More from the UK migration debate

With not just tabloids like the Daily Mail but even government Ministers emphasising the potential downsides of the UK's recent migration experience, a few commentators have sought to present more thoughtful accounts. Here are three:

David Smith of the Sunday Times wrote on 28 October that Migrants ease the inflation pressure. he does a good job summarising submissions to the House of Lords economic affairs committee investigation into the economic impact of immigration:

There are contributions from business, with the Institute of Directors saying that three-quarters of its members believe that foreign-born workers make a big positive contribution to the economy and, more controversially, that they “significantly outperform the existing workforce across a whole range of measures, including productivity, education and skills, work ethic, reliability and the amount of sick leave”.

The City of London Corporation waxes lyrical about the historic contribution of immigrants, noting that “City street names such as Lombard Street date back to the reign of King Edward I, when land was given to goldsmiths from the Lombardy region in Italy”. More recently there has been a significant City influx from the Continent and America and the corporation notes that London’s overall foreign-born population rose from 1.17m to 2.23m between 1986 and 2006.

J Sainsbury says it has used migrant labour to fill “pressing gaps in both skilled and unskilled areas” and praises the work ethic of such staff.

This kind of thing would be a red rag to the unions, it might be thought. But the Trades Union Congress, in its submission, is also strongly supportive.

“The overall economic impact of immigration is limited but positive,” it says. “Migrant workers contribute more in taxes than they receive in services, and migration probably leads to slightly higher levels of employment and wages for native workers. Migration may possibly be linked to an increase in wage inequality in this country, but the evidence is not conclusive.”

The government’s take on the economic impact of immigration is also reassuring. It believes that in the short term the impact of immigration on the public finances is positive, though the last official study was some years ago. It concluded that migrants paid £2.5 billion more in taxes than they took out in benefits and the use of public services. This net gain to the exchequer is likely to have grown, the government suggests.

The long-term impact of migrants is more difficult to assess, it accepts. An American study pointed to a large overall positive impact but any conclusion for Britain is sensitive to the number of dependants each migrant has, and whether they remain in Britain until retirement. As it is, the effect of migration will be to ameliorate the consequences of Britain’s ageing population.

The dependency ratio – the ratio of dependants to working-age people – is 61% and will rise to 74% over the next 50 years. With zero net immigration it would increase to 82%.

The arrival of migrant workers has meant employers have not had to outbid each other for scarce labour. This has helped the Bank of England by delivering lower wage rises for a given rate of economic growth than would otherwise have been the case. Interest rates have thus been lower in recent years than they might have been.

The IPPR's Danny Sriskandarajah explains in the Financial Times why limiting immigration is bad for Britain. He points out how difficult it would be to 'control' migration, and argues that work permit system is likely to prove more responsive than a points-based system.

In their rush to control immigration, both parties are also suggesting a departure from the market-based, employer-led system of allocating work permits that has served the UK economy so well over recent decades. ..the number of work permits issued each year has broadly been in keeping with economic and labour market conditions. An individual-led, points-based system, in which someone need not have a job offer in the UK, may not be sufficiently responsive.

Annual limits or sector-based quotas are likely to be even worse. Imagine a desperate would-be employer being told that the new head of mergers and acquisitions or eminent university professor or star footballer cannot take up his or her post until next year because the annual limit has already been exceeded.

Britain’s political leaders either do not realise that migration cannot be cut in the crude ways they say they want to, or they have calculated that political benefit of being tough on immigration from outside Europe is worth the undoubted economic costs this may incur.

Unfortunately, denying UK employers access to the best and brightest workers from across the world may hurt more than they expect and still not stop the inflows that worry the electorate.Indeed, without a long-overdue reality check, Britain may continue to have relatively high levels of immigration but not necessarily the right workers for the right jobs.

I am less hostile to the new points system than Danny, but agree that attempts to curb migration may well backfire.

Finally, Richard Reeves examines the impact of immigration in this week's New Statesman: Why Brits need not apply

Although the figures on immigration are generally treated as "bad news" for the government, the data on migrant employment is in many ways cause for celebration. A standard case against immigration is that foreigners come to the UK to luxuriate on benefits, use the NHS and snag a council flat. But, on the contrary, it seems immigrants come to do an honest day's work.

Certainly, a significant inflow of people puts pressure on public services, especially when the level of immigration is much higher than expected. And some of the indigenous population may see their chances reduced of gaining cer tain goods such as social housing. These are real, political issues. Nonetheless, most economic analy ses show that immigration has a positive economic effect - the latest has estimated a £6bn boost to GDP and it seems certain that recent waves of immigration, dominated by eastern Europeans, especially Poles and Lithuanians, have been even more beneficial.

Reeves also highlights the link between immigration, welfare and employment. So far this has been an under-exxamined issue in the migration debate (though I suspect not for much longer):

The vast majority of the new immigrants - 94 per cent - have no dependents. They are also white, which improves their chances of landing a job (a fact about the British labour market that should cause no pride). And they work hard. Major employers praise the "superior work ethic" of eastern Europeans.

...A harder question is why so few of the jobs that have been created are being taken by any of the five million native Brits currently out of work. They do, after all, have a linguistic edge over the newcomers. It is not as if any of the jobs are advertised with signs saying "Brits Need Not Apply". One explanation is that much of the work, especially in agriculture and construction, is not appealing to the indigenous population. Another is that the new immigrants are making more use of effective "informal" job-search methods - personal contacts and the grapevine - than unemployed Brits, many of whom are cut off entirely from the world of work.

