Immigration. Immigration. Immigration.

Migration plays a very significant role in the UK’s population structure, with net migration of 336,000 in 2015, including the highest number of asylum seekers for 12 years. This became an issue of political significance, which was exploited by Nigel Farage and his party to play a role in the UK’s vote to leave the European Union in June. The 2004 expansion of the EU to incorporate several Eastern European states proved a catalyst for immigration, with 1.5million Eastern European immigrants coming into the UK between 2004 and 2009. There is no doubt that high levels of immigration can have negative impacts in the UK, but there are a number of positive impacts too. Balancing out these positives and negatives is often heavily down to the perception of the person assessing them.

Concerns of an overly ageing population are growing each year in the UK with 440,290 people over the age of 90 in 2011. For males, life expectancy has gone up from 70.9 to 78.7 between 1981 and 2011 contributing to the fact that on average 15.7 years of a person’s life on average are spent in poor health. This has a large cost to the NHS in terms of treatment, whilst also meaning the government must pay out increasing amounts of pension payments – a concept known as the pensions time bomb. Indeed by 2050 UK will have to spend £80billion more a year than currently on the elderly – 21% of GDP will be spent on long term care and pensions. This has knock on effects on the labour force who will have to pay greater taxes and retire later. However encouraging migration will partially offset this problem as the labour force is increased, hence decreasing the dependency ratio. This increased supply of workers will not only reduce likely rates of income tax, but will help to fill job vacancies – increasing the total output and therefore GDP of the UK.  In a way, high rates of immigration increasing the labour force creates economies of scale with average costs falling, especially if there are high levels of labour market flexibility. But how do we know we aren’t running into diseconomies of scale? It’s hard to know for sure but generally larger population densities are more efficient, and having an increased population gives potential for more spending on infrastructure as tax income increases. In the past fears of overcrowding have often been overblown, and technology has adapted to suit the new environment. The Boserupian theory goes some way towards explaining how an increase in population can be a positive, albeit in a slightly different context.

The stereotype of immigrants is that they fill unskilled, low wage jobs that many locals do not want to do. However there are plenty of skilled immigrants coming into the country too, with their specific talents often needed to do jobs which could not be filled by the average person. This is reflected in the fact that in 2011, 32% of recent EEA immigrants and 43% of non-EEA immigrants had university degrees, compared with 21% of the British adult population. The NHS is a specific case study that could be highlighted to show how reliant the UK is on immigrant workers. Research by the Health and Social Care Information Centre (HSCIC) from 2014 showed that 26% of doctors working in the NHS are non-British. There are fears that the UK’s decision to vote out of the EU could lead to a staffing crisis if immigration is not properly managed. The circular flow of income works with spending of citizens too, and a high rate of immigration will mean there is more spending on goods and services produced by firms in the market. This increases the consumption element of aggregate demand – a significant component making up roughly 66% of all AD. Businesses in the UK profit from this greatly as their total revenue is likely to increase. Another common stereotype of immigrants is that they are a drain to the system by claiming benefits, actually withdrawing money from the UK economy in a way. Research has contradicted this belief, with studies showing immigrants who arrived after 1999 were 45% less likely to receive state benefits or tax credits than UK natives in the period 2000-2011. However in the same period immigrants from non-EEA countries claimed more in benefits than they paid in taxes, mainly because they tended to have more children than native Britons.

Commonly when studying economic issues the concept of quality of life is left out, partly due to it being hard to definitively measure. There is an argument suggesting that high levels of immigration can cause significant social issues. This doesn’t just mean an increase in hate crimes, but problems including shortage of housing with not enough new housing being built. Indeed many of the properties that are constructed are built out into the green belt surrounding towns, reducing green space and contributing to greater air pollution. With it now hard for cities to develop their roads within the city itself an increase in population is likely to lead to an increase in road congestion. Many UK citizens are concerned immigrants will not integrate into society, instead segregating themselves into cliques, or worse – becoming alienated and turning to extremism.  There do seem to be some ‘segregated areas’ within the UK – Tower Hamlets has a 34.5% Muslim population for example. However the problem is much less significant than in other countries such as France, in which notorious suburbs have been known to breed extremism. Integration is a two way process and requires effort from the British majority, and well as any ethnic minorities, to succeed. House prices are a major concern amongst many in British society, especially the young, and high net migration results in increased demand for housing. This has the effect of pushing house prices up, and further exacerbating the problem

There is an economic argument that having a high net migration will depress wages for British citizens. This theory is easily explained with a supply and demand diagram. Immigrants entering the country and increasing the size of the labour force will shift supply curve to the right. At the same level of demand wage rate will fall. This is particularly the case if migrants are happy to accept lower wages. Some may even work for below minimum wage in desperation – such practices are illegal but have been recently unearthed at Sports Direct, showing that it does happen. High net migration bringing wage rate down is actually a good thing for businesses who have their costs of production reduced, but many workers may suffer and native Britons will feel particularly hard done by. There are fears too that high net migration results in high unemployment. ONS long term migrant statistics do not seem to highlight a particular relationship between high net migration and unemployment and in June 2014 a rise in net migration coincided with a fall in unemployment. Issues may arise however in times of economic recession when overall unemployment is high. Immigrants are likely to suffer the most in terms of searching for a job, especially if they lack English language skills or if racial discrimination is prevalent. Indeed between the 1970s and late 2000s unemployment levels were generally higher in immigrant populations than UK natives. There are a number of explanations for this, including the fact that many immigrants tend to work on short term contracts meaning they are more liable to be laid off. Since the turn of the century however the employment gap in immigrants and UK natives has closed.

Clearly there are pros and cons to high net migration into the UK, affecting different people in different ways. This means it does not go far enough to simply say high net migration is either ‘good’ or ‘bad’. For example business owners who gain cheap labour from immigrants would be pleased to see a high rate of migration, but a low-skilled unemployed British native will be negatively affected by high rates of immigration. The reality is that GDP is likely to be slightly increased by high net migration but other economic concepts such quality of life and strain on services must also be taken into consideration when making a conclusion on the overall merits of migration.

One thought on “Immigration. Immigration. Immigration.

Leave a Reply

Your email address will not be published. Required fields are marked *