Those who say that immigration is having a devastating effect on UK wages are right – studies show wages in the semi-skilled sector have been plunged by no less than a penny an hour.
Fake news, we keep hearing about it; the trouble is, too many people just don’t want to know the truth.
The immigration debate in the UK is misleading, politicians, fully aware of the facts, are making no attempt to correct this, instead they see votes in surfing a wave built on lies and half-truths.
The Tory government plans to cut immigration to the tens of thousands. And that policy, above all others, gets full marks, not full marks for economic senses but for pandering to populism.
It’s a populism that ignores truth.
One of the leading UK economists on the impact of immigration on the economy is Jonathan Portes, former director of The National Institute of Economics and Social Research.
Last year he wrote: “We can calculate that. . . the impact of migration on the wages of the UK-born [in the semi-skilled service sector] since 2004 has been about 1 per cent, [of growth] over a period of 8 years. With average wages in this sector of about £8 an hour, that amounts to a reduction in annual pay rises of about a penny an hour.”
The thing is, the sector of the labour market that has been most adversely affected by immigration is the semi-skilled sector – and workers are worse off by one penny an hour. Err, but then changes to tax rates which have on balance favoured the worst paid, have been worth far more than one penny an hour.
But, despite the nonsense you hear to the contrary, migrants support the NHS and schools. And they do this in more way than one way. For one thing, they boost the economy, leading to higher tax receipts – far, far greater than they take out as benefit. They provide labour for the NHS – that is obvious but they also have a more-subtle effect on the education sector.
In a closed economy, one in which there is no immigration, there is an equation that describes the relationship between education and the economy. It works like this: education costs money, but the skills it creates leads to higher productivity creating more taxation, paying for education. But add immigration to the equation and it all changes. The cost of education is forked out by someone else, as the vast majority of immigrants are educated abroad, but the UK sees the benefits of that education. If there was an 'education benefits' versus 'costs' balance sheet, then immigration would be a major positive item.
But people don’t want to know this: they have been bombarded by media reports telling us about the evils of immigration for so many years that many are unaware of the other side of the story.
Or take the UK university sector – UK universities are among the best in the world, and foreigners across the world pay big bucks to be educated by them. But this is in decline, and the Tory Party, with little or no criticism from Labour, has made it clear that only migrant students to the very top universities are welcome.
Will students be included in the net migration target? We will have to wait and see, but the runes don’t look good.
Immigration is also vital for encouraging entrepreneurialism.
But a wider point is ignored too, demographic changes in Europe mean that many countries that currently provide migrants to the UK have a shirking labour force, while in the UK it is growing. The odds are high that in a few years time, all else being equal, the net flows of immigration between the UK and EU will reverse. Instead, just as we are approaching the point when this reversal will begin to be felt, we pull up the drawbridge – the effect of this won’t just be to keep migrants out, it will also be to keep UK citizens in.
There is much that is wrong with the world, and growing inequality is among the problems, but blaming immigrants is to detract attention from the real causes – but then that is populism for you.
Be under no doubt, the price we will pay for the backlash against immigration is a smaller economy.