It's increasingly becoming accepted, even on the left, that immigration to Britain under the previous government had some negative consequences, one of which was to depress wages and increase job scarcity for the indigenous population.
It is increasingly accepted, even on the left, that immigration to Britain under the previous government had some negative consequences, one of which was to depress wages and increase job scarcity for the indigenous population.
Tim Montgomerie has repeated the claim today in a piece for the Times (£). Under Labour, he writes, “immigration rates soured, depressing the wages and job chances of working-class Britons”.
The first misunderstanding here is that the economy has a fixed number of jobs, sometimes known as the “lump of labour” fallacy.
In reality, just as immigration may increase competition for jobs it can also create new jobs.
A 2008 study found that an increase in the number of migrants corresponding to one percent of the UK-born working-age population in the years 1997-2005 resulted in an increase in average wages of 0.2 to 0.3 percent.
The same study did find evidence that the five per cent of lowest paid workers experienced a small short term squeeze on wages as a result of migration. For each one per cent increase in the share of migrants in the UK-born working age population there was a 0.6 percent decline in the wages of the five per cent lowest paid workers.
We are talking very small percentages here, however, and the study also found that migration led to a rise in the wages of medium and high paid workers. Most of the published evidence has also found no correlation at all between immigration and depressed wages.
Another study carried out in the same year by Jonathan Portas of NIESR found “little hard evidence that the inflow of accession migrants contributed to a fall in wages or a rise in claimant unemployment in the UK between 2004 and 2006 (when the study was carried out)”.
And as Jonathan Wadsworth, of Royal Holloway College and the government’s independent Migration Advisory Committee, has said:
“It is hard to find evidence of much displacement of UK workers or lower wages, on average.”
The below chart shows the correlation between wage growth at the 10th percentile (ie very low paid workers) and the proportion of migrants from the new EU member states at local authority level. As you can see, it’s hard to see any link between the number of migrants in an area and wage depression.
Concerns about wage depression must also be offset against the benefits migrants bring in terms of the social welfare pot. A 2009 study found that A8 immigrants – that is those from the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Slovenia, Slovakia, and Poland – paid 37 per cent more in direct or indirect taxes than they received in public goods and services.
Another study, carried out by researchers at UCL, found that new migrants were 60 per cent less likely than natives to receive state benefits or tax credits, and 58 per cent less likely to live in social housing.
Overall in 2008/9 migrants contributed 0.96 per cent of total tax receipts and accounted for only 0.6 per cent of total expenditures
Of course, low wages should be a concern for all progressives, and we should not shy away from talking about immigration and objectively assessing its costs/benefits.
However considering the paucity of evidence suggesting migration depressed “the wages and job chances of working-class Britons”, there are far more pressing concerns such as ensuring minimum wage legislation is enforced and where possible that employers pay a living wage.
Fear-mongering implying that immigration under the last government was in any way a serious problem or worse “out of control” should simply be ignored: the figures don’t support such concerns.
40 Responses to “Did immigration really ‘depress the wages and job chances of working-class Britons’?”
blarg1987
You have just entioned it is risky, no doubt if the goverment had done that and it all went belly up you would argue wjy did the goverment waste this persons money on the stock market when itt was a risk and so we have to pay more tax to cover it, correct me if I am wrong?
blarg1987
I think one thing that should be looked at is skills requirement, as their have been many stories about bus drivers and store manager jobs being advertiesed abroad instead of the Uk, without saying what the wage package is. The argument giving is need experienced staff etc. Whats should happen is that employers have to prove they have explored all avenues before going abroad to look for labour including increasing the salary. If they truly need the labour then they are willing to pay for it properly :).
OldLb
Is it?
What about Abramovitch? Good for the UK? Spends lots of cash he. I’d put him in the welcome set.
Abu Hamzah, I wouldn’t.
Somewhere between the two, there is a line. Those above are good for the UK. Those below aren’t.
11K a year.
Take total spending and divide it by UK population. That gives you a spend per head.
If you want to know what you have to earn, to pay more tax than the cost of supporting them, you need a tax calculator.
This one is accurate
http://listentotaxman.com/
Try thinking for yourself.
OldLb
Define risk.
One where with 100 certainty, you get 20% of what you have paid in.
Or the other, where you would need a 80% fall in the FTSE to end up in just a bad a place.
You’ve got a very weird view of risk if you think a 20% payout isn’t risky.
[PS it was a sarcastic statement about being safe. They have already started the default if you haven’t noticed]
Let people invest their own money, and get 500% more. If you are worried about risk, offer a guarantee for 20%, if and only if you run out. It’s dirt cheap, because its not going to ever be evoked unless you are a Philpott of this world.
Ash
“Somewhere between the two, there is a line. Those above are good for the UK. Those below aren’t.
11K a year.”
Two glaring problems with this:
One: that’s the *average* spend per person. It’s skewed upwards by the much higher spend on people who are more heavily reliant on public services and benefits – roughly speaking, people who are too young, too old, or too sick/disabled to work. (If you’re in school or claiming a pension, that’s £6,000 a year being spent on you even before you account for child-focused benefits/tax credits and age-related health and social care. If you’re a working-age adult in good health – as most immigrants are – the ‘net contributor’ line is going to be far lower.)
Two: you’re assuming that each worker receives, in cash, the full fruits of his labour, so that the only way to tax the value of what he produces is to tax his personal income. That’s not right; only 50-odd percent of what we collectively produce is paid out in the form of wages, but that doesn’t mean none of the other 40-odd percent adds (directly or indirectly, e.g. through investment) to tax revenues.
In the crudest terms, if I produce widgets to the vaue of £40,000 and my employer pays me £25,000 and takes £15,000 profit for himself, the contribution I’m making to the national coffers is not just whatever tax I pay on my £25,000 salary; it’s that plus whatever tax my employer pays on his £15,000 profit. Then there are knock-on effects to take into account – e.g. if my employer invests £1,000 of the profits I generate for him this year in a new widgetmaker that enables me to produce 10% more widgets per day next year, his profits will rise and so will the net contribution I make (indirectly) to the tax system (even if he freezes my salary).