Reduce net migration if you must, but don't expect it to improve the lot of the lowest skilled and lowest paid
The first thing to do in any discussion about the impact of migration on employment is to disregard MigrationWatch. It brought out a report on Monday noting the correlation between youth unemployment and immigration (finding that, between 2004 and 2011, unemployment among the young had risen from 575,000 to over a million, while 600,000 eastern Europeans had entered the labour force). Matt Cavanagh from the Institute for Public Policy Research took this apart immediately – and if you think that was quick work, bear in mind that MigrationWatch has brought out this report before, 18 months ago, and the flaws in it have already been uncovered. It's reheating material that has already been discredited in the hope that the crisis of youth unemployment will leave us clutching at any explanation. Next it will blame Spanish bluebells, and grey squirrels, and witches.
But on Tuesday two reports came out from more reputable institutions, the Migration Advisory Committee and the National Institute of Economic and Social Research, with different findings. NIESR found no correlation between immigration and unemployment, while the advisory committee found no correlation within the EU, but that for every 100 non-EU migrants, 23 jobs were lost to the indigent population: therefore, the 2.1 million migrants entering the UK between 1995 and 2010 had displaced 160,000 British workers.
The reason for these apparently opposite conclusions is in part due to their different methodologies (explained by Jonathan Portes, head of NIESR, in his blog) and in part to the fact that the committee's conclusions were not as trenchant as the immigration minister, Damian Green, chose to believe when he remarked: "This report makes clear that [immigration] can put pressure on the local labour market." It isn't all that clear – the report is actually quite tentative.
So of course I have a strong leftie twitch going that says NIESR is probably right. Precisely because the anti-immigration lobby overstates its impact on employment so regularly, a study finding no impact has the ring of likelihood. And yet just because we have conflicting results for employment it doesn't mean we have no evidence on what immigration does to the economy.
There are plenty of studies on what net migration does – overall, it boosts gross domestic product. Scott Blinder from the Migration Observatory points out: "You're adding people and they will always have some output, so it's inevitable that you're adding some productivity." What that shows is that GDP is a pretty blunt tool with which to carve any kind of policy. But it also boosts GDP per capita – however, it's "not necessarily good for the GDP per capita