According to one group of eminent economists, while a fall in immigration may help boost wages for low paid workers to a modest extent, the negative hit on the economy will be much greater. But there is a far bigger issue, it does seem as if there is a good chance that migration flows within Europe may go into reverse. Maybe in 15 years’ time the UK’s problem will be not enough immigrants.
It’s a shame we weren’t told this during the EU Referendum debate. According to the Resolution Foundation, between 2004 and 2014 the ratio of migrants to the overall UK population rose from 10% to 16%. As a result, indigenous workers operating at the low education and intermediate qualification end of the labour market were slightly worse off.
The Resolution Foundation said that its report “shows that. . . reducing migration to the tens of thousands immediately could boost the wages of British workers in sectors most affected by migration by between 0.2% and 0.6% by 2018.”
But it says that this change would be dwarfed by a 2% fall in average wage growth, projected by the Bank of England in the wake of the Brexit vote.
So there you have it. On the one hand, grant the wishes of the anti-immigration lobby, and make a small proportion of the workforce a tiny bit better off, but in the process see average wages across the economy fall significantly below the level they might otherwise have reached.
Truth is, economists have been saying for years that the effect on the economy and government finances of immigration has been positive, and that this in turn funds the NHS, education, tax credits or indeed tax cuts.
But look forward ten years, and the whole debate may be an irrelevance.
According to Boston Consulting by 2030, Poland may face a labour shortfall of around 24% of the workforce. It’s set to be a problem across much of the world.
Boston Consulting said: “Of the four BRIC countries (Brazil, India, Russia, and China), for instance, only India is safe from an impending shortfall. And countries with labour surpluses and persistently weak or no economic growth face a gloomy outlook as those surpluses threaten to spiral out of control.”
It drilled down by focusing on Italy and the UK. It said: “Italy’s demographic woes—the country is Europe’s most rapidly aging society—translate into a labour shortage by 2030 in the 10- and 20-year growth scenarios. The UK, however, grapples with chronic unemployment as a result of an expanding labour supply and inadequate economic growth.”
So in 2030 there may be a shortage of workers across much of Europe, while the UK faces unemployment.
And this brings us to a campaign in Latvia to encourage its workers who have emigrated back home. “I want you back” is the slogan the campaign uses, which it has borrowed from a Jackson 5 song. Meanwhile in Poland the Return Programme is gathering momentum. It’s been helped by the Brexit vote with many migrant workers feeling less welcome abroad.
Be careful what you wish for because you may get it, and for those who voted Brexit over fears over immigration, their wishes may well be granted.