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The TUC has plenty of evidence to show how mass migration is being encouraged by employers to bring down wages – successfully – but it still refuses to draw the only logical conclusion...

Memo to the TUC: the real economics of migration

WORKERS, OCT 2007 ISSUE

The TUC report, "The economics of migration: managing the impacts", published in June, claims that immigration benefits Britain. The TUC deserves some credit for joining the debate, but rather less for the anti-working class conclusions it reaches. In this article, we review a plethora of findings, from the TUC's own (albeit ignored) evidence through a number of eminent economic sources, and conclude that immigration is harmful to workers to the same degree as it benefits capitalism – racist as ever, whenever they get the opportunity they pay foreigners even less than they pay the indigenous workforce.

The figures showing the number of foreigners who have moved to the UK in recent years are heartening to the employer:

There are also, by Home Office estimate, some 430,000 illegal immigrants who are particularly "favoured" in the employment market.

The expansion of the EU has been the main reason for the increase. 222,000 Poles were given National Insurance numbers for the first time in 2006–7, bringing the total to 466,000 in the last four years. In a recent survey, half the Polish immigrants said that they would like to stay here – so much for the government's claim that they'll all go back.

Poaching
UN Resolution 2417 forbids poaching specialist professionals, yet the government's own figures show that:
  • 38 per cent of all doctors working in hospitals in England qualified outside of Britain.
  • 40 per cent of new dentists were born abroad.
  • 58 per cent of new doctors in the NHS were born overseas.
  • 25 per cent of British medics have their roots in the Indian subcontinent. They supply a third of trainee doctors.
  • 44,000 overseas nurses worked in the NHS last year alone.
  • In Greater London 23 per cent of doctors and 47 per cent of nurses working in the NHS were born overseas.
The more skilled the immigrants, the more the loss to the source countries. In a 1990 study, the ILO found that a 'truly astonishing' proportion of highly educated people aged 25+ with 13 or more years of education had emigrated to the USA: for example, Guyana 80.62 per cent, Jamaica 69.34 per cent, Gambia 58.51 per cent, El Salvador 46.63 per cent, Trinidad 43.7 per cent. The TUC report has to admit "the negative effects of migration" on developing countries.

As the TUC report says, 'Migrant workers ... often earn much less than native workers would for the same work.' Since 2002, real wages of new immigrants have fallen relative to those of British workers. As the TUC report admits, "it is likely that workers who are unable to enforce their employment rights and constantly at risk of being reported to the authorities by their employers are more vulnerable than any other group. It seems extremely unlikely that this would not have some impact on wage levels, at least at the bottom end of the labour market."

So, "migration may have held down pay at the bottom end of the distribution". And, "Migrant workers are more likely to work in jobs with higher health and safety risks and to be even more at risk than other workers." Employers gain hugely from illegal workers, who lower wages and increase profits, and the government looks the other way. Yet the TUC still says that immigration is good for Britain!

A recent report, The Impact of Recent Immigration on the London Economy (City of London, July 2007), describes as a positive effect of migration "its quantitative contribution through expanding labour supply and thus enabling employment growth and reducing upward wage pressure". It goes on, "An effect of the concentration of migrants in the worst paid segment of the labour market has been a significant downward pressure on wages at the bottom end of the market. This seems to have encouraged job growth in these occupations, but earnings among workers in this sector have suffered, falling behind growth in the cost of living."

As the TUC notes, 15 per cent of employers target Eastern European immigrants. For example, at one North Wales factory, the employer sacked the entire workforce, and two weeks later hired a contingent of Polish workers, at much reduced wages.

Inaccurate statistics
Further, says the TUC "the Local Government Association claimed that inaccurate migration statistics had left as many as 25 local authorities paying for services to migrants who had not been included when the central government grant to authorities was being calculated. Up to 25 councils, including Birmingham, Sheffield and Manchester were affected."

Yet after all this evidence that an increase in the number of unskilled migrants reduces the wages of unskilled domestic workers, the TUC report concludes, "the country as a whole is benefiting from migration, as we noted above, the Treasury expects it to account for at least a tenth of future economic growth". Note that the sole proof of benefit from migration that the TUC produces is not any actual existing present benefit, but only a Treasury prediction of "future economic growth". If they had been able to find any present benefit, they would certainly have said so!

