Immigration is playing an increasingly important role in addressing labour shortages in developed countries. Many nations are struggling with ageing populations, low birth rates, and the economic strain that comes with these trends.

A recent study found that immigrants in Europe and North America earn nearly 18% less than native-born workers. The study analysed salaries from 13.5 million people across nine countries, including Canada, Germany, Sweden, and the United States.

The research showed that most of the pay gap is not because immigrants are paid less for the same job, but because they are often unable to access higher-paying roles. Only a quarter of the gap comes from wage differences within the same role.

The country with the largest gap was Spain, while Sweden had the smallest. In Sweden, many immigrants work in the public sector, which may explain the narrower difference. The data did not include those who are unemployed or working in the informal economy.

Immigrants from sub-Saharan Africa and the Middle East faced the largest earnings gap, while those from Europe and other Western countries earned closer to the average native-born worker. Despite this, the second generation of immigrants tends to do better, with the earnings gap shrinking over time.

Three-quarters of the gap can be traced to where immigrants end up working. They are more likely to be in low-paying sectors, regardless of their level of education or skill. The study ruled out lack of ability or training as the main cause.

The findings suggest immigration policies are not doing enough to connect immigrants with jobs that match their qualifications. Many face barriers such as lengthy credential recognition, limited networks, and a lack of information early in their job search.

Several countries are starting to respond. Germany’s 2024 Skilled Immigration Act now allows foreign graduates to work while their qualifications are being processed. France also updated its talent visa in 2025 to attract skilled workers, especially in healthcare.

Commentary

This report highlights something we often overlook in discussions about immigration: the hidden barriers that prevent newcomers from fully participating in the economy. While immigration is commonly seen as a solution to labour shortages, this study shows that without proper support, much of immigrants’ potential is wasted.

Language support, faster credential recognition, and early job market access are not just “nice to have” — they are necessary. It’s not enough to let skilled workers in. Countries need to help them move up, not just in, or risk losing the long-term benefits immigration is supposed to bring.

Originally reported by The Conversation