Non Regular Foreign Input of Labour

STD/NA(2001)30

1

STD/NA(2001)30

Table of contents

1.Introduction......

2.Issues related to measurement of employed foreigners......

3.The definition of non regular employment in the system of national accounts......

4.Sources of data on regular and non regular employed foreigners......

5.Methodology for estimating regular and non regular foreign workers......

5.1.The estimation of regular foreign workers......

5.2.The estimation of non regular employed foreigners......

6.The results achieved......

7.Conclusions......

Bibliography......

Non regular foreign input of labourin the new national accounts estimates

1.Introduction

Italy registers a continually increasing flow of immigrants that contributes to making the presence of foreigners in the country more and more substantial, and particularly of those who are compelled to leave their home countries seeking for better economic conditions. In the last few years, the elements that have contributed to an increase in the presence of foreigners in the country can be identified in the openings created by the new regulatory policies governing entries and residence on one hand, and on the other, in the growing demand for foreign workers, regularly registered or not, to be introduced in the labour market.

Since 1998 the Unified Text of measures governing immigration regulates the entry and permanence of foreign citizens in Italy, a law designed to contain migratory flows to the country which plans and sets limits for legal entries[1]. In fact, the regulatory framework in Italy, as well as in other European countries, appears to be changing, as the planning policies for migratory flows become a more widespread practice, while the more restrictive policies, tending towards a containment of the migratory phenomenon by fostering the complete closure of boundaries, are reviewed.

The labour market itself seems to be partly changing compared to the recent past. The gradual desertion by Italian workers of unskilled and low salaried jobs seems to have encouraged the flourishing of non regular or transitory employment thus allowing the survival of sectors undergoing crisis, such as agriculture for instance. Simultaneously, entrepreneurs are gradually being pushed by the state of affairs to demand for foreign workers and thus for an increase in the entry flows planned by the government, particularly in the local situations where it is difficult for the work offering to meet the demand[2].

Nevertheless, quantitative analyses reveal several difficulties in the monitoring of employment of immigrants. The factors that determine this situation are primarily related to the sources of information not being exhaustive and thus unable to measure the phenomenon as a whole. In fact, to this day what is available is only a number of different hypotheses as to the amount of non regular workers in Italy; and an exhaustive statistical survey on the number of regularly employed foreigners is not yet available.

The aim of this paper is to describe the methodological approach and the results of the estimation of non regular employed foreigners produced every year within the context of the national account estimates. Non regular employed foreigners represent in fact a typology of workers that has been influencing the labour volume level and dynamic which takes part in the production of income and whose contribution, in terms of Gross National Product, tends to grow in time.

2.Issues related to measurement of employed foreigners

Researches on the migratory phenomenon still tends to classify the different segments of employed foreigners not so much according to whether they are visible to the institutions for taxes, social security and assistance, but rather in relation to their status with reference to the entry and residence provisions for immigrants, which define the stock and flows of foreigners as regular and non regular, according to whether they possess the necessary documentation or not[3].

In addition, a lot of researchers believe that the migratory phenomenon comes to assume a legal or illegal character, according to the kind of immigration legislation or experience that was being enforced previously. This consideration implies that the more stringent the quotas for regular entries set by the hosting country, the higher the level of illegality for those people who have nevertheless chosen to emigrate. A drag effect has moreover been observed, by which the higher the number of immigrants, the higher the flow of new immigrants, at parity of other conditions. If the former have entered the country illegally, the latter will do the same[4].

At least in theory, in Italy it appears quite easy to make a study on the numbers of the foreign presence, their social-economic features and new entries of regularly employed foreigners, since the existing regulations require foreigners to produce documents related to their residence, stay and job.

The measure of foreign regular workers can be determined, in particular, by using flow and stock data[5], generally deriving from administrative sources, such as:

−the entry flow of foreign citizens arriving in the country in a certain period of time with the purpose of obtaining a job;

−the outward flow of foreign citizens leaving the country with the aim, for example, of obtaining a job in another country or going back to their own;

−the stock of foreign workers that at a particular date or during the course of a specific period of time can be considered as employed in the hosting country.

