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’?”
Richas
You’re being a tad decieptful. Why pick class 3? Why not look at all the NI?
I took the price for the pension benefit. I would have thought a free market guy like yourself could see no other option but using the price.
It is your entirely false premise that all NI is for pensions and you also use an entirely false model for your fictional charge free private pension. Anyway I am done with this, if you want to pretend that private contribution based pensions are great, go ahead, we have real world experience that shows that they are not, meanwhile the state pension is a core element of pensioner incomes.which costs billions. It is not poor value for pensioners but deep down you know that, you are just anti state provision of pensions regardless of the fact that it is needed and has been running since 1905 and every advanced industrialised country has a state pension..
OldLb
I’m not being deciptful.
The problem is with you assertion is that most people pay class 3. They don’t They pay NI as part of PAY, they employers have to pay more for them on top. That makes the cost of their pension far more that just class 3.
=========
It is your entirely false premise that all NI is for pensions
=========
No its not. The problem is that unless you know what you have lost from a funded scheme, compare to the state unfunded scheme, you can’t tell the cost of these extras to see if that cost is a reasonable one.
I’m quite aware that NI does go for other things like bereavement benefit. I’m also aware that it doesn’t go the NHS, because there is no connection between NI and the NHS access. It’s also what the government says on its own websites.
==========
very advanced industrialised country has a state pension..
==========
And most are bankrupt as a result. 5,300 bn of debt in the UK hidden off the books.
250,000 per worker of debt.
OldLb
No, its not the risk with the FTSE.
That is the risk with the state. It is what you have already lost. It’s gone. No chance of getting it back. In fact you are going to lose even more, because they have hidden that debt off their books.
Total government debt per taxpayer, 250,000 pounds.
OldLb
Here’s a reasonable set of questions.
1. Is the state pension value for money?
2. From NI contributions, how much gets diverted/redistributed/siphoned off to other people?
3. For the other things that NI provide, what’s the cost?
4. Would people have been better off under a funded scheme, and if so by how much?
5. What’s the true extent of what the state owes for its pensions?
6. What are the chances of those promises being met?
7. How much do people lose by changes to the pension? eg. 1 year on retirement age?
8. Ditto for the RPI CPI change.
9. Given the size of the debt, how will future defaults on the promises be implemented?
10. When will it tip and the state can’t pay?
11. What effects will a cap on over all benefit spending have on pensions?
12. Will the young accept being milked?
13. Will the pensioners cut off welfare to others to preserve their pensions
14. 110 -> 144 a week. How much extra debt does that generate?
15. Who has won and who has lost, and if so by how much?
16. A collapse of pensions. What impact on the welfare state?
17. Accounting fraud. What excuses will MPs come up with?
OldLb
obodies working life is 40 years full time at the average wage. Income varies over people’s lifetime. NI contributions are not all pension …
===========
It does vary.
Some of the time they earn less. Some of the time they earn more. On average, they earn exactly the average.
I think you’re having a bit of a George Bush moment. e.g. 50% of school kids are below average and something must be done about.
If you don’t get the joke and why its an idiotic question to ask, ask away.