Institutional Capital and Labour Devaluation: The Non-Recognition of Foreign Credentials in Germany

Bauder, Harald Article Institutional Capital and Labour Devaluation: The NonRecognition of Foreign Credentials in Germany Intervention. Zeitschrift fuer Ökonomie / Journal of Economics Provided in Cooperation with: Edward Elgar Publishing Suggested Citation: Bauder, Harald (2005) : Institutional Capital and Labour Devaluation: The NonRecognition of Foreign Credentials in Germany, Intervention. Zeitschrift fuer Ökonomie / Journal of Economics, ISSN 2195-3376, Metropolis-Verlag, Marburg, Vol. 02, Iss. 1, pp. 75-93, https://doi.org/10.4337/ejeep.2005.01.09 This Version is available at: https://hdl.handle.net/10419/277041 Standard-Nutzungsbedingungen: Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden. Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen. 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If the documents have been made available under an Open Content Licence (especially Creative Commons Licences), you may exercise further usage rights as specified in the indicated licence. https://creativecommons.org/licenses/by/4.0/ Institutional Capital and Labour Devaluation: Th e Non-Recognition of Foreign Credentials in Germany Harald Bauder* Th e non-recognition of foreign credentials channels many international migrants into occupations below their skill levels. I examine processes of credential devaluation among so-called Spätaussiedler who migrated from Eastern Europe to Germany. An empirical study, involving an interview survey of NGO administrators, government bureaucrats, and employers in Berlin, suggests that institutional processes of credential recognition are intertwined with cultural processes of distinction. Th e study illustrates how institutional labour market regulation links with forces of social reproduction and the cultural exclusion of migrants. JEL classifi cations: J, J . Introduction International migrants often fi nd themselves in stopgap employment in the labour markets of their places of destination (e. g. Castles , Reitz , Waldinger ). In this paper, I explore the devaluation of immigrant labour in Germany. Of particular interest is the non-recognition of foreign credentials among so-called Spätaussiedler who migrated from Eastern Europe and the former Soviet Union. I link the non-recognition of cre dentials to * University of Guelph. Th e German Academic Exchange Service (DAAD) and the Social Sciences and Humanities and Humanities Research Council of Canada (SSHRC) funded this research. I thank Rainer Münz for hosting me at the Humboldt University of Berlin, Carsten Foertsch for research assistance, and Randy McLeman for comments. Correspondence address: Harald Bauder, Associate Professor, Department of Geography, University of Guelph, Guelph, Ontario NG W, Canada, e-mail: [email protected] Received 10 Nov 2003, accepted 12 Jan 2005 © I. Journal of Economics, Vol. 2 (2005), No. 1, p. 75 – 93 76 I. Journal of Economics wider processes of social distinction, and view the devaluation of immi grant labour as a mechanism of the social reproduction of privileged positions held by non-migrant labour. After the fall of the Berlin Wall in , the Federal Republic of Germany has received a sharply increasing stream of returning migrants of German origin, or Spätaussiedler, from Eastern Europe and the former Soviet Union. Legally these migrants are not perceived as immigrants but as fellow citizens (Gassner , Koopmans ). German law (i. e. the Bundesvertriebenengesetz [BVFG] §) defi nes as Spätaussiedler those ethnic Germans »who left the former Soviet Union, Estonia, Latvia or Lithuania after December ,  through formal procedure.« (Juris , my translation) Th e law also specifi es that applicants have to demonstrate their commitment to the German nation through their ancestry, knowledge of the German language, education, and culture (BVFG §). Once accepted as Spätaussiedler, they are considered German citizens with unrestricted access to the labour market and with entitlement to the recognition of their foreign educational and occupational credentials. Despite these privileges, Spätaussiedler have experienced diffi culties in the German labour market (Münz et al. ). A problem for some Spätaussiedler, such as former workers in the oil industry, is that their occupations do not exist or are not in demand in Germany, such as former workers in the oil industry. Other Spätaussiedler, however, are denied work in their own occupations due to the non-recognition of their foreign occupational and educational credentials (Münz et al. :  ff ., Koch :  ff .). Although they are legally entitled to credential assessment, the practice of non-recognition apparently excludes Spätaussiedler from employment in the upper labour market segment. Th e empirical study, involving an interview survey of administrators of non-governmental organizations (NGOs), government bureaucrats, and employers, took place in the city of Berlin. Th e results of the survey illustrate the role of institutions in the devaluation of migrant labour. I interpret these results in light of theories of social reproduction. . Background . Spätaussiedler in the labour market  percent of the