Immigration and the ‘left behind’

Statsmeister Michael O’Connor produced this gem of a chart a few weeks ago, breaking down the post-recession employment recovery by region, type of employment and country of birth. It shows how much of the job growth outside London has come from self-employment, especially for those born in the UK. Even now, there are still fewer people in employee jobs in Yorkshire and Humberside than there were before the recession. Among the UK-born, there are fewer people in employee jobs in Yorkshire, the Midlands, Scotland and, most surprisingly, the South-East.

CplRJQ2WcAAR43d.png-large

Some of this might be due to demographic change. The population of working age UK-born has fallen in some areas. But that wouldn’t explain why there has also been a growth in self-employment among the UK-born. If it were simply a case of there being fewer of them, surely the number of self-employed would fall too.

Mobility, and the lack of it, provides some explanation for these patterns. In any society, people in their twenties and early thirties, without children, tend to be the most mobile. They are free to travel for work and happy to live in relatively basic accommodation. After all, it won’t be for long and the money and experience will set them up for a (hopefully) more stable future.

The effect of free movement of labour throughout the EU has been to gather all these people, across Europe, into a single labour pool. It is a pool in which British employers have found it easy to fish. With English being the most popular second language in Europe and wages in the UK being relatively high, it was inevitable that a lot of these people would be attracted to the UK. As a Centre for Population Change report published earlier this year showed, the proportion of people in their twenties and thirties is much higher among EU migrants than among the UK-born population

Screen Shot 2016-08-22 at 15.17.35

These are the people who can move most freely across the continent, making them highly responsive to the demand for labour. (More on this in last week’s post.)

Many of the UK-born population find it difficult to do some of the jobs current filled by migrants. It’s not because they are lazy it is simply that the sort of flexibility the migrants provide, and employers have come to expect, is hard to maintain when you have a home and a family. As Sarah O’Connor said:

When people say “migrants are doing the jobs that Brits are too lazy to do”, they are missing the point. These jobs may be palatable if you are a single person who has come to the UK to earn money as a stepping stone to a better future. But if you live here permanently, have children here, claim benefits here, they are not jobs on which you can easily build a life.

James Gleeson produced an interesting chart earlier this week showing how the geographical centre of gravity for jobs has shifted further south over the past decade or so, while the people and, especially, the housing have lagged behind. (He explains the methodology behind it here.)

pop-jobs-and-homes-centres-2

To a certain extent, then, people are following the work but many are, for obvious reasons, staying where their families and accommodation are.

Recent research by the Joseph Rowntree Foundation suggests that there is a similar problem in microcosm in many of the large cities. The prosperity of the shiny new city centres in Manchester, Leeds and Birmingham does not flow to the areas round about. This doughnut problem sees unemployment and underemployment in the periphery of major cities existing alongside unfilled jobs in the city centres. A mixture of skills mismatches and poor transport disconnects suburbs and small towns from the employment opportunities in the cities close by.

Perhaps this explains some of the rise in self-employment among the UK born in the Midlands and North. In the absence of new local jobs, people have set up their own businesses. The trouble is, as Paul Nightingale and Alex Coad point out, a lot of these businesses are likely to be marginal, lacking the capacity even to provide a minimum wage income for their owners. The vast majority of businesses set up in recent years have turnover below the VAT threshold and the incomes of the self-employed have collapsed since the recession. Even so, subsistence-level self-employment is preferable to no employment at all.

This raises another question though. If we hadn’t had free movement of labour and a young mobile workforce on tap, would the labour shortage have forced employers to train more people and to move to areas where they could find workers? Might they have had to put a bit more effort into using the workers we already had available in the UK? Or might it simply be that, without the ready supply of migrant labour, a lot of the jobs and a lot of the companies that have appeared since the recession would simply not exist?

The end of free movement of labour probably won’t make us any the wiser. The effects will be dwarfed by the economic downturn. As Jonathan Portes notes, there are already signs that the weakening UK economy is making the country look less attractive to migrants. The Resolution Foundation points out that, even if annual migration is cut to below 100,000, any increase in wages brought about by the resulting labour shortage is likely to be cancelled out. The pay squeeze caused by the economic shock of Brexit will obliterate any gains.

Screen Shot 2016-08-22 at 17.14.06

Their report showed that, while immigration does create some downward pressure on pay, it is nothing compared to the effects of an economic slowdown. Recessions hit people’s pay packets much harder than migrants do.