If the TUC officers cannot see the wisdom of their own evidence, then it is asking too much of them to look further. But we will.

So, economist Paul Samuelson writes, "an increase in supply will, other things being equal, tend to depress wage rates." A US study found that a 10 per cent increase in labour supply reduced wages for all groups. "Undoubtedly access to lower-wage foreign workers has a depressing effect [on wages]," says former US Labor Secretary Robert Reich. Research suggests that between 40 and 50 per cent of wage-loss among low-skilled Americans is due to the immigration of low-skilled workers. Some native workers lose not just wages but their jobs through immigrant competition. An estimated 1,880,000 American workers are displaced from their jobs every year by immigration.

Wage reduction
Then George Borjas, Professor of Public Policy at Harvard finds, "benefits from immigration arise because immigrants reduce the wage that native workers get paid." No workers' pain, no employers' gain. Native workers lose, and this loss accrues to capitalists. "Workers lose because immigrants drag wages down. Employers gain because immigrants drag wages down. These wealth transfers may be in the tens of billions of dollars per year." For example, in the last 16 years US immigration has increased the labour supply by 16 million, 10 per cent, and cut the native wage rate by 3-4 per cent = $152 billion. It also increased US national income, but only by 0.1 per cent = $8 billion. Total gain to capital, $160 billion. In sum, says Borjas, "Immigration redistributes wealth from labor to capital."

The Wall Street Journal constantly calls for unrestricted immigration. Perhaps in theory it is possible that the US capitalist class's chief organ has misread the bottom line, and that unrestricted immigration is bad for capitalism and good for the working class, but is it likely? Alan Greenspan, chairman of the Federal Reserve Bank, pointed out what should be obvious to the TUC – that the laws of supply and demand inevitably imply that an increase in the supply of workers lowers wages and decreases inflationary pressures.

Britain's low wage rates are partly due to high immigration flows, which is why immigrant labour is popular with employers. New Trade Minister, Digby, Lord Jones, says, "we have a tight labour market in the UK and yet wage inflation has not been a problem. Immigrants are doing the work for less."

The Governor of the Bank of England, Mervyn King, says, "Immigration has reduced wage inflation ... the inflow of migrant labour, especially in the past year or so from Eastern Europe, has probably led to a diminution of inflationary pressure on the labour market."

Evidence
Professor Richard Layard of LSE, who helped to design the Government's Welfare to Work programme, wrote, "There is a huge amount of evidence that any increase in the number of unskilled workers lowers unskilled wages and increases the unskilled unemployment rate. If we are concerned about fairness, we ought not to ignore these facts. Employers gain from unskilled immigration. But the unskilled do not."

Immigration has an adverse effect on the job opportunities of those British workers whose skills are similar. The greater the number of immigrants, the greater the losses suffered by those who compete with immigrant workers. Immigrants take jobs that natives cannot afford to take and work for less than the going rate. Had immigrants never arrived the employer would have been forced to raise wages to fill the positions.

The present wave of unskilled immigration is destroying the jobs, wages and conditions of our less skilled workers. A 'guest worker' programme of permits for temporary low skilled labour would also benefit employers and harm low skilled labour. Canada, Australia and New Zealand exclude low skilled labour through point systems and quotas aimed at recruiting highly skilled immigrants, but a skills-based point system would threaten the wages and conditions of our skilled workers.

Where's the need?
In Britain, there are more than two million "economically inactive" people who want a job. The real level of unemployment is 4.5 million, so why do we need to import workers?

Employers are glad to recruit overseas as this avoids both higher wages and training costs. But overseas recruitment is a disincentive to training and re-training British workers. It is also a disincentive to investment.

We need to defend skill, defend the interests of our skilled British working class, and demand apprenticeships to develop skills. If we did all these things properly, would we need any immigration?

But first we need to get to grips with the evidence and base our arguments on them. At the moment there is too much claptrap coming from both "sides": unpleasant racists who hate all foreigners and so-called liberal thinkers who smother workers with their "caring", masking only their cowardice to face up to reality.

Meanwhile, in all this muddled thinking and refusal to discuss, the real sides of the argument are missed: as always, it's workers versus capitalists and as always we forget this at our peril.

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