Spätaussiedler who arrived in Germany in  were income earners and / or in the labour force prior to settling in Germany. Th is fi gure can be disaggregated into . percent for men and . percent for women. Th e remaining Spätaussiedler were either children, students, retirees or they were not in the labour force. Among those in the labour force, . percent were in service occupations, particularly in social, administrative, transportation, health and sales occupations. Another . percent had industrial and trade occupations, especially as mechanics, locksmiths, and industrial helpers; . percent had technical occupations, including engineer and technician (Bundesverwaltungsamt ). Tracking the labour market performance of these newcomers after their arrival in Germany is diffi cult. Th e government does not legally distinguish between Spätaussiedler and other Germans, and therefore does not provide separate labour market statistics for Spätaussiedler and native-born Germans. Statistical information on the labour market perform- Harald Bauder: Non-Recognition of Foreign Credentials in Germany 77 ance of Spätaussiedler is therefore limited. Nevertheless, some studies indicate that only about  percent of Spätaussiedler are employed (Chrustaleva ), and most of those who are employed fi ll positions that are unattractive to German-born workers (Greif et al. ). While about half of the employed Spätaussiedler still work in fi elds related to their pre-migration occupation, most work below their original qualifi cations (Münz et al. :  ff .). Th ese studies thus suggest that a large portion of Spätaussiedler are excluded from eff ective participation in the labour market, and those who do fi nd employment often suff er from the devaluation of their qualifi cations. . Institutional regulation Non-orthodox economics, such as the regulation school (e. g. Boyer , Tickell / Peck ), has long challenged the idea that economies are self-regulating systems that gravitate towards a general equilibrium state. Among non-orthodox labour market researchers, the social regulation of labour market has received particular attention (e. g. Hanson / Pratt , Peck , Bauder ). In this paper, I examine how labour markets are institutionally regulated. While the term institution often includes a range of social confi gurations (e. g. family, gender, community, etc.), my interest lies in government institutions and regulatory bodies responsible for setting occupational entry conditions. For inter national migrants, such as Spätaussiedler, an important occupational entry condition is the recognition of their foreign credentials. Th e institutions responsible for foreign credential recognition control which migrants have access to certain occupations. Th e institutional processes associated with credential recognition challenge human capital theory. Th is theory suggests that personal income and occupation refl ect investment in education and training. Immigrants supposedly upgrade their human capital as they improve their language skills and assimilate into the host society. Over time, they therefore move upward in the labour market (e. g. Chiswick , Borjas ). In this paper I suggest that education and skills do not always provide access to higher-wage occupations. Rather, institutional processes defi ne whether a worker is eligible to work in a particular occupation. Furthermore, eligibility is a function of pre-market processes of social distinction. For example, workers who do not possess the institutional authority to practice medicine are excluded from medical occupations, whether they possess the necessary practical skills and theoretical knowledge – that is the human capital – or not. Moreover, wheth er or not they receive the privilege to practice depends on where they obtained their skills and knowledge. In this case, institutional capital rather than human capital regulates access to occupations. Formal institutions are an important element of social reproduction. Bourdieu (, Bourdieu / Passeron ) refers to the term institutionalized cultural capital to describe how a privileged elite in France relied on educational credentials to distinguish themselves from lower classes who did not have access to the prestigious institutions of higher education. Th e democratization of higher education in Western Europe and North America during the post-WW II period strengthened the role of institutional capital in regulating the la- 78 I. Journal of Economics bour market (Collins , Brint / Karabel ). Educational diplomas and occupational certifi cates have become central requirements for employment in most occupations. While the popularization of the education system may have broken the monopoly access of social elites to occupations in the upper segments of the labour market, it did not eliminate the institutional exclusion of some groups. Of particular interest in this paper is the exclusion of migrants. Th e non-recognition of foreign educational and occupational credentials excludes migrants from occupations that require these credentials, even when they possess technical expertise and practical experience similar to holders of domestic credentials. Th us, the institutional capital of domestic credentials