The next recovery will be different from the last one. Recessions and recoveries always are. Whether the absence of free movement of labour from the EU will make much difference to the overall pattern of job growth is difficult to say. Without concerted effort from government and employers on infrastructure, training and technology, it looks unlikely that much will change. Without that, Brexit or otherwise, the workless, the underemployed and those in precarious jobs probably won’t see much improvement.

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22 Responses to Immigration and the ‘left behind’

  1. jeffrey davies says:

    see jcp for all But that wouldn’t explain why there has also been a growth in self-employment among the UK-born pushed into or rather talked into going se ops

  2. Metatone says:

    For a long while, pushing ppl into self-emp was unofficial govt policy to massage the unemployment stats. Yorkshire Ranter has blogged about this.

    What strikes me is that if freedom of movement hadn’t happened in the uncontrolled way it did, things might have evolved to a better situation. But you can’t go back in a system just by undoing it. The real question should be – how do we reach a better state from here. And ending freedom of movement may not be the way.

  3. “Even so, subsistence-level self-employment is preferable to no employment at all.”

    I would suggest this preference for self-employment has significantly increased because of benefit sanctions and the DWP’s fixation with off-flows.

    “Never mind the quality (of claimant detinations), feel the width (the off-flow volume)”, seems to be DWP’s cruel mantra.

  4. JohnR says:

    Unemployed = low pay,constant hassle,trying to live on minimal benefits while keeping a roof over heads.
    Self employed = working benefits

  5. Blissex says:

    «gem of a chart a few weeks ago, breaking down the post-recession employment recovery by region, type of employment and country of birth.»

    That is useful, but not quite as useful as this chart of house price increases and decreases across the various regions:

    https://www.lovemoney.com/news/53528/property-house-price-value-real-terms-2005-2015-uk-regions

    «It shows how much of the job growth outside London has come from self-employment, especially for those born in the UK.»

    That’s “underemployment” at best, and just a way to reduce the reported unemployment numbers, like excessive levels of enrolment in university degrees, or zero-hour contracts.

    If unemployment was not effectively much higher than reported then median hourly wages would not have fallen 10-20% in recent years, and nobody would be willing to work zero-hour contracts, and immigrants would be able to afford something better than to live 4 to a bedroom in crumbling buildings.

    «The effect of free movement of labour throughout the EU has been to gather all these people, across Europe, into a single labour pool. [ … ] and wages in the UK being relatively high,»

    There are three big notes here:

    * EU immigration to the UK accounts for around half of immigration, the rest is immigration from non-EU countries under a “points system” that has been designed to boost immigration for the sake of bigger corporate profits.

    * EU «free movement» has not just been of «labour» and just immigration: a large number of emigrants *from* the UK to the EU is made of retiree who are benefit tourists, scrounging off the better funded health care systems of social-democratic EU countries, something that they have been encouraged to do by UK governments to reduce the NHS budget. The UK net payment to the EU budget only partially compensates for that.

    * Anyhow EU «free movement of labour» has not had huge effects until the very poor countries in eastern Europe were given it. The second largest foreign group after the poles is germans, and nobody minds them, because obviously they are not in the UK because of better wages, competing with low income UK citizens. The real issue is desperate young workers from very poor contries competing with young workers from the North and Scotland for jobs in the heavily subsidised southern english economy.

    «Even so, subsistence-level self-employment is preferable to no employment at all.»

    Zero-hour contracts are not that different from «subsistence-level self-employment», and *viceversa*. Self-employment for very low wages is just a ruse to avoid paying benefits and the application of the last shread of labour laws. Consider all those “self-employed” delivery van or bike drivers, or “self-employed” builders.

    «If we hadn’t had free movement of labour and a young mobile workforce on tap, would the labour shortage have forced employers to train more people and to move to areas where they could find workers?
    This is a variant of the quite laughable argument that without low-wage immigrants the NHS simply could not service as many people as it does.

    That argument is laughable because it is a particularly bad application of “ceteris paribus”: in recent decades many millions of mostly native workers have found “bullshit jobs” in the financial sector, as property negotiators, mortgage salespersons, etc.; those jobs add pretty much close to zero or negative to actual GDP.

    «Might they have had to put a bit more effort into using the workers we already had available in the UK?»

    If there had not been so much immigration from the poor countries of eastern Europe then perhaps there would be 1-2 million less people in finance and other “bullshit jobs” and many of them would be working for the NHS instead, and instead of having enrolled in “Media studies” or “Business studies” they would have gone into courses in nursing, medicine, dentistry.

    • “because obviously they are not in the UK because of better wages, competing with low income UK citizens”.
      They are (it wouldn’t make sense if everybody had migrated for CEO job positions, right?), but even if their British wages are better than German ones, they are not exclusively employed in low skilled labour, which avoid competition and further resentment.

