What are the impacts of labour migration on the UK labour market and public services? Rachel Marangozov weighs up the evidence.
It is nothing new that in hard times, public attitudes to migration harden, as migrants are increasingly seen as competing with native workers for limited jobs and public resources. Public attitudes to the recent migration from Eastern Europe has been no exception to this and the Government has taken this further by considering an annual cap of 75,000 to all EU migration.1
Labour migration to the UK since 2004 has been dominated by EU10 countries, with Poles accounting for two thirds of foreign nationals migrating to the UK between 2004 and 2011.2 But just what is the impact of labour migration on employment and is the recent hype around ‘benefit tourism’ justified?
Calculating the labour market effects of recent EU migration is not a perfect science. For example, given that migrants often go to areas that are experiencing economic growth and strong labour demand, migration can be both a cause and consequence of changes in wages and employment, making it difficult to establish causality. Yet the available evidence strongly suggests that EU migrants have had no effect on employment levels in the UK, even post recession.3 As for wages, the picture is more mixed. Evidence suggests that while immigration has little impact on average wages, there is a more significant impact along the wage distribution, with low-wage workers and those in unskilled or semi-skilled service sector losing out while high-paid workers gained.4 However, available research has shown that any adverse wage effects of migration are likely to be greatest for resident workers who are themselves migrant workers.5
But what about public services? A good question, when even the government concedes that it has no quantitative evidence for its recent claims of ‘welfare tourism’. The available evidence shows that EU migration has little negative effect on public services. Dustmann et al found that EU8 migrants were 59 per cent less likely than UK nationals to receive state benefits or tax credits and 57 per cent less likely to live in social housing. Furthermore, even if EU8 migrants had the same demographic characteristics as natives, they would still be 13 per cent less likely to receive benefits and 29 per cent less likely to live in social housing. In a similar vein, other work has confirmed that EU8 migrants in the UK are the least likely to claim welfare benefits because of their high employment levels and high levels of education.6 According to the most recent study on this, the ‘vast majority’ of EU migrants moving to another EU state do so to work or to look for work and are more likely – because they are younger – to be in employment than the nationals of the host country.7 It also showed that in most countries, immigrants are not more intensive users of welfare than nationals and this concurs with earlier evidence which also found that mobile EU citizens have not relied on social services due to their high levels of employment.8
If welfare tourism really was a driver of recent EU migration, then it would have been Sweden, with its more extensive welfare state, and not the UK, which would have seen much higher numbers of EU10 migrants after the 2004 round of accession.9 As it turned out, Sweden only received an average of 5,000 Polish migrants per year between 2004 and 2011, while the UK received 45,000. Instead of welfare protection, wage differentials and demand for labour seem to have played a bigger role in driving recent EU migration. As for abuse of the NHS, it is difficult to imagine young, relatively fit workers from Eastern Europe needing to access healthcare, and even if they did, the NHS does not provide the sort of cash benefits that could drive ‘benefit tourism’.
Indeed, perhaps the reason millions of us didn’t wake up on January 1 to find a Romanian family camped on our front lawns is because most migrants come not to claim benefits but to work and build a better life for themselves.
And even the prospect of a better life in the UK is not a sure thing. Weak labour market regulation leaves many migrants open to exploitation and poor living conditions.10 In some sectors, there is little opportunity for migrants to progress in the workplace, despite possessing relatively high levels of education and skills. And for those migrants wanting to integrate into UK life, extensive cuts to ESOL provision mean that this is only now available to those who can afford to pay for them (not a realistic prospect given that EU10 migrants are predominantly concentrated in low pay work).11 Then there’s the rising cost of living, our not-so-tolerant tabloid headlines and of course, the weather…
At a time of austerity and widespread public concern over immigration, it is perhaps all too easy to claim that migrants are to blame for a host of wider problems in the UK, such as pressure on the welfare system, unemployment, under investment in skills, weak labour market regulation and the problem of low skilled, low waged work as an entrenched feature of the economy. However, these claims lack robust evidence12 and could lead other member states to impose their own restrictions to welfare assistance for the 1 million or so Brits who live and work on the Continent.
More significantly though, these claims risk damaging our economic recovery because they raise serious questions about whether the UK is ‘open for business’, whether it welcomes migrant workers as part of a diverse workforce that contributes to innovation and growth, and whether it has a future in the European Union.
Unsubstantiated discussions around ‘them’ and ‘us’ may be a vote-winner at home but in an increasingly globalised labour market, they are of limited use.
1 A report drawn up by the Home Office was leaked in December 2013.
2 Salt, J (2012), International Migration and the United Kingdom. Annual Report of the UK SOPEMI Correspondent to the OECD. London: Migration Research Unit UCL.
3 Lucchino, P., Rosazza-Bondibene, C. and J. Portes (2012), ‘Examining the relationship between immigration and unemployment using National Insurance Number Registration Data.’ NIESC Discussion Paper 386, National Institute of Economic and Social Research; Migration Advisory Committee (2012), Analysis of the Impacts of Migration. Home Office.
4 Dustman, C., Frattini, T. and I. P. Preston (2008), “The effect of immigration along the distribution of wages”. CReAM Discussion Paper No. 03/08, Centre for Research and Analysis of Migration, Department of Economics, University of London; Nickell, S. and J. Salaheen (2008), “The impact of immigration on occupational wages: Evidence from Britain.” Working Paper No. 08-6, Federal Reserve Bank of Boston.
5 Manacorda, M., Manning, A. and J. Wadsworth (2007), “The impact of immigration on the structure of male wages: Theory and evidence from Britain” in Research in Labour Economics 26, pp. 125-155.
6 Drinkwater S and Robinson C (2013), ‘Welfare participation by immigrants in the UK’, International Journal of Manpower, Vol. 34, No. 2, pp. 245 – 286.
8 Barrett A and Maître B (2011), Immigrant welfare receipt across Europe, IZA Discussion Paper 5515.
9 In 2004, only three countries chose to open their labour markets right away to citizens of new member states: UK, Ireland and Sweden.
10 A 2013 Home Office report in on conditions for immigrants found widespread ‘poor quality, overcrowded accommodation, inflated rents… exploitation by unscrupulous landlords and a growing number of “beds in sheds.”’
11 Marangozov, R. (forthcoming), Labour market integration of new immigrants: A case study for the Migration Policy Institute.
12 IES is currently undertaking research for the European Foundation for the Improvement of Living and Working Conditions (Eurofound) on the impact of EU10 migration on public services in the UK and on welfare assistance.