serves as a mechanism of regulation that privileges domestic workers and excludes migrants. Th e term institutional capital implies that institutional and economic processes cannot be easily separated from each other. In fact, Bourdieu () explains that various forms of monetary and non-monetary capital are inter-related elements of a wider system of social and economic relations. For example, institutional capital can be transformed into monetary capital through entrance into a high-paying occupation. Below, I will draw attention to the economic nature of institutional processes by using terminology that is usually used to describe economic processes. For example, the non-recognition of foreign credentials constitutes a devaluation of labour. Th e non-recognition of foreign credentials as a mechanism of labour devaluation is not unusual in countries that receive large numbers of foreign migrants (e. g. Geddie , Bauder ). In Germany Spätaussiedler present an interesting case, in that, as German citizens, they enjoy rights and privileges unavailable to other migrant groups (Morris :  – ), yet they still fall victim to the double standard of domestic versus foreign credentials. In particular, Spätaussiedler have full legal access to the labour market and obtain economic integration assistance (Bundesministerium des Innern ). In some cases, Spätaussiedler receive preferential treatment relative to other Germans – for example when applying for small business loans (Juris : BVFG §). Regarding credential recognition, diff erent criteria apply to Spätaussiedler and non-German migrants. Spätaussiedler have a legal right to the full assessment and accreditation of their vocational qualifi cation to manage a small business and off er vocational apprenticeships – a right that is denied to foreigners and naturalized migrants (Juris : BVFG §). Despite these privileges, Spätaussiedler still experience considerable labour market disadvantages due to the nonrecognition of foreign credentials (Koch :  – ). Th e focus on Spätaussiedler allows me to emphasize the role of institutional capital in disadvantaging workers who otherwise enjoy all legal rights and privileges. . Study area and methodology Th e empirical investigation undertaken in this study focuses on the city of Berlin. To share the cost and burden of integration, the federal government disperses Spätaussiedler spatially among regional states (Bundesländer). Berlin now receives . percent of all Spätaussiedler Harald Bauder: Non-Recognition of Foreign Credentials in Germany 79 arriving in Germany (Juris : BVFG §), and roughly , of the . million ethnic Germans from the former Soviet Union who settled in Germany between  and  (Bade /Oltmer : ). Th e arrival of these newcomers constitutes an additional challenge to the already strained local economy of the unifi ed Berlin. Th e state and structure of Berlin’s economy infl uence the integration of Spätaussiedler into the labour market. With unifi cation, two previously separate economies and labour markets were merged. Th e Western part of the city lost federal transfer payments designed to sustain the geographically isolated economy of the former West Berlin. At the same time, a signifi cant portion of the Eastern manufacturing industry closed its operations in light of increased competition. Skilled workers subsequently fl ooded the local labour market and diminished opportunities for newly arriving migrants (Häußermann / Kapphan ). Th e oversupply of labour is refl ected in extraordinarily high unemployment rates. In August , when empirical research for this study was conducted, the unemployment rate in Berlin was  percent (Doelfs ). Th e economic situation of Spätaussiedler who settled in Berlin is worse than that of other residents. Recent fi gures indicate that  percent of women and  percent of men were unemployed. Only about  percent are legally employed, and women are less likely to fi nd employment than men. Many of the men and women who are employed work in low-skill jobs with considerable health risks and few chances for occupational upward mobility. While some workers, especially in technical professions, manage to secure jobs in their pre-migration occupations, only about half of those who fi nd employment at all work in their previous occupations. Sixty-eight percent of Berlin’s Spätaussiedler do not possess any recognized occupational certifi cation. Unemployment among Spätaussiedler concentrates disproportionately in regulated occupations that require certifi cation, such as teaching and the trades (Bundesanstalt für Arbeit ). In the empirical analysis below, I draw on an interview survey of  government bu - reau crats, administrators of non-governmental organizations (NGOs), labour market and settlement counsellors, and employers in Berlin who deal with Spätaussiedler and /or some aspect of their situation in the labour market. Th e survey sample was developed from reference catalogues that list services for migrants (Ausländerbeauftragte des Senats von Berlin , a, b, c) and through word of mouth. Th e survey was designed to facilitate exploratory research. Interviews followed a semi-structured technique that allowed the interviewer to probe for specifi c issues, and that enabled respondents to elaborate on problems not included in the pre-designed interview guide. In the initial interview guide, the development of questions followed the relevant literature. Later in the research process, I modifi ed the interview guide as my grasp of the material and the issues involved deepened. Th e insights gained during the research process also shaped the sample of institutions and respondents. Th e interviews varied in length, but they were on average  minutes long. All interviews were conducted in German. Th ey were taped and transcribed. Th e quotes below are my own translations. 