The underground economy includes  any employment in a country for which employers do not pay taxes or  social insurance contributions and is thus composed of both unauthorized  foreign workers and native workers for whom appropriate contributions  are not paid. Countries’ Programs for Admitting Foreign Workers

The countries in our review have programs designed to recruit foreign  workers to fill jobs that cannot be filled by native workers, and these  programs generally focus on recruiting high-skilled or seasonal foreign  workers. Countries Can Use Bilateral Agreements or Third Party Entities to Recruit Foreign Workers

Some countries we studied use bilateral agreements to manage the flow of  workers between two countries or to manage foreign worker admissions  in specific labor sectors. Countries Control the Admissions of Foreign Workers by Limiting Their Numbers and Setting Eligibility Requirements

			Countries Manage Foreign Worker Admissions Using Various Methods But May Find It Difficult to Effectively Respond to Changing Labor Market Needs

Most of the countries we studied assess the need for foreign workers by  studying the labor market and using the results to determine the number  of foreign workers to admit to work in specific sectors, but the countries  varied in the extent to which they have formalized processes to assess  labor market needs for foreign workers. However,  government officials and experts stated that the fee requirement may  create an incentive for workers to seek illegal employment and for  employers to hire unauthorized workers in order to avoid having to pay  the fee. Countries Use Various Means to Limit Employment of Unauthorized Foreign Workers

The countries we studied generally require employers to report  information on workers’ employment, such as workers’ names and social  insurance numbers, to government agencies, and in some countries,  employers are required to review employees’ work authorization  documents. Some Countries Focus Enforcement Efforts on All Illegal Labor Practices, while Others Focus More Specifically on the Employment of Unauthorized Foreign Workers

In some of the countries we studied, labor agencies are primarily  responsible for enforcing workplace laws and focus their enforcement  efforts broadly on identifying all types of illegal labor practices, of which  the employment of unauthorized foreign workers is part, including  employers’ provision of substandard working conditions or failure to  appropriately pay minimum wages, taxes, or social insurance  contributions (see table 3). Immigration experts and governmental  officials also suggested that to help deter employers’ hiring of  unauthorized foreign workers, government agencies should conduct  frequent inspections so as to increase employers’ perception that they are  likely to be investigated, contributing to the deterrent effect of employer  investigations and monetary fines on employers’ hiring of unauthorized  foreign workers. However, countries have faced challenges in conducting  employer investigations. Countries’ Experiences with Regularization Programs

Some countries we studied have implemented regularization programs  that provide eligible unauthorized immigrants with the opportunity to  obtain legal status on a temporary or permanent basis for various reasons,  and countries have established different eligibility requirements for  program participation. Governments in countries that have implemented  regularization programs reported benefits from these programs, such as  collecting increased tax and social insurance contributions, yet  governments face a variety of challenges in managing such programs. Countries Require Unauthorized Immigrants to Meet Criteria for Participation in Regularization Programs

Some countries we studied, including Italy, Greece, and Spain, have  implemented programs through which unauthorized immigrants could  regularize or change their status to gain temporary or permanent legal  residency, and in some countries, such as Greece and Argentina,  unauthorized immigrants could eventually apply for citizenship. For example,  requiring unauthorized foreign workers to earn the opportunity to apply  for permanent residence status may complicate these workers’ ability to  economically and socially integrate into a country. Therefore, government officials and experts have  stated that it is important to implement new or enhanced worksite  enforcement efforts in conjunction with a regularization program to  maximize participation in the program by employers and eligible  immigrants and to help deter employers from hiring unauthorized foreign  workers in the future. Impact of Regularization Programs on Illegal Immigration and Employment Is Unknown