Nevertheless, the precise determination of the phenomenon, is highly influenced by the condition of official sources that often supply conflicting information about individuals belonging to the same universe[6].

To achieve a precise quantification of the phenomenon, one also needs to consider the high incidence of non regular workers who do not have a residence permit or have one that has expired.

Estimates on non regular foreign workers are, nevertheless, very uncertain. In the past they were retrieved by making control inspections on enterprises or by occasional enquiries carried out on individuals and households[7]. Starting from the Nineties, an additional source of information comes from the numerous requests for regularisation, subsequent to the entry into force of new regulatory provisions, aimed at legalising non regular positions of foreigners residing in Italy before the new laws were approved, as well as limiting immigration flows.

For the non regular component of employment, therefore, there are estimates available that are generally obtained through indirect methods, and often present significant discrepancies one from the other. In reality, the majority of the methods used are based on a set of hypotheses that generally tend to condition the results.

Nevertheless, it is also true that when considering non regular employment of foreigners, the lack of statistical apparata in the different administrative offices that are in charge of registering and controlling the population sample being examined, but also the nature of the phenomenon itself, gives rise to many problems of measurement, since this component is not so easy to keep under survey.

In this context it becomes of crucial importance to use definitions and classifications taken from current regulations, which allows estimates on numbers, working conditions and main features of the universe of employed foreigners to be obtained.

3.The definition of non regular employment in the system of national accounts

The concept of employment that is not directly observable is closely connected to the more general one of hidden production and income. These interactions among hidden units, hidden production activities and economic aggregates cause some conceptual confusion on a phenomenon that can be studied from many different points of view and which definitions differ one from the other.

At an international level it is generally recognised that the system of economic accounts of various countries ought to capture the effects that different forms of hidden production activities have on economic aggregates and, thus give the weight of the corresponding non regular working activity, of which the foreign workers component plays an important part. Not to include this component in the economic aggregates would determine a false measurement and analysis of the production system of a country[8].

Among the member states of the European Union are recognized two relevant definitions and distinctions that are related to the work concepts and definition of national accountants.

One distinction is between observed and non observed economic activities. The statistical aim is to reduce the area of non observed economic activities, that is of getting an exhaustive set of estimates, as defined by the Commission decision well known as the “exhaustiveness criterion”[9]. That decision contains a detailed description on the programmes and activities undertaken by each member states on the subject of the exhaustiveness as, in particular, the provision of any available official estimates of the number of clandestine immigrants by economic branches (article 10).

Another conceptual distinction is between illegal economic activities and economic activities that are legal but are conducted in violation of fiscal or social securiry laws. The international system of accounts (SNA93)[10] and the one adopted with partial changes in the European context (ESA95)[11] give an explicit definition of what should be intended by non observable production activities in a broad sense, establishing the boundaries of those economic activities that contribute in creating goods and services meant to fulfil human needs.

Encompassed within the boundaries of the production system are the following activities:

•illegal activities, subject to penalties, producing income, such as goods and services, which it is prohibited by law to sell distribute and own, as well as all those legal production activities that become illegal if they are performed by non authorized operators according to current regulation (for instance, smuggling, usury, illegal gambling)[12];

•production activities, subject to administrative sanctions since they are performed with the deliberate intention to evade taxes or not to respect contributory and tax regulations in the attempt to reduce production costs, the latter being an aggregate currently defined as economic underground;[13]

•non registeredproduction activity due to the non compilation of the administrative forms and/or statistical questionnaires prepared for enterprises or households, and thus statistical underground;

•informal activities consisting in all the small-scale production activities with low levels of organisation and little or no distinction between capital and labour. Encompassed within this sphere are the non-registered activities that are not subject to administrative obligations, such as the activities of craftsmen, small traders, non-licensed street vendors, and house workers[14].

At the moment, the estimation of illegal activities is not included in the accounts of the European Union, whilst the informal activities have a small weight in Italy and, in the national economic accounts, the ones taken into consideration are those related to the agricultural and constructions sectors.

