Immigration and the jobs miracle

Conservative MPs are demanding a cap on immigration from EU countries as part of whatever renegotiation of membership the government manages after the next election. David Cameron is making the sort of noises that will appease his backbenchers though I wonder if he really believes what he’s saying.

The Financial Times reckons he’s gotten himself into a right muddle:

The prime minister has repeatedly declared that the UK is in a global economic race and must boost its competitiveness if it is to emerge victorious from this contest. At the same time, Mr Cameron has pledged to reduce net migration: the difference between the numbers entering and leaving the UK. He would like to see it return “to the levels of 1990s – tens of thousands a year, not hundreds of thousands”.

A year before the general election, the flaw in this approach is evident. The prime minister wants Britain to be open for business but also be closed to immigrants. This is a difficult stance for any leader operating in a global economy – let alone one in a country facing skill shortages who advocates the need for competitiveness at all costs.

A few weeks ago, when the employment statistics came out, a succession of Conservative MPs stood up at Prime Minister’s Questions and, repeating a rote-learned figure, boasted about the number of jobs created since they came into office.

Trouble is, though, of the 1.6 million increase in employment since the first quarter of 2010, more than half of it has come from workers born outside the UK. (See table EMP06 here.)

Now it’s true that the rise in employment among non UK born workers goes back much further than the last four years. As Michael O’Connor said a few weeks ago, much of the net increase in employment over the last decade has come from foreign-born workers.

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Employment among the UK born seems to have peaked sometime around the middle of 2005 and has only recently started to recover. Another of those trends we associate with the recession but which actually started well before it.

Look into the figures a bit more closely though, as Michael has done, and an even more interesting picture emerges.

Close to half  the increase in employment since David Cameron took office has come from people who have arrived during the Coalition era. When it comes to full-time employee jobs, the figure is even higher. Those who have come to the UK since 2010 account for around 75 percent of the rise.

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Many of the migrants who are fuelling the job growth are very recent arrivals.

Now, of course, some will say all this proves we need a cap on immigration and that migrants are coming in and taking jobs that would otherwise be done by British people. It’s difficult to say what might have happened if we had allowed fewer migrants into the country but the research suggests that, even where immigration does have an impact on the employment of the existing population, it is usually small and temporary. As the economy recovered, some new jobs would have been created if immigration had been lower but it’s unlikely that the increase would have been as high. Without migration, especially from the EU, many of these jobs would probably not have been created in the first place.

All of which suggests that the rising number of immigrants in the workforce is simply another indicator of the changing character of our economy. Closing the door might, as the FT suggests, choke off the flow of talent just when we need it. That said, these figures are a bit surprising (well they are to me anyway) so I’d be interested to hear from anyone who can explain why recent jobs growth has been so migration dependent.

Next week, when the July employment figures are released, loyal government backbenchers will probably stand up again in the commons and repeat the number of jobs created since 2010. We may well see some of the same MPs demanding restrictions on immigration a few weeks later. Bragging about the increase in jobs but saying you want to lock out a lot of the people working in them is hardly fair though. Much of the Coalition’s employment increase has come, and continues to come, from foreigners who have moved here to work. If there really is a British jobs miracle, it’s a migrants’ jobs miracle too.

Update:

Couple of things to add.

Michael has also looked at where the post-2010 arrivals have come from.

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Jonathan Portes points out that the migrants’ share of jobs has kept pace with their share of the working population for the past few decades.

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It’s also worth remembering that there are lots of British people working elsewhere in the EU too. The traffic isn’t just one way. As Bill said in the comments thread, globalisation is not a la carte. You can’t pick the bits you like and reject all the rest.

Update 2: I had no idea when I posted this that the Migration Advisory Committee was just about to publish a report on migration and skills. Will comment once I’ve had time to read it.

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10 Responses to Immigration and the jobs miracle

  1. bill40 says:

    Two points if I may. The assumption that Eastern Europeans are all plumbers and builders is very mistaken. Many have technical qualifications such as LoadRunner, NoSQL or the catch all BigData. At the bottom they will live in squats crammed 5 to a room but at the top their graduates have the right knowledge. Business now sees training as a cost, hence they import the talent.

    My other point is simple, with freedom of movement for capital comes freedom of movement for people legal or otherwise. Politicians would have you believe that Globalism is a la carte. Well it ain’t it’s a take it or leave it, no vegetarian option available.

    • NatzSchmatz says:

      Totally agree. Like the Germans say, you can’t dance at two weddings at the same time.

    • gunnerbear says:

      “Business now sees training as a cost, hence they import the talent.”

      So shut down the pipeline…UK businesses, if they wanted a worker, would either have to train up a low cost ‘Brit’ or pay an experienced ‘Brit’ better wages to take the job.

  2. Jonah says:

    There’s a lot wrong with this analysis starting from the fact that over three quarters of the rise in employment under this government has gone to British citizens to the well-established understanding that one needs to look at wealth per capita for the resident population, not overall GDP growth as clearly migrants benefit from migrating. It’s not clear from the evidence that immigration has much impact on economies at all, either positive or negative, in the general sense although clearly some individual migrants can bring many good things with them.

    • Rick says:

      Jonah, agree that the overall economic impact is probably small, which is what most studies say. Where did you get the figures on citizenship from?

      • Jonah, growth in the number of British nationals/citizens in employment has two components. 1. British nationals moving into work 2. People in work gaining British nationality. So if a business takes on a British school-leaver and at the same time an existing Indian-born employee receives British nationality then the number of British nationals in employment goes up by two, and the number of foreign nationals in employment goes down by one. Over time of course, this means that if everyone kept the same job as they have today and no one entered or left the country, the number of British nationals in employment would rise inexorably and the number of foreign nationals fall as they became eligible for citizenship. But that wouldn’t represent any meaningful change in the labour market – in fact no change at all would be occurring. For that reason it’s usual to use country of birth in looking at the impact of migration.

  3. roGER says:

    I’d explain the fact that a large number of jobs have gone to immigrants because employers can pay immigrants comparatively low wages. That’s because immigrants are keen to work for a lower wage than a comparable British worker.

    We’re basically caught in a race to the bottom, which results in a low wage, low skill, low growth economy.

    Caveat: As with all broad simplistic explanations, there are bound to be tons of exceptions and nuances, especially in London which is sort of economic entity all by itself these days.

  4. Martin says:

    Foreign-born people accounted for 40% of the rise in UK employment in the year to Q1 2014, while representing just over 10% of the total UK population. So how can Jonathan claim that migrants’ share of new jobs is in line with their share of the population?

  5. Dipper says:

    My big beef is about political representation of the white working class in this country, which between the major parties is practically zero. British politicians should not be advancing
    economic arguments about the benefits of immigration when their own constituents are manifestly failing to achieve their potential. They have a side in this argument.

  6. gunnerbear says:

    “Closing the door might, as the FT suggests, choke off the flow of talent just when we need it.”

    Who knew that all the denizens of Sangatte II are all rocket scientists, teachers, accountants and international bond traders…

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