Experts have noted that regularization programs may be viewed as a pull  factor in encouraging further illegal immigration. We selected these  countries based on the following criteria: net immigration rate; size of  population; membership in the Organisation for Economic Co-operation  and Development (OECD); classification by the World Bank as high  income; range of immigration policies; and geographic location. We also interviewed officials  from 6 employer associations, 10 labor groups, and 1 advocacy group, as  well as 19 immigration experts, in Belgium, Canada, France, Germany,  Spain, Switzerland, the United Kingdom, and the United States (see app. Employers can  apply to renew a work permit B for foreign workers 1 month before  expiration of the work permit. In 2000, Belgium implemented a large-scale regularization program. Points-Based System

Canada uses a points-based system to evaluate foreign workers’  applications for permanent skilled immigration to Canada. These permits are not  subjected to quota. GAO. GAO. GAO.
Why GAO Did This Study

The opportunity for employment is an important magnet attracting immigrants, including unauthorized immigrants, to countries. The policies and practices used by other countries to manage foreign workers, including actions to limit illegal immigration and to reduce the employment of unauthorized foreign workers, have been shaped by country-specific economic, demographic, and political factors. Immigration reform is a matter of continuing debate in the United States. This report examines selected countries' (1) programs for admitting foreign workers; (2) efforts to limit the employment of unauthorized foreign workers; and (3) programs for providing unauthorized immigrants with an opportunity to obtain legal status, referred to as regularization. To address these objectives, we examined reports from foreign countries, intergovernmental organizations, and research organizations. We also interviewed government officials and experts from 8 countries--Australia, Belgium, Canada, France, Germany, Spain, Switzerland, and the United Kingdom--and surveyed 6 other countries. We selected these countries based on their net immigration rate, population size, membership in the Organisation for Economic Co-operation and Development or World Bank classification as high income, range of immigration policies, and geographic location.

What GAO Found

The countries GAO studied have programs for admitting foreign workers, most of which are focused on recruiting high-skilled or seasonal foreign workers. To recruit foreign workers, some countries use bilateral agreements with other countries. For example, Canada uses bilateral agreements with Mexico and several Caribbean nations to recruit seasonal agricultural workers. Some countries manage foreign worker admissions by various means, such as quotas or points-based systems. However, officials stated that it is difficult to implement a system that responds to changing labor market needs and does not create incentives for employers to hire unauthorized foreign workers. Some countries regulate foreign worker admissions by specifying requirements for participation in a foreign worker program, such as work permit fees. Moreover, foreign worker programs differ in their requirements for workers to return home. Some temporary programs require workers to return upon expiration of work permits, while others allow foreign workers to renew their permits and apply for permanent resident status. The countries GAO studied use a variety of efforts in enforcing laws designed to limit the employment of unauthorized foreign workers. In some of these countries, employers are required to report workers' information to government agencies or to verify workers' authorization status. Among these countries, the employment of unauthorized foreign workers is largely considered one of several illegal labor practices, including failure to pay taxes or social insurance contributions, and government agencies generally focus their enforcement efforts and investigate employers to detect all such practices. Government officials and experts have noted that conducting frequent employer investigations and publicizing those investigations helps deter employers' hiring of unauthorized foreign workers. Countries can penalize unscrupulous employers for employing unauthorized foreign workers, including imposing monetary fines on employers. However, countries have faced difficulties, such as the prevalence of document fraud, in penalizing employers. Some countries have implemented large-scale regularization programs that allow unauthorized immigrants to apply for legal status on either a temporary or a permanent basis. Countries have implemented regularization programs for different reasons, such as to help reduce the size of the underground economy or to facilitate immigrant integration, and governments believe they derive some benefits from implementing these programs, such as increased collection of tax and social insurance contributions. Under these programs, countries require illegal immigrants to meet specified eligibility requirements, such as residency and work requirements, before applying for or receiving legal status. Employers and unauthorized foreign workers have incentives to participate in regularization programs but may not want to because, for example, some employers can save money by employing unauthorized foreign workers from whom they do not pay taxes or social insurance contributions. However, countries have faced difficulties in implementing these programs, such as in ensuring timely review of applications. Moreover, some experts have reported that regularization programs may attract further illegal immigration,while others have concluded that programs' effect on illegal immigration is unclear.