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Rob Ackrill

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No Evidence That We Have Anything to Fear From EU Immigration

Posted: 10/11/2013 21:53

On 1 January, 2014, workers from Bulgaria and Romania will be free to come and work in the UK. Meanwhile, a new report has been published by the European Commission which looks at benefit tourism within the European Union.

To this end myself and colleague Chris Lawton, from Nottingham Business School's Economic Strategy Research Bureau, feel now is a good time to review these issues, especially in the light of recent press and political statements and scare stories.

We have, of course, been here before, when ten countries joined the EU in 2004. It is timely to remind ourselves of the economic impacts of the post-2004 immigration on the UK economy.

Researchers have found repeatedly, in multiple studies, that migration has had a range of positive effects on the UK economy. It has boosted Gross Domestic Product; lowered inflation, in turn helping to keep interest rates lower than otherwise; and there has been a significant net gain to the UK budget.

Compared to UK-born residents, migrants are much more likely to be in work, and less likely to use public services. Being, on average, younger and healthier, they make far fewer claims on the health service, while their large net contribution to the UK budget helps fund the NHS and other public services.

Recent research has also found that migration has, contrary to popular belief, not led to higher housing costs. Indeed, migration helped lower housing costs at the bottom end, with almost no impact on average costs.

It is also important to remember that the magnitude of in-migration from 2004 occurred under a unique confluence of circumstances. The UK was one of only three EU countries to open its labour market fully to migrants from day one. Also, the UK was a particularly attractive destination, compared with other possible destinations, for migrants looking to work. It had a strong labour market, with low unemployment and a lack of workers with key skills; significantly lower employment rates in key origin countries, such as Poland; and favourable exchange rates for would-be EU migrants considering the UK as a destination.

Since then, all of these factors have shifted to make the UK a less desirable option. Indeed, the UK government's own management information (such as National Insurance registrations) indicates that net international migration peaked in 2007 and has declined subsequently.
Another finding, in multiple studies, was the absence of significant negative impacts on the employment and wages of locals.

But might such findings at the national level hide regional variations? In 2007 and 2010, the Institute for Employment Research (IER) at the University of Warwick investigated the impact of international migration on the labour market and economy of the East Midlands, looking in particular at areas that saw rapid increases in migrant populations from 2004.

The 2007 study found no evidence to support the claim that even a high concentration of migrant workers in given sectors or local areas displaced UK-born workers - they did not "take our jobs". Where unemployment among UK-born workers did rise, this was caused by factors other than migration.

They also failed to find clear evidence that migration has affected the wage rates of UK-born workers. There was some evidence that migrants working in less-skilled occupations were vulnerable to being paid less than the "living wage" but because migration did not undermine local workers' job prospects or pay, this can be interpreted as exploitation of migrant labour.
The later IER study estimated that, in 2009, workers born outside the UK contributed 10% of total regional output to the East Midlands economy (measured by Gross Value Added) - despite the 2011 census showing only 2% of the resident population of the East Midlands was born in an EU Accession State.

This contribution is consistent with the findings of national studies, which put the contribution of migrant workers to national output at between 8% and 11%. The evidence in the latter study was slightly more equivocal about positive local economy impacts, but there was still no clear evidence of a negative impact on UK-born workers.

Given that the government's own data show a decline in migrants after 2007, negative labour market outcomes are more likely to be the result of the economic crisis.

October 2013 saw the publication of a new study, undertaken for the European Commission, on "benefit tourism". In some ways, this study says nothing new. Like so many previous studies, it found people move to another EU country to work; they are much more successful in finding work than local workers; and as a result, migrants contribute far more to the host economy than it costs to provide health care, etc.

Moreover, the majority of migrants currently not economically active did previously work in their host country. Many of the rest are students, who are not claiming benefits but are making a significant net financial contribution to the UK economy. Ultimately, this study found no clear evidence to support the claims made about benefit tourism.

For three years the European Commission has, unsuccessfully, been asking the UK government to provide evidence to back up its claim of benefit tourism. Similarly, the House of Lords has recently criticised the government for failing to provide proper evidence to back up such claims.
This is unsurprising - the UK government cannot provide what does not exist. People are, of course, entitled to their own opinions, but not to their own facts.

 
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