Cameron’s migrant benefit move is even worse than you think

The latest restrictions on migrants claiming benefits won't only harm migrant workers but also Britons.

The latest restrictions on migrants claiming benefits won’t only harm migrant workers but also Britons

The lack of any compelling evidence to support the government’s latest move to limit unemployment benefits for EU migrants has been widely reported.

It’s a well-rehearsed line among progressives that EU migrants make a net contribution to the UK economy and that they are less likely to claim benefits than British citizens. There is also no evidence that the benefit system acts as a ‘magnetic pull’.

Across the political spectrum, commentators have dismissed this move as a cynical political ploy to appeal to voters tempted by UKIP, backed up by the tasteless photo opportunity inside the home of an illegal immigrant after a raid. The Office for Budget Responsibility has distanced itself from the government’s claim that the change will save £500m over five years.

However, the damage doesn’t stop with dogwhistle politics. Unfortunately, this policy, the latest in series of measures to limit migrant benefits, will harm not only migrant workers and job-seekers but also Britons.

The government’s plan is to cut the amount of time EU migrants who have not made national insurance contributions can claim Jobseeker’s Allowance from six months to three months. Anthony Reuben’s analysis suggests the total number affected cannot be more than 10,000 people (even this is very charitable, assuming 0 per cent of EU migrant JSA claimants have ever worked in the UK or gained British citizenship).

However if these reforms do have any significant impact, it will be to place immigrants in an even weaker bargaining position vis-à-vis employers and potential employers compared to British workers.

It’s an economic fact that unemployment benefits strengthen the position of workers and potential workers in negotiations with employers. If you know you and your family will become homeless if you lose your job, you are more likely to accept a pay cut. The less bad the prospect of losing your job is (a combination of personal savings, external support and the ease of finding another job), the harder you can bargain.

These reforms further entrench a two-track system, where migrants will have a greater incentive to accept an employer’s terms, lowering the market price for labour.

Employers will have an incentive to hire migrant workers ahead of British workers, because they know migrants are less likely to put up a fight if they decide to cut hours or pay.

Already, we know that immigrants are less likely to be members of trade unions and that enforcement of the minimum wage has been an issue with migrant workers. These moves tip the scales even further in favour of employers.

British and non-British workers alike will suffer the consequences of lower wages and worse conditions. Migrant workers will suffer the consequences if they lose their job and Britons will find it harder to get a job in the first place.

Cameron says this will ‘put Britain first‘ – first in line for the dole.

The impact is likely to be minor, but in tackling the non-problem of benefit tourism Cameron is actually worsening the impact of immigration on low paid British workers.

Charlie Cadywould is currently completing an MSc in Public Policy at UCL focusing on labour markets and regulation

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