According to the outlines of the national accounts, the overall outputs of production activities can be properly compared with employment only when the working activities taken into account are those carried out by regular and non regular workers, both national and foreign, resident and non resident, if produced within the economic territory of the country considered and on account of production units (enterprises, households, institutions) residing in the country. To summarise, in measuring the input of labour underlying production, what is relevant is where the production unit resides and not the status of the individual who is carrying out the working activity; if this working activity is legal or not, or elements such as the age and nationality of the worker, in principle, irrelevant.

The Italian approach to estimation of input of labour therefore enables calculation of the level of employment for different working positions or jobs that can be identified by integrating and comparing different statistical sources and by using methods of indirect estimation. The basic assumption underlying this aggregation of sources and their comparison is that each source, if respondent to an appropriate standardization (in terms of time period of observation, classification of sectors, population of reference) can communicate with other sources and enable the emergence of statistical differences that can gain meaning in economic terms.

The jobs that are defined as regular are those that are registered in the pay rolls of enterprises and/or can be observed both by tax-collecting institutions and statistical or administrative sources of information.

The following types of jobs are defined as non regular:

a)permanent carried out without complying to current legislation;

b)occasional, carried out by people who declare to be unemployed being students, housewives or retired people;

c)non regular and non resident foreign workers;[15]

d)multiple jobs not declared to tax-collecting institutions.

The category of non regular and non resident foreign workers, which this paper focuses on, represents an ever-increasing share in the overall number of non regular jobs held both by citizens and foreigners. This share does not in fact include those foreign workers that have regular permits and reside in the country, who are in fact present in the country but are not specifically identified in the estimates relating to regular employment[16].

In order to obtain an estimate of the non regular component of foreign workers, the universe to be estimated has been subdivided into different sub-categories of employed workers based on the regulations that govern the entry and residence of foreigners on the domestic territory, on the definitions given in the national accounts, and on the elements that make the foreigner visible in the administrative and statistical sources available.

The main administrative sources related to the population and to the potential foreign labour force are represented by the population register (administrative register) and by the archive of residence permits provided by the Ministry of Internal Affairs. The population register indicates the number of people who are residents without giving any indications regarding their working situation; the archive of the Ministry for Internal Affairs registers instead, the number of foreigners who are in Italy legally, with a valid residence permit, and the motivation of their stay, for example work, study, family, etc.

In Italy, as far as working activities are concerned, the possession of a residence permit is the only binding element required by the governing and tax-collecting institutions. On the other hand, enrolment in the general population registrer is not compulsory. Therefore, generally a foreign resident ought to have a valid residence permit in order to work, unless he/she has already obtained Italian citizenship. Nevertheless, though, considering the actual reality of the Italian labour market, not all foreign workers are regular according to the legislative provisions governing labour, and often they are not even as far as the regulations relating to entry and residence requirements are concerned.

According to the regulations governing labour, foreign workers enrolled in the population registrer (that is with the certificate of residence), and thus classified as permanent residents, can be either regular or non regular respect to the resident permit that is temporary and necessary for working. They can be distinguished in the following categories:

a)employed people with a valid residence permit;

b)employed people with an expired residence permit;

c)unemployed people with a valid or expired residence permit.

Simultaneously, employed foreigners who have only a temporary residence permit (not the certificate of residence) and are staying in the country, can be sub-divided into the following categories:

a)employed people with a valid residence permit obtained for work;

b)employed people with a valid residence permit obtained for other motives;

c)employed people with an expired residence permit;

d)employed people without any permit;

e)unemployed people with a residence permit for working reasons enrolled in the employment lists.

In Table 1 the above-mentioned typologies of employed foreigners, resident and non resident in the country, have been crossed with jobs that are regular or non regular according to the provisions governing labour. The squares in grey indicate the categories of foreign workers that are included in the employment estimates of the national accounts.

According to the Italian law, there are specific types of employment that need to be considered differently. This is the case of the employed people who are residents, since they are enrolled in the population register, and for whom the following comments should be made: a) to be considered regular, they need to have a residence permit; b) if they are employed but do not have a residence permit, then they are working in a non regular situation.

In the typology of employed people working regularly but with a residence permit other than that for work reasons, the following categories of people can be included with full right: a) students; b) people who have been in the country for at least a year due to family reunification; c) foreigners who have been recognised as political refugees; d) foreigners who are residing in the country for humanitarian motives.