Immigration Control Is No Barrier To Economic Recovery

Economics, Employment, Migration Trends, Visas/Work Permits

Introduction: The Economist and
others, such as Jonathan Portes (Director of the NIESR) are wrong to claim that
immigration control is acting as a barrier to economic recovery. A careful
examination of the immigration statistics does not support their exaggerated
claims. That is not to say that the bureaucracy cannot be improved and
Migrationwatch will be making some suggestions in this regard. Meanwhile we examine the evidence.

1. Nobody
disputes the importance of reviving economic growth but, on examining the
facts, it is very hard to argue that recent reforms to the immigration system
constitute any significant impediment to a resumption of growth.

2. In his
blog of 23 August 2012 (See
Mr. Portes described recent changes to skilled migration as “a set of
new burdensome and bureaucratic rules and regulations” which make it more difficult
for businesses to employ the workers they want and, as a consequence, reduce
growth and make us poorer.

3. It is
hard to see what, in practice, he is referring to. There is no limit on
Intra-Company Transfers (ICT’s) nor, of course, on any form of recruitment from
the EEA – a pool of over 500 million people. Tier 1,
the route for self-starters, was effectively closed after evidence that a
significant proportion ended up in unskilled roles such as shop assistants,
security guards, supermarket cashiers, and care assistants. (See
Tier 2, employer sponsored skilled labour, was capped at 20,700 a
year but in it first year, only about half that quota has been taken up. (See
Improved routes have been introduced for entrepreneurs and investors.

4. The
same blog also refers to Mr. Portes’ evidence to the Treasury Select Committee
in March 2011 (See
in which he claimed that, “by applying simple arithmetic to official
publications”, he had calculated that the cap on skilled migration would reduce
UK output by £2 – 4 billion over the whole 5 year period of this Parliament.  According to his evidence about half of this
was pure population effect.

5. These
calculations were based on the Home Office Impact Assessment.  It estimated that there would be a reduction
of 11,000 a year in skilled immigrants (and their dependants), or 50,000 over
the whole period, and it stated that those excluded would be, on average, about
twice as productive as current UK residents.

6. In practice,
the cap has not been reached so no significant number of genuinely skilled
workers has been excluded. Indeed, the preliminary evidence suggests that most
of the reduction was in chefs and care workers – hardly vital to productivity
and growth. Other economic migrants might have been excluded by the higher
threshold for Tier 2 but that implies that they were of somewhat lower skills
and unlikely to be twice as productive as British workers. Mr. Portes recognised
that his calculation could prove exaggerated if those migrants “excluded” had
lower productivity than the average migrant.
That indeed is what has happened.

7. His
blog continues that the UK being “open for business” should also mean being
open to labour mobility. He suggests
that “simply reversing the new regulations introduced by this government, let
alone further deregulation, could yield large gains.  Sounds good but does he really advocate
unlimited immigration of skilled workers from, for example, India?  If so he should say so. That, however, would be a recipe for massive
levels of immigration which are simply not acceptable to the public and it
would surely be better to recognise that.

8. Indeed,
since the year 2000, the British labour market has expanded by just over 2
million, nearly all of whom were foreign born. (See
Whatever the technical arguments, it is clear that, over the boom
period up to 2008, British workers were not drawn into the active labour market
as would have been desirable. Obviously,
immigration is not the only factor. There are issues of motivation and welfare
provision as well as education and training but it does seem clear that, if
employers are entirely free to bring in cheap, flexible and non-unionised
labour, they are likely to do so – especially if they are tied to them by the
work permit system. For wider social
reasons it is important that there should be some countervailing pressure on
employers to train and employ British workers.

9. It would
be helpful if Mr. Portes were to be clear about the kind of immigration policy
that he advocates. If he advocates an open door policy he should say so. If he
advocates a selective immigration policy, than he needs to be clear about where
the lines should be drawn. It is important that we also contextualise
immigration policy against the backdrop of a rapidly increasing population (two
thirds due to immigration), and two and a half million people unemployed.

10. Nobody has yet produced any hard evidence of
significant economic benefit to the resident population from recent mass
immigration. The House of Lords report
in April 2008 was quite clear that they had “found no evidence…… that net
migration generates significant economic benefits for the existing UK
population.” (See
abstract here)
Indeed the MAC pointed out recently that much of any benefit
goes to the immigrants themselves. (See
Paragraphs 3.6-3.13 here)
Nor should we overlook the results of the study
by the NIESR, a body which Mr. Portes now heads, which found that the
contribution of East European migrants to GDP per head was expected to be
“negligible” (See Exec
Summary here)
, indeed negative in the long run (p 26). Quotes from the US cut very little ice. Their society is very different. Their labour markets are much more flexible
and their welfare much more limited.
Nor are they exactly a small island.

30th October 2012

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