      “The real issue is desperate young workers from very poor contries competing with young workers from the North and Scotland for jobs in the heavily subsidised southern english economy.”
      Not everybody in the North can move to the south, given the cost of living there. It could be a good idea to create an organised plan to create jobs in the northern counties. I live in a northern county, no immigration but.. the unemployment is quite high.

      “This is a variant of the quite laughable argument that without low-wage immigrants the NHS simply could not service as many people as it does.”
      I just speak about Cumbria in this case, but all Cumbrian hospitals have a recruitment problem, nobody wants to move up here. Often doctors are not UK-born because no UK born coming from the south is interested to live in such a rural area.

      “instead of having enrolled in “Media studies” or “Business studies” they would have gone into courses in nursing, medicine, dentistry.”
      From my personal point of view (i.e. currently studying in a degree course) the assumption that anyone could study medicine and dentistry at will is wrong. I study in the humanities, because that is what I always liked and where I can give my best. I’m married to an engineer, successful, in employment, and being promoted twice a year. You could say, why didn’t I study engineering? Because there is no meaning in studying something you don’t like, even if the job opportunities would be much better, both in medicine or engineering. We’re not all born doctors or nurses or engineers😉

      • Blissex says:

        I think that some of your points are a bit optimistic:

        «Not everybody in the North can move to the south, given the cost of living there.»

        Look at it from the point of view of middle aged lady owning property in St. Albans: she *knows* that is completely false. Because those fantastic romanians that are so much cheaper for doing her garden and cleaning her house are obviously well able to live in the south, they just live four to a room, and eat rice and beans, and just sleep when they are not working their 2-3 jobs. If northerners are not willing to do that too then they are for her just lazy parasites that want to live large charging her too much for their work. J Hutton, New Labour minster for work and pensions, summarized it thus:

        http://www.yorkshirepost.co.uk/news/main-topics/local-stories/crackdown-on-benefits-scroungers-1-2412296
        «He said that benefit claimants needed to compete for jobs with migrant workers, many from Eastern Europe. He went on: “We cannot reasonably ask hard-working families to pay for the unwillingness of some to take responsibility to engage in the labour market.”»

        «It could be a good idea to create an organised plan to create jobs in the northern counties.»

        That is a nice dream, but I am not sure that you get the politics of it.

        «Often doctors are not UK-born because no UK born coming from the south is interested to live in such a rural area.»

        They would come, with the housing being cheaper and all that, but they can get posh well paid jobs in the south very easily, because there is a “shortage” in the south too, and so why bother. Part of the reason there is a shortage is that enrolment in medical courses is very restricted because the courses are very expensive to run, and the government prefers to import immigrant doctors, dentists, nurses from abroad, as their training has been fully paid for by some foreign socialist government.

        BTW if as a cumbrian you want to understand better the UK economy and the politics, look at this map:

        https://www.lovemoney.com/news/53528/property-house-price-value-real-terms-2005-2015-uk-regions

        and the maps on slide 23, 27, 28, 30 in:

        http://www.cpes.org.uk/dev/wp-content/uploads/2013/08/5-fothergill-Welfare-reform-Cambridge-talk.pdf

        Additional information: the Treasury has got economist that assess (by region, income, …) the impact of various proposed changed in spending and taxation, so those maps are not “accidental”.

      • Blissex says:

        I think that some of your points are a bit optimistic:

        «Not everybody in the North can move to the south, given the cost of living there.»

        Look at it from the point of view of middle aged lady owning property in St. Albans: she *knows* that is completely false. Because those fantastic romanians that are so much cheaper for doing her garden and cleaning her house are obviously well able to live in the south, they just live four to a room, and eat rice and beans, and just sleep when they are not working their 2-3 jobs. If northerners are not willing to do that too then they are for her just lazy parasites that want to live large charging her too much for their work. J Hutton, New Labour minster for work and pensions, summarized it thus:

        http://www.yorkshirepost.co.uk/news/main-topics/local-stories/crackdown-on-benefits-scroungers-1-2412296
        «He said that benefit claimants needed to compete for jobs with migrant workers, many from Eastern Europe. He went on: “We cannot reasonably ask hard-working families to pay for the unwillingness of some to take responsibility to engage in the labour market.”»

