In praise of foreign workers

Anyone in the UK visiting their local supermarket or coffee chain in the past year or two will have dealt with migrant workers from the new EU member states. Most are young, helpful and enthusiastic. And there are plenty of them. According to the latest Home Office estimates almost a quarter of a million (232,000) Central and East European workers have arrived to work in Britain over the past year - greatly exceeding government estimates of the expected inflow post-EU enlargement.

Just over a year ago there was hysteria in the tabloids - and amongst some politicians - about this 'foreign invasion'. But now only two national newspapers bothered to report the figures, and tucked them away inside. No front page scare campaigns are to be seen. This new immigrant 'flood' no longer scares people - it's just a fact of life. And a good thing too.

So, what are the facts?

The latest Accession Monitoring Report on the UK's Worker Registration Scheme states that half the new workers are from Poland and they are predominantly in their 20s. Just under a fifth of registered workers were based in London, and 97% of workers were working full time.

 Accession workers are continuing to go where the work is, helping to fill the gaps in our labour market, particularly in administration, business and management, hospitality and catering, agriculture, manufacturing and food, fish and meat processing.

The vast majority of workers are young and single, 82% of workers were aged between 18 and 34. 95% of registered workers had no dependants living with them in the UK, and only 2% had dependants under the age of 17 with them.

The numbers applying for tax-funded income-related benefits, child benefit, tax credits and housing support remain very low. For example, fewer than 1,700 applications for re processed between May 2004 and June 2005, and of these applications just over 50 were allowed to proceed for further consideration.

And as for them being welfare scroungers, of the near-quarter of a million workers just fifty claims for Income Support and Jobseeker's Allowance "were allowed to proceed for further consideration".

Both The Daily Telegraph and Financial Times carried reports yesterday. As the FT notes, "the latest statistics appear to vindicate the government's efforts to recruit foreign workers to fill labour shortages while preventing them from claiming state benefits". The indefatigable Tim Worstall has also posted on the topic:

We now live in an economy where human capital is the most important thing, vastly more so than financial or physical. Immigration of people who are of working age and who have been raised and trained at the expense of somewhere else’s taxpayers is an import of human capital. We would therefore expect our economy to benefit from it.

There are also some interesting comments underneath his entry. For those wanting an economic analysis of the impact of this wave of immigration, see recent DWP Working Paper 18 by Jonathan Portes and Simon French, The Impact of Free Movement of Workers from Central and Eastern Europe on the UK Labour Market: Early Evidence. The authors conclude:

Our results suggest that the primary impact of A8 migration has been to increase output and total employment, with minimal impact on native workers, although higher levels of accession-worker migration do appear to be associated with small increases in the claimant unemployment count. There is some evidence that free movement appears to have resulted in a reduction in illegal, or unreported, working among A8 nationals.

At a sectoral level, by far the most significant observed changes have been in the agriculture and fishing sector. Here, employment appears to have grown sharply as a result of accession-worker migration, while there is some mixed evidence that growth in nominal wages has been reduced relative to the rest of the economy.

Overall, the economic impact of accession on the UK labour market appears to have been modest, but broadly positive, reflecting the flexibility and speed of adjustment of the UK labour market.

I could not download this paper from the DWP website, but you can easily find it on Google. Note however that it is 2.2Mb.

Comments

[Angry Economist]

This confirms a lot that is known about economic migration - the most capable workers can and do migrate oversease for work. Counter to the argument that the UK would become a dumping ground for the East's poor, past evidence told me that (mostly) the most capable people would come the the UK if they could find work. And if the UK slid into recession and there was less work - if your home country was vastly cheaper to live in if unemployed, why would you stay in the UK?

It will be interesting to think about this in reference to Turkey's bid for EU membership.

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