High minimum wages pose job threat: study

2:05 min

A recent study suggests that increased minimum wages have a negative impact on refugees living in Sweden.

The fact that Sweden has the lowest percentage of low paid jobs in the EU has sparked a debate on how Sweden's relatively high minimum wages affect refugees.

In a previous study, Per Skedinger, a labour market researcher at the University in Växjö, has studied how increased minimum wages in the retail sector affected the employment rate between 2001 and 2005.

"The results show that raised minimum wages also increase the risk of a worker eventually being without a job. And the more the wage increases, the bigger the risk of that their employment will end."

In the new study the same researcher specifically studied the impact that minimum wage increases have on refugees.

"The unemployment rate among refugees went up when minimum wages increased. In fact, both the risk of losing one's job and the length of time of unemployment went up."

According to the study, raising the minimum wage by ten percent increases the risk for unemployment by 12 per cent. Similarly, the period of time of unemployment goes up by 20 per cent.

Worst effected were refugees from outside of Europe, specifically people from Iran, Iraq, Somalia, Ethiopia, and Eritrea, and those who had been in Sweden for a short period of time. A possible explanation, according to Skedinger, is that those groups are more likely to have a lower level of education than refugees who have lived in Sweden for a longer period of time.

"It's hard to draw any conclusions about what should be done,” says Skedinger.

However, he strongly disagrees with the minimum wage increase that the Swedish Trade Union Confederation has proposed.