        • “well able to live in the south, they just live four to a room, and eat rice and beans, and just sleep when they are not working their 2-3 jobs.”
          Ugh I never understood why someone needs to live like that. And I say this as a migrant who even detested to inhabit the same flat with others, I was able to stand that for 9 months and I had a double room by myself. I know, I am freaking spoilt, but it wouldn’t have made sense to me to be an expat and living like a cockroach. Maybe if British employers (or people like the old lady you mentioned in your example), stopped to pay for cheaper workforce the situation would get better.

          • Blissex says:

            «“well able to live in the south, they just live four to a room, and eat rice and beans, and just sleep when they are not working their 2-3 jobs.”
            Ugh I never understood why someone needs to live like that.»

            It is quite simple: a good wage in Romania or Bulgaria is around £2-3,000 per year. If one of them works in the UK say at £5/hour for 3,000 hours a year they make £15,000 a year that they think is really huge. Then they want to spend no more than £5-6,000 a year for rent and food so they can take home most of what they have earned, and buy a house or get married. So they rent crumbling houses full of bunk beds and live like prisoners; many rent sheds in the gardens of London semis. During periods in which they can’t find work they live in tents.

            http://www.theguardian.com/uk-news/2015/jun/28/london-the-city-that-ate-itself-rowan-moore
            «Meanwhile, if you fly in a helicopter over suburban boroughs such as Hounslow or Newham, as council enforcers sometimes do, you will see ramshackle structures in back gardens, some of which will be housing uncounted numbers of migrants. Whereas iceberg houses are permitted by loopholes in the planning system (which some local authorities are now trying to close), these are unauthorised and try to evade detection. A Brazilian architect once asked me why there were no favelas in London. They are coming now – sheds in back gardens, small flats and houses appallingly overcrowded.»

            And tents… You can do a web search and find many articles on the living conditions of poor immigrants. Or you can read H Mayhew’s classic “London Labour and the London Poor”of 1856, and what’s written there is going to come around again. The southern “conservatory-building classes” want to turn things back to the 50s, the 1850s, when servants were cheap and plenty. Some want to turn things back to the 1750s, because they think they would be “upstairs” people. They are landlords!

            Couple of “amusing” links:

            http://www.standard.co.uk/news/london/jailed-man-who-lived-in-garden-shed-while-renting-750000-council-house-on-gumtree-a2927551.html
            http://home.bt.com/lifestyle/house-home/househunter-stunned-to-find-room-to-rent-is-a-shed-in-a-communal-lounge-11364001853563

            There was an article I can’t find anymore with an interview with someone renting their garden shed to an immigrant, and they said they felt bad about getting a few hundred pounds a month “tax free” for it, but they needed the money to help pay the mortgage on the house without giving up going on holiday.

          • Blissex says:

            «“well able to live in the south, they just live four to a room, and eat rice and beans, and just sleep when they are not working their 2-3 jobs.”
            Ugh I never understood why someone needs to live like that.»

            It is quite simple: a good wage in Romania or Bulgaria is around £2-3,000 per year. If one of them works in the UK say at £5/hour for 3,000 hours a year they make £15,000 a year that they think is really huge. Then they want to spend no more than £5-6,000 a year for rent and food so they can take home most of what they have earned, and buy a house or get married. So they rent crumbling houses full of bunk beds and live like prisoners; many rent sheds in the gardens of London semis. During periods in which they can’t find work they live in tents.

      • Blissex says:

        «Often doctors are not UK-born because no UK born coming from the south is interested to live in such a rural area.»

        They would come, with the housing being cheaper and all that, but they can get posh well paid jobs in the south very easily, because there is a “shortage” in the south too, and so why bother (and there is a shortage of Waitrose sites in the north).

        Of course Cumbrian doctors and dentists and nurses could be the answer, but that’s unlikely: the government both knows that medical courses are very expensive and wants to push up medical salaries, so it greatly restricts the number of places, and then fills shortages with immigrants that have been trained at the expense of some foreign government. Now since UK medical course places are greatly restricted there is a lot of competition to get into them, and obviously fee-paying school candidates have a huge advantage at winning admission.

        Not many people from poor northern countries can afford to send their children to fee-paying schools that give them a huge “leg-up” at getting into the universities and courses that lead to the good jobs in medicine etc.; posh southern families, especially those with their huge tax-free house capital gains can do that much more easily. An anecdote:

        http://www.dailymail.co.uk/money/mortgageshome/article-2105240/Stuck-rent-trap-How-middle-class-family-kept-remortgaging-home-pay-bills-longer-afford-repayments.html
        «Certainly, we overstretched ourselves when we bought our lovely period home for £419,000 in 2002. But with mortgage companies practically throwing loans at us in a rising property market, we slept soundly at night, smug in the knowledge the house was making us money. [ … ] The valuer had barely been in the house for five minutes yet we were able to borrow a further £80,000. [ … ] we weren’t spending the money on expensive designer clothes, luxurious holidays or flash cars. Much of it was going on school fees and upkeep of the house.»