80 I. Journal of Economics . Results . Labour market segmentation of Spätaussiedler Th e interview respondents generally agreed that Spätaussiedler are confronted with considerable diffi culties in the German labour market. Respondents acknowledged the high un employment rates of Spätaussiedler and confi rmed that most Spätaussiedler who have jobs work in low-skill occupations. For example, respondents describe the following scenarios: »Most of those who we place into the fi rst [i. e. unsubsidized] labour market are people with low qualifi cations, who work in cleaning fi rms, in small businesses. And yes, they are regularly exploited and work for very low wages.« »[Spätaussiedler] take on the lowest jobs. Th ey receive the lowest hourly wages. [Th ey assume] work that nobody else wants. Cleaning women, many men work for cleaning fi rms, for example in the S-Bahn [light-rail urban-transit system], in building cleaning. Construction, many with secondary education work in installation.« »Everyone works on an entry-level step. Th ey get eight Marks an hour, or work in construction.« Respondents also mentioned that Spätaussiedler often work as truck drivers, manual labourers, geriatric nurses, and in temp agencies. Th e manager of a settlement agency remarks, »temporary agencies like to hire [Spät]aussiedler because of their low wage level.« An other informant implies that the low wage levels of temp workers do not refl ect the value of their labour: »Temp agencies take advantage of the situation by buying [Spät]aussiedler for eleven Marks and renting them for  Marks per hour. A lucrative business.« Disproportionate representation in temporary employment indicates the role of Spätaussiedler as a »fl exible« workforce at the bottom of the labour market (Th eodore , Peck / Th eodore ). . Th e non-recognition of credentials A major contributing factor to the devaluation of Spätaussiedler’s labour and their segmentation into low-wage and low-skill occupations is the non-recognition of their educational credentials and employment experience. German law states explicitly that Spätaussiedler’s  In the German context, the fi rst labour market usually refers to the unsubsidized labour market. Th e second labour market includes positions that are government-subsidized to create employment opportunities that would otherwise not exist.  Although the offi cial currency at the time of the interviews was Euro (€), many respondents still used German Marks (DM) when they discussed price and wage levels. One DM corresponds to € .. Harald Bauder: Non-Recognition of Foreign Credentials in Germany 81 »exams and proof of qualifi cation are to be recognized, if they are equivalent to the corresponding exams and proof of qualifi cation« in Germany (Juris : BVFG §). Despite this legislation, most interview respondents still saw credential non-recognition as a major labour market barrier for Spätaussiedler. For example: »In the context of labour market integration the non-recognition of degrees is an important topic. It is a gigantic problem [for Spätaussieder who have a] high school diploma, university degree, or employment experience. Th ere are people who already have  years of employment experience […] and nothing is recognized.« »Th is is actually the most serious problem about taking up employment. Th e degrees that many migrants obtained in their home countries are not recognized here. We have a [client] who managed fi ve or six large canteens with her husband in their hometown. Th eir job is not recognized and her husband works as kitchen helper. Th is is really the biggest problem.« Educational credentials obtained in the former Soviet Union and Eastern Europe are generally acknowledged, but respondents suggested that they are devalued and accepted at a lower level only. A settlement counsellor says: »If they have the Spätaussiedler documents [Spätaussiedlerausweis], then their education is of course recognized. A secondary educational degree [Abitur] is recognized as intermediate school [Realschule], two years of college [Hochschule] are recognized as a high school diploma. Th at’s quite something.« Similarly, occupational qualifi cations are frequently not recognized. German law regulates occupations in the fi elds of health, pedagogy, food production and inspection, agriculture and forestry, law, accountancy as well as technical and trade occupations. In addition, all government employment is regulated. To practice in regulated occupations an employee requires specifi c degrees and /or certifi cation. Although Spätaussiedler have the formal right to the recognition of their certifi cates, non-accreditation still constitutes a signifi cant hurdle to employment in regulated occupations. If degrees and certifi cates are formally recognized, it is often at a lower level. For example, a respondent reports: »Engineers are generally recognized as technicians. Th e ones with Technikum, which was between vocational school [Berufsschule] and college [Hochschule], are relegated to trades occupations.