An eagerly awaited study of EU migration to the UK concludes that short-term migration from the EU explains the apparent conflict between two sets of official figures for migration.
ONS figures show that 265,000 migrants from the EU arrived in Britain between June 2014 and June 2015. But this is far lower than the figure from the Department for Work and Pensions, which states that 697,000 EU nationals were issued with new national insurance numbers to work in the UK over the same period.
The new analysis from the Office for National Statistics concludes that the difference is accounted for by short-term migrants — people from other EU countries coming to Britain to work for a short period.
But Jonathan Portes, principal research fellow at the National Institute of Economic and Social Research (NIESR), was sceptical of this interpretation and noted that analysis of additional data from HM Revenue & Customs, which was also presented by ONS, “suggests . . . there was [also] a degree of undercounting of long-term migration from EU member states”.
Migration — and its possible effects on employment and wages of British nationals — is one of the most important factors determining how people will vote in the referendum on June 23. The ONS’s finding that the figures for long-term migration may understate the number of EU migrants actually competing for jobs in Britain throws renewed attention on the question of what effect migration actually has on wages and unemployment in the UK.
Who are the EU migrants?
In 2015, there were approximately 3.3 million EU immigrants living in Britain. About a third live in London. EU migrants tend to be younger and better educated than the UK-born population. They are also more likely to be employed — indeed, work is the main draw for them to come to Britain.
What is the effect of migration on unemployment and wages?
One theory has it that migrants compete with the local population for jobs, driving down wages and pushing up unemployment for British people. But this ignores the fact that migrants also buy goods and services — providing a boost to the economy and creating new jobs. Migrants might also bring useful skills that complement those of the indigenous workforce.
There is little evidence that more migrants push wages down or unemployment up. Economists from the Centre for Economic Performance at the London School of Economics say that when they look at the areas with the largest increase in EU immigration, these have not seen the sharpest falls in employment or wages since 2008.
Jonathan Wadsworth, one of the authors of the CEP report and a former member of the government’s Migration Advisory Committee, says: “There is still no evidence of an overall negative impact of immigration on jobs, [or] wages.”
Do low-skilled UK citizens bear the brunt of EU migration?
A number of studies have found there is a small negative effect of migration on the wages of low-skilled workers — those with whom migrants compete most directly.
Research published last year by Sir Stephen Nickell of the Office for Budget Responsibility suggested there was a small negative effect of migration on the wages of locals in the semi-skilled and unskilled service sector — such as care workers, shop assistants, restaurant and bar workers.
Mr Portes of the NIESR thinks Sir Stephen’s research results are nevertheless small. “The impact of migration on the wages of the UK-born in this sector since 2004 has been about 1 per cent, over a period of eight years,” he says.
While not disputing Mr Portes’ assessment, Professor Ian Preston of University College London notes that the government could nonetheless improve the outcome for the low paid. The role of government should be “to see that the long-term benefits [of immigration] are enjoyed widely and the negative effects on those whose lives may be disrupted are recognised and addressed,” he says.
What effect do migrants have on public services and the public finances?
Recent EU migrants have typically been relatively young and are more likely to be in work than the local population. Consequently, they place less demand on many public services, are less likely to receive benefits and pay higher levels of taxes on average than UK citizens do.
Professor Christian Dustmann of University College London has found that between 2001 and 2011, the net fiscal contribution of migrants from the ten central and eastern European countries that joined the EU in 2004 or 2007 was almost £5 billion. Over the same period, British citizens received more in public spending than they paid in tax.
But this sort of comparison provides a partial picture. New migrants are young and likely to be employed. Locals with the same characteristics will also place a relatively low average demand on the public purse. If migrants stay in Britain into old age — when they may start to draw more heavily on health services and public pensions — their net contribution is likely to diminish.
However, even taking account of these longer-term effects, the OBR suggests that the UK’s fiscal position would be significantly worse in 50 years if migration was to be lower.
Will the new “benefits brake” have any effect?
The “emergency brake” on in-work benefits for EU workers in Britain was negotiated by David Cameron as part of his renegotiation with the bloc’s members in February. However, the OBR’s Sir Stephen told MPs at the end of last year that the plans were “unlikely to have a huge impact” on migration numbers, although he admitted he had not conducted any detailed work on the issue.
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