What Effect Does Immigration Have on the Prospects of the Local Workforce?

What Effect Does Immigration Have on the Prospects of the Local Workforce?

One of the central tenets of the Vote Leave campaign in 2016 was the assertion that foreign workers from the EU took the jobs and prospects of the local domestic workforce.  At the time, Brexiteer, Iain Duncan Smith, stated that "the government's own Migration Advisory Committee reported that for every 100 migrants employed 23 UK-born workers would have been displaced".  In fact, according to the BBC who investigated this statistic, this number was actually for non-EU migrants.  But, what was also missing was the point that foreign workers who remain in the UK for five or more years do not displace British-born workers.  The BBC's Reality Check service also clarified that "no statistically significant effects were found for EU migrants coming to the UK".  This is an important point which for many who voted Brexit, was lost in the melee of overlapping and often contradictory messaging during the referendum campaign.

Why Do People Continue To Believe That EU Immigrants Take The Jobs Of The Local Workforce?

In large part, this belief held because it was repeated so often by anti-EU politicians in the UK and by news media who were sympathetic to the leave cause.  One article in the Sun newspaper back in February 2017 has the headline, "Brits are suffering from immigrants taking their jobs for half the price - we need an immigration deal that works for everyone, not just bosses who want cut-price labour.  The current situation is unsustainable, so it's wonderful that we've left the single market". 

The left-leaning media, including the Guardian and the Independent, did its best to point out the absolute inaccuracy of this narrative.  One such article in the Guardian explains that the belief has its origins in an argument made by former Home Secretary and Prime Minister Teresa May, that lower-skilled workers coming to the UK depresses the wages of domestic workers.  This was heavily debunked by research by the London School of Economics in May 2016 which concluded that "migration from other EU countries has not had an adverse impact on the wages and job prospects of UK-born workers".  The research also found that areas of Britain with the largest increase in workers from the EU have not "suffered sharp falls in pay or seen a bigger reduction in job opportunities than other parts of the country".  They make the key point that the actual reason for falling wages was not immigration but rather the ongoing impact of the 2008 recession. 

Jonathan Wadsworth, one of the co-authors of the report, stated that "for the most part it [migration of workers from the EU] has likely made us better off".  The report also states, "EU immigrants pay more in taxes than they use public services, and therefore they help to reduce the budget deficit. Immigrants do not have a negative effect on local services such as education, health or social housing; nor do they have any effect on social instability as indicated by crime rates".

It is likely, therefore, that the reason people believed EU immigrants took the jobs of the local workforce was the combined effect of a) the very real reduction in wages following 2008 financial crash and the resultant period of austerity and b) the repetition of this belief by the media and politicians in the run-up to the Brexit referendum in 2016.  As such, it could be argued that the reduction in wages due to the 2008 recession provided the perfect set of adverse circumstances on which to blame EU workers, and hence drive home the point that the UK should leave the EU.

Do Non-EU Workers Negatively Impact The Prospects of Domestic Workers?

There is a sound reason why most of the dialogue regarding whether immigrants suppress wages and job opportunities has been centred on EU workers.  Firstly, the campaigning and media messaging around Brexit has been and continues to be about the benefits of leaving the EU and of stopping free movement; secondly, non-EU migrants are already heavily restricted from working in the UK and must have sufficient skill levels to do so.  Because of this, those with high skills were possibly seen as adding to the economy more than those with lower skills. 

According to an analysis by IZA World of Labour, an organisation which uses evidence-based research to advise on policymaking, the "short-term wage effects of immigrants are close to zero€”and in the long term immigrants can boost productivity and wages".  While this is a US-based research organisation, their conclusions are borne out by other researchers and institutions in the UK and the EU.  Indeed their paper states that "many people hold the belief that immigrants "take jobs" from the native labour force in industrial countries; that they crowd out job opportunities; and that they depress wages".  In other words, this narrative is the same worldwide, and in no way unique to the UK.  What they say is that this belief is based on the overly "simplified, static model of labour demand and supply in which immigration increases the supply of some workers while everything else in the economy remains fixed".  They say the only way to truly understand the impact of migrant workers on the economy, and hence the local workforce is to consider how local economies "respond to immigrant inflows by expanding, investing, adjusting product specialisation, adopting efficient technologies, and creating new businesses". 

Using this logic, it can be seen that any minor impact on wages of domestic workers (which is close to zero) is completely cancelled and reversed out by the resulting innovation, investment, and other changes which occur as a result of a thriving economy which encourages skills and labour from outside of the country.

Final Words

The message that migrant workers damage the work prospects of domestic workers has very much been debunked.  Those who still maintain that the UK's immigration policy has harmed wages and jobs will need to wait until 2021 to see how leaving the EU really pans out for them in terms of job prospects.  Already the Home Office has stated categorically that low skilled migrants will not be allowed into the UK, and hence such roles will ultimately need to be fulfilled by British nationals and settled workers.  Whether this increases job prospects and wages across the economy will remain to be seen.

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