« For accreditation, the structure and contents of the foreign program is required to match the equivalent German certifi cate program (KMK : A.). A decree of the Standing Conference of the Ministers of Education specifi es that workers with technical degrees (Techniker) from the former Soviet Union correspond to the lower category of skilled workers  Since the accreditation of foreign credentials is the responsibility of state governments (Länder), Spätaussiedler usually apply for accreditation after they have been assigned to a place of residence. In most cases, accreditation cannot be guaranteed prior to migration. 82 I. Journal of Economics (Facharbeiter) in Germany (KMK c). An employee in the Senate Administration of Berlin explained that her offi ce is bound by this decree. Th e interviewees generally diff erentiated between regulated occupations, such as educators and lawyers, in which recognition is nearly impossible, and non-regulated occupations, in which employers are not bound by law to hire workers with specifi c credentials (KMK a). However, even in the occupations not regulated by government, Spätaussiedler rarely fi nd employment in their fi eld because employers do not regard foreign credentials as equal to German credential in the same occupation. An employment counsellor suggests that Spätaussiedler in non-regulated occupations face an additional disadvantage because they are expected to enter the labour market without additional training. »[Many migrants] have formal credentials [in a non-regulated occupation], well then, they do not need further training or education. Th e career guidance offi cer says: ›You have credentials. Here are addresses. Simply apply.‹ But, of course, businesses do not take [migrants] who obtained their credentials [abroad]. Th e formal paper is not enough if one has not gone through the local system.« Employers’ belief in the superiority of the German education and training systems translates into the devaluation of Spätaussiedler’s credentials, even in occupations not regulated by the state. Another problem frequently mentioned in the interviews is the non-recognition of foreign work experience. One problem is that workers have experience in a fi eld outside of their training that did not match their credentials. An employment counsellor remarks: »In the Soviet Union, one studied in a certain subject and then worked completely outside of this subject. For example, I counselled a physics teacher who worked in a wastewater treatment plant and had ten years of experience. And he had problems [fi nding employment] in a treatment plant here because he did not have the qualifi cations.« However, even workers with work experience in their fi eld of study often get no credit for their experience because their degrees are not accredited. An employment counsellor who resettled from Russia fi nds herself in the bizarre situation that her work experience was invalidated because she did not acquire her training and experience in the exact sequence demanded by German regulators: »In Russia an academic education is followed by practical training, but the practical hours are insuffi cient for Germany. It had to be more, and therefore it is not recognized. For example, in Russia I was a tailor. I attended a technical vocational school (technische Berufsschule). After school, I worked in the evenings. I worked for seven years, but here it is not recognized because there were too few practical hours in practical training. Th at I worked seven years did not make a diff erence. I do not have practical experience!« Th is same respondent continues to explain that similar problems exist in other occupations: Harald Bauder: Non-Recognition of Foreign Credentials in Germany 89 »We have a lawyer here. He passed his fi rst state examination in Irkutsk, which was recognized. He attempted the second state examination in Germany but failed. Th e man is highly intelligent, but he could not cope with the exams from a language point of view. […] He [now] completes an internship once a week with a lawyer […] where he participates in communication with clients.« Skilled and educated Spätaussiedler do not unlearn their skills or forget their knowledge. Rather, their skills and education are devalued, preventing them from claiming wages that refl ect their human capital. Institutional processes associated with credential non-recognition thus supplies a labour force rich in human capital cheaply to German employers. . Conclusion »How many studies like this have there been? I think every one already knows what the cause is: level of education.