-employed divided by the total population employed by native- and foreign-born self-employed.
  12. 12. 2.4. Factors Behind Migrants’ Entrepreneurship• Higher (Lower) Propensity of Entrepreneurship of Migrants in USA,UK and France (in Spain)• Estimation on how each individual factor is related to self-employment • Greater Credit Constraints for Migrants • Years in Host-Country affect S.-E. propensity • Different Propensities by Region of Origin• Entrepreneurship can be a strategy to move out of a low- wage job or a discrimination situation into paid employment• Or a way to overcome difficulties in finding wage and salary employment • Migrants are less likely to become self-employed after being unemployed (than natives)
  13. 13. 3. Policies for Foreign Entrepreneurs and Investors• Most OECD countries have adopted specific migration policies to regulate the entry and stay of foreign entrepreneurs and investors• Objectives: o To select immigration candidates with plans to start or invest in businesses according to their capacity to meet the country’s economic needs o To attract immigrant entrepreneurs and investors likely to contribute to the host country’s economic growth and encourage them to settle in the country
  14. 14. OECD countries with specific migration policies for foreign entrepreneurs Settlement countries were Some countries that introduced first: those policies more recently: Canada 1969, 1978, 1986 Germany, Greece 2005 Australia 1976 Portugal 2007 USA 1990 Switzerland 2008 New Zealand 1999 France 2009 Korea 2010Some OECD countries have specific entry categories for foreign investors (Australia, Canada, Greece, Korea, New Zealand);while other have same entry category as entrepreneurs (France, Ireland, Japan, Mexico, Poland).
  15. 15. Selection criteria for immigrant entrepreneurs Selecting immigration candidates with plans to start or invest in businesses according to their capacity to meet the country’s economic needs based on:• the Candidate: • the Business Plan:- Previous experience in managing - Capital to be invested a business/investment - Number of jobs to be created/preserved- Financial assets - Organisation of the business- Language proficiency - Market potential- Educational level - Added value in terms of innovation- Age - Potential benefit to the host country- Health requirements labour market and economic growth Definitions and relative weight of each criterion vary between countries
  16. 16. Example Eligibility criteria for immigrant investorsMinimum amount of capital to be invested Source: OECD (2010)
  17. 17. Supporting immigrant entrepreneurs• Specific assistance in administrative procedures required for the establishment of the business provided by various professional or government bodies (Spain, etc.)• Training, guidance, mentoring and network building to enhance the development of their businesses (Denmark, Finland, Norway, Sweden)• Measures to facilitate access to credit for immigrant entrepreneurs (Denmark, Sweden)
  18. 18. Relative role of specific admission policiesOnly a fraction of migrant entrepreneurs used specific entry routes designed for them: Average annual Average annual number of number of new Period special visas migrant issued to foreign entrepreneurs entrepreneurs Germany 2006-2008 103 000 2 964 Spain 2004-2008 59 000 658 Italy 1998-2008 23 000 4 745 Netherlands 2005-2008 10 000 88 Belgium 1999-2008 5 000 927 Sweden 2002-2008 4 000 66 Sources: Average annual number of new migrant entrepreneurs: own estimates using EU Labour Force Survey; Average annual numbers of special visas issued to foreign entrepreneurs calculated on the basis of administrative data provided by national authorities.
  19. 19. 4. Concluding Remarks• In OECD countries, average entrepreneurship rates between immigrants and natives differ slightly (12.6% versus 12.0%).• Migrant entrepreneurs’ contribution to employment creation is substantial.• Their activities go beyond traditional ethnic businesses, into a wide range of sectors and innovative areas.• Migrant entrepreneurs are more likely to start a business than natives in most OECD countries although the survival rate of migrant businesses is often lower• Migration policies are not sufficient in themselves to attract migrant entrepreneurs and investors• Other factors play a major role, including general economic and fiscal policies.
  20. 20. • Thank you for your attention! OECD (2010): “Open for Business: Migrant Entrepreneurship in OECD countries”, OECD Publishing. For further information on the OECD’s work on migration: www.oecd.org/migration

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