Out-of-work Brits are also, after a decade of economic expansion, increasingly in what policy wonks dub "hard to help" groups: the long-term unemployed; those with caring responsibilities, such as lone parents; and those on incapacity benefits. A single Lithuanian lad can easily pop up to Liverpool to take a job: it is a different matter for a single mother of four.

There are some harder truths. The British benefits system makes relatively few demands on recipients in terms of job search, certainly by comparison to the new "tough love" US welfare system - a gap that David Cameron looks set to exploit. You do not need to be on the far right to see that there is little incentive for indigenous welfare recipients to swap the stability of benefits for the uncertainty of the labour market.

But the link between immigration, welfare and employment cannot be ignored much longer, for there is certainly something tragic in the sight of a British economy creating jobs alongside a British welfare system discouraging British citizens from taking them.

Comments

[Alice Cook]

I read somewhere recently that back in 1997 that 5.7 million working age people received some form of benefit. By 2007, that number fell by just 400,000. Unfortunately, I don't know the net increase in employment over that period, but given the ten straight years of economic growth we have had, employment has grown significantly. This all suggests that the greater part of increased labour supply has been due to immigration.

It is an obvious point perhaps, but the implication is that immigration has placed a significant role in GDP growth; much greater than some of the comments you record might suggest(notably those of the TUC)

Alice,

http://ukhousebubble.blogspot.com

[Peter Schaeffer]

"The arrival of migrant workers has meant employers have not had to outbid each other for scarce labour. This has helped the Bank of England by delivering lower wage rises for a given rate of economic growth than would otherwise have been the case. Interest rates have thus been lower in recent years than they might have been."

So immigration is good because it holds down wages.

How crass can you get.

By the way, it is also not true. At least in the US, immigrants are inflationary. House prices go up considerably more than other prices go down. Check out California and New York. They combine low wages and a very high local cost of living.

Sadly, mass immigration brings poverty for the natives, not prosperity.

[Jasper]

At least in the US, immigrants are inflationary. House prices go up considerably more than other prices go down. Check out California and New York. They combine low wages and a very high local cost of living.

Peter Schaeffer: your comment is utter drivel. A cursory glance at the conditions of the US property market would reveal vast quantities of highly affordable housing (even before the current slump) in such immigrant magnets as Atlanta, Charlotte, Houston, Dallas, and Denver. It's pretty obvious that America's housing industry is capable of meeting the spike in demand created by population growth -- whether natural or brought about by immigration -- when local governments permit said industry to operate freely. It certainly is true that many municipalities in the large coastal metro areas place onerous restrictions on the construction of new housing; shockingly, such land use restrictions drive up the price of buying or renting shelter. But as the examples of numerous, cheaper cities demonstrate, this process has very little to do with immigration.

[Londoner51]

""Another is that the new immigrants are making more use of effective "informal" job-search methods -personal contacts and the grapevine - than unemployed Brits, many of whom are cut off entirely from the world of work""

I've seen first hand experience of this ... I should note that these are only 2 occasions and don't apply to everyone. In one case I asked a "probably Eastern European" leafleter who his employer was so I could get some leafleting jobs .. his response was to be very defensive and said he didn't know??!!! My feeling was that he was protecting jobs from the British..

The second was when I was in an internet cafe and saw the sign "staff needed". I asked the women if I could apply .. again the response was defensive .. and I felt that my British accent was the reason ..

Now if this happens to be true .. then this isn't good. You can look up and down the high street and often see shops run by groups of people of one nationality.. All these things are against the UK's equilty laws so its easy to see why British unemployed people get wound up.

The reality is that recent immigration trends makes feel like I'm in a foreigner country in London, thats largely because most of North London is largely foreigners .. The place has changed very fast in ten years .. Only 8 years again Ealing was one of the most English places in London, now you are more likely to hear a foreign language than English .. This makes me feel alienated ... I do actually like multiculturalism and multi-racial environments, but only really in the second generation ... when people are integrated into Britain, whilst retaining elements of the their parent/grandparents etc roots ... Just turning existing established population into straight minorities across London, for me is unjustified on a social level, whatever the economic arguments.. The only get out clause is that with an open movement EU, British people have the option of living anywhere in the EU.

Does anyone else have an opposing view on this .. I like to be challenged ..

[Ed]

I believe this talk about economic growth is misleading as here we are talking about absolute growth, not relative growth. It would be very difficult indeed to fail to cause economic growth by increasing the population. However the point is to increase the economy per capita, not simply to increase the absolute size of the economy. The difference is easily overlooked but essential. After all China has a bigger economy than the UK, but of course China is much poorer because of its hugely greater population. One could merge China into the UK and truly state that our economy had more than doubled. It would be true, but misleading as per capital income would plummet.

Studies show that the increase in the economy brought by immigration is balanced by the increase in population ie there is no significant per capita growth in income. That would suggest there is little or no benefit to the existing inhabitants of the country.

This is yet another case of "lies, lies and damned statistics" I feel, in which figures are taken out of context and are therefore misleading.

[Arthur Eckart]

Ed, a problem with empirical models on immigration is there are no data for future costs, or the true costs of immigration are understated. In California, which often leads the country, taxpayers aren't willing to pay more taxes, e.g. for the poor, including immigrant education, health care, and other government services. California has a huge budget deficit, in part, because taxes are too low, and has to cut costs. So, most economists believe Third World immigration is a net benefit to society.

Of course, many Third World immigrants are ambitious and hard workers, who not only keep wages low, in many industries, but also keep prices low, and maintain high profits. However, these immigrants also contribute to inequality, e.g. in income, education, health care, etc., particularly since they tend to have more children than the domestic population.

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