« (Administrator in the Federal Offi ce of Labour, Bundesanstalt für Arbeit) Th is quote illustrates that the problem of unemployment and segmentation of migrants into low-wage occupations is commonly attributed to a lack of human capital. Th e above analysis revealed that a key labour market barrier for Spätaussiedler indeed relates to educational and occupational credentials. However, the problem for Spätaussiedler is not so much that they lack education or skills, but that their institutional credentials are not recognized. In other words, the institutional capital Spätaussiedler acquired abroad is invalid or devalued in Germany. A settlement counsellor who has worked extensively with Spätaussiedler acknowledges this process, although he does not make the conceptual distinction between human and institutional capital: »For every qualifi cation there is a certifi cate. And Germany is certifi cation-country, and what I don’t have on paper does not exist. […] Th ere have been attempts in Germany to certify informal knowledge [i. e. experience, skills, etc.] through assessment. However, this is very complicated and expensive. One would need to certify every migrant. Who can aff ord this? Th us it leads to devaluation. Human capital is being destroyed.« Popular perception is that the labour market for migrants is driven by supply and demand. Accordingly, Spätaussiedler would fi nd it easier to move into occupations where the supply of labour is relatively short. A government bureaucrat, for example, says the short supply of labour in accounting and sales occupations accounts for the » and  percent« success rate of accreditation among Spätaussiedler in these occupations. However, at the time of the interview an abundant supply of labour seems to have existed in these fi elds: the national unemployment rate for accountants was . percent and for sales clerks . percent, compared to an average of . percent across all occupations (Bundesanstalt für Arbeit ). A more likely explanation for the occupational segmentation of Spätaussiedler 90 I. Journal of Economics is the institutional regulation of the labour market through the recognition of credentials and experience. Which social processes and motivations underlie this system of institutional labour market regulation? Bourdieu (, Bourdieu / Passeron ) suggests that institutional capital in the form of credentials enables privileged groups to control their own reproduction. Bourdieu also argues that processes of social distinction are played out in varying institutional arenas, and that privileged groups strategically create and valorize new forms of capital to maintain their social and economic status. In the context of German immigration, Spätaussiedler constitute a new group of residents that possesses citizenship privileges and potentially threatens the status of native-born Germans. Th e latter therefore have an interest in defi ning entry regulations to the most prestigious occupations in such a manner that German-born and educated workers have access to these occupations while Spätaussiedler are excluded. Since Spätaussiedler are German, citizenship is not an eff ective instrument of distinction and exclusion. Rather, credential recognition (or non-recognition) has emerged as a more eff ective tool for this purpose. Many state-regulated occupations, such as medical doctor, lawyer or engineer, are well paying and prestigious occupations in the upper segment of the labour market. By excluding workers with foreign credentials, German-born and educated workers maintain privileged access to these occupations. For example, in the medical fi eld the German education system produces the number of doctors needed to fi ll the available positions. A bureaucrat in the Berlin Senate Administration explains that there is no need to off er licenses to foreign educated doctors: »What works generally against issuing a licence to practice [to Spätaussiedler] is that there is a suffi cient number of doctors in the state (Land ) of Berlin who provide care. And therefore we do not need more doctors.« Demand for doctors is satisfi ed by the German education system, educating mostly Germanborn medical students. Th e process of credential non-recognition serves to keep foreigntrained Spätaussiedler out of this labour market. Since upper-tier jobs are eff ectively reserved for German-educated workers, Spätaussied ler are pushed into less prestigious and lower-paying jobs. As noted by one respondent: »Many [foreign-trained] educators go into nursing in senior homes. Th at is exactly the type of work that the indigenous population does not want.« In other words, the near-monopoly access of German-born workers to the upper labour market segment and the devaluation of migrant labour help to structure the entire labour market, from top to bottom. Th e institutional regulation of labour markets does not occur within an ideological vacuum. Th e representation of the German education and training system as superior to foreign systems has the eff ect that the foreign credentials of Spätaussiedler can legitimately be invalidated or subordinated in comparison with German credentials. A senior administrator in the Berlin Senate Administration recognizes the strategic nature of valorizing the local educational system and jokingly remarks: »Our educational system is held highly [laughter]. 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