        That’s the good government-subsidized life in the south! As long as it lasts🙂.

        • “They would come, with the housing being cheaper and all that,”
          Unless you are available to live in a residential accommodation near the hospital, housing in the ‘nice’ areas is expensive as any in the South. A nice cottage in Windermere can cost even 500k. Problem is that to get from Windermere to any hospital in the county, well roads are horrible and during the winter floods or frost can affect your commuting time.

          “(and there is a shortage of Waitrose sites in the north).”
          This made me laugh out loud, because it is true lol. A friend of mine always says that she wouldn’t like to live in Cumbria because there are no Waitrose shops in the county (none at all, you must get yourself to Gretna in Scotland or in Northumberland).

          “Of course Cumbrian doctors and dentists and nurses could be the answer, but that’s unlikely:”
          You are right and we have tried to push forward (as a community) a program of that kind, trying to lure the Cumbrians back home. It has not been a success but I don’t think because of lack of fee-paying schools, but general lack of services.

          Thanks for the anecdote but I try not to read the Daily Fail, it makes my day darker😉

  6. I have a couple of questions, hopefully something will reply….

    1) In the unemployed statistics, am I right to assume that they are not taking into account the real amount of unemployed people but only the ones who are receiving JSA?

    2) How do they know who’s coming from where? Do they follow the nationalities of the registered national insurance numbers? If yes, I guess all statistics don’t include who has not registered… (i.e. the illegal ones)

    • Blissex says:

      «In the unemployed statistics, am I right to assume that they are not taking into account the real amount of unemployed people but only the ones who are receiving JSA?»

      There are *several* unemployment statistics. The “headline” ones tend to be just the JSA people, minus (some JSA people don’t count as unemployed). Most “headline” statistics (GDP, inflation, unemployment) are based on cleverly “optimistic” “methodologies”. At least in first-world countries the raw data is mostly reliable, it is just the “headline” numbers that are “optimistically” computed.

      To understand better the situation one has to double check disaggregated data, and check those statistics that are particularly hard to compute “optimistically”🙂 and significant. For employment I look at full time *employment* (not unemployment) for men 24-55, as men in prime age just *must* have a full time job, and any drop in their full time employment rate is a big deal. After that I look at *median* hourly wages for men 24-55. Any drop there is bad news, too, that means that people who *must* have a job are trading down in desperation. Looking at employment and median wages of women, and men 16-24 is also interesting, because those are in different degrees more optionally in work.

      «How do they know who’s coming from where? Do they follow the nationalities of the registered national insurance numbers?»

      Mostly; also in theory foreign workers, whether EU or not, should register with the home office. But many don’t. There are also surveys based on sampling, that find a portion of the unregistered/illegal ones, and the census.

      • “Mostly; also in theory foreign workers, whether EU or not, should register with the home office” – nope, EU workers’ registration is not even contemplated in the Home Office regulation (unless it’s a very recent development, i.e. from 2015 onwards). Non-EU workers have no right to legally work in UK unless they have a visa, so if they are working they are 1) legal and arrived with a visa 2) illegal.
        Are you sure you’re not confusing it with permanent right to reside or the EEA QP? The latter is actually not enforced either because it’s such a legal mess that actually nobody has bothered to look into it yet. All this mass of legal entanglements will surely come up to the forefront once Brexit happens.

        Thanks for your quite well-detailed explanation about the statistics!🙂

    • @smerlinchesters

      The unemployment count is obtained from the Labour Force Survey (LFS). Anybody who has looked for a job in the last 2 weeks is included so it includes JSA claimants but is wider. However, there are many people who may want a job but who are not included because for one reason or another they have not looked for a job in the preceding period.

      • “Anybody who has looked for a job in the last 2 weeks is included so it includes JSA claimants but is wider.” – ok. But how do they know who looked for a job? This interests me in particular because I spent the last three years trying to register with DWP as unemployed/job seeker and I never succeeded because unless one wants to claim benefits they are not registering you…… I might add, the local ‘habit’ here is to hand CVs in by hand….

        • The unemployment count is done by a survey. This means they don’t ask everybody. Instead they (the Office of National Statistics) ask a representative sample of the population and draw conclusions using statistical methods.

  7. strbe says:

    lowet migration=lower rents.and lower house prices.
    Brexit pls now

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