April 7, 2008 | posted by Michael Baxter in Immigration | comments (0) |

Last week the House of Lords published its report on immigration and seemed to side with the tabloids over the Government.   

It comes down to this.  It’s agreed, immigration has added around £6bn to the UK economy, but, since it has also led to a bigger population, GDP per person is no higher.

But it is a complex argument.     Evidence suggests most economic migrants make far less use of public services – they are younger so they make less use of the health service, they are less likely to have children, so make less use of education.   It seems they may well pay out more in tax than they take from the economy.

This is a complex report, but the rhetoric from some members of the House of Lords committee which prepared it was not.  As we said at the time, they may well have added fuel to the tabloid fire of xenophobic hysteria – blaming hard-working Poles for our ills.

Maybe, though, in a few years’ time we will have the definitive answer.

According to Capital Economics, unemployment in Poland has fallen from 15 per cent in 2004 to 6 per cent last year.  Real wages are still much lower in Poland, but the gap is closing. More to the point,  annual wage growth in the Polish construction sector has reached 25 per cent a year. 

Combine all that with the falling pound, and it appears Polish migrants will have less reason to move to the UK, and migrants already here more reason to return home.

If this is right, and there is a negative flow of Polish migrants, we will be able to form a more accurate picture of their impact upon the UK economy.

March 20, 2008 | posted by Michael Baxter in Immigration | comments (0) |

No less than $27bn flowed into India last year, from migrant Indian workers living abroad sending money back home, says a new report from the World Bank.    The country topped the list of recipients of migrant remittances.  China was second ($25.7 billion), followed by Mexico ($25 billion), the Philippines ($17 billion), and in fifth place, somewhat surprisingly,  was  France ($12.5 billion). 

The United States was the top immigration country in 2005, with 38.4 million immigrants, followed by the Russian Federation (12.1 million), and Germany (10.1 million). Among low-income countries, India had the highest immigration volume (5.7 million), followed by Pakistan (3.3 million).

Dilip Ratha, senior economist at the World Bank said, “In many developing countries, remittances provide a lifeline for the poor. They are often an essential source of foreign exchange and a stabilizing force for the economy in turbulent times.”

For 2007, recorded remittance flows worldwide are estimated at $318 billion.   Interestingly, global remittances are now three times greater than official aid from governments to the developing world.

The World Bank also said, “Smaller countries tend to have higher rates of skilled emigration. Almost all the physicians trained in Grenada and Dominica have emigrated abroad. St. Lucia, Cape Verde, Fiji, São Tomé and Principe, and Liberia are also among the countries with the highest emigration rates of physicians.”

Rich countries are the main source of remittances. The United States is by far the largest, with $42 billion in recorded outward flows in 2006. Saudi Arabia ranks as the second-largest, followed by Switzerland and Germany.

In the UK, money flowing into the economy from remittances was actually greater than money flowing out, at least that was the case in 2006.    In all, inward remittance flows came to $6.954bn in 2006, and outward remittance flows to $4.526bn. 

February 22, 2008 | posted by Michael Baxter in Immigration | comments (0) |

For some time there has been this assumption that the flow of immigrants coming into the UK will just continue ad infinitum – until the indigenous population of these isles are left as the minority.

Setting aside the argument that, actually, Britain was built on immigration – and that being British is as elusive a concept as King Arthur, this argument has ignored some key points.

For one thing, other European countries are being forced to open up their borders, so all of a sudden the UK is going to find itself in competition with other developed economies in the region for attracting cheap labour.

Secondly, the flow of migrants was always going to slow down and then go into reverse.

Take Poland as an example. Despite the flow of labour away from the country, the economy has been growing at around 5 per cent per year – inevitably it is getting richer. Sure, the gap between the UK and Poland is still vast – but it is closing.

Wages in Poland are increasing at around 10 per cent a year, and wages in the sectors that are seeing a particularly marked exodus of workers have seen even higher increases. In fact the Polish construction sector has seen wages increase by 50 per cent, in some years.

This means that for Polish workers in the UK, their homeland must be looking more and more attractive. Bear in mind, also, that the countries of Eastern Europe have similar long-term demographic problems as the UK – in fact, for many, the birth rate is much lower than in the UK.

According to Capital Economics, the number of Poles registering as finding employment in the UK has fallen from over 45,000 per quarter in the second half of last year to less than 40,000.

It says this may be a one-off, but equally we could be witnessing a new trend.

Maybe, in a few years the migrant flow could become negative, as more Polish workers return to their country of origin than enter the UK.

How will that leave the UK?

Be careful of what you wish for yourself, it may come true – every child knows that from their fairy tales.

Immigration has been a force for low inflation – it has helped create low interest rates.

The single biggest disadvantage of immigration from Eastern Europe to the UK is probably this. It was only ever going to be a temporary phenomenon, and has done no more than paper over the cracks, disguise the deeper problems, that will be revealed in their full horror as Britain is eventually left to the British.

January 7, 2008 | posted by Michael Baxter in Immigration | comments (0) |

It’s amazing how headlines can tell a story. Just before Christmas, the Telegraph ran a story with the headline “100,000 lose out to migrants in hunt for work.” Yet, on the web site workpermit.com, an article reporting on the same survey the Telegraph was referring to said, “Study finds that the UK needs immigrants.”The two articles were both referring to a report by Ernst Young ITEM Club. In fact the ITEM Club has often been one to talk up for immigrants, emphasizing the economic benefits they bring. The latest report was no exception, it’s just time that its findings were qualified.

Peter Spencer, Chief Economic Advisor to the ITEM Club, said, “Without a million and a half foreign workers since 1997, the UK economy would have suffered slower GDP growth, higher inflation and interest rates… Looking forward, if immigration were to continue to increase at the same rate as in the last two years, ITEM would expect GDP to grow by an impressive 3 per cent a year over the next decade.” He added “If immigration were in line with the average of the last decade, long-term trend growth would be reduced to 2.4 percent a year. And if there were no immigration at all, it would drop to just 2.2 per cent a year.”

The Telegraph, however, chose to focus on the downside. “There is some evidence that the growth of immigrant employment seen in the last few years may have come at the expense of the domestic workforce,” it quoted. And then added, “Given the age and skill profile of many of the new immigrants, it is possible that ‘native’ youngsters may have been losing out in the battle for entry-level jobs.”

It does seem that actually both sides of the immigration debate have merit. Immigrants are easy targets, and some of the comment in the press, which by the way is repeated over and over again by the public, seems little more than xenophobia.

There is no doubt that UK PLC has benefited from immigration. It’s not just workers doing the low-paid jobs, but the UK has also seen a flow of highly qualified individuals who have helped create wealth, not to mention employment, for the UK.

Since immigrants tend to be younger, often with no children, they are not great users of public services such as the NHS and the education system, either.

It seems they contribute far more in tax than they take out.

But that is not to say there is no downside at all. It seems likely that immigration has acted as a stopper on wage inflation, which might be good for the rate of interest, but it’s bad for workers trying to eke out a living.

Recently, Steven Gerrard the Liverpool captain said it well when he talked about how English football players are struggling to get in the first team of Premiership clubs, and as a result, the England national team is beginning to suffer.

When you leave school there is often this Catch-22 problem. You need experience to get your first career job, but until you get that job you have no experience. There is a danger that immigration could make this initial challenge even harder.

Immigration is good for the UK, but not necessarily good for all those who are already living in the UK.

Maybe the answer is a solution that applies equally to the comments of Mr Gerrard. Maybe Brits should be more willing to try for jobs abroad.

When we emigrate from the UK to another EU country, it is normally as a form of retirement. It often seems quite hypocritical when Brits with their second homes are one of the costs pushing up property prices in the local area, moan about immigrants pushing up the cost of UK homes.

But the truth is, the issue of immigration is complex. There are arguments for and against - but up to now the debate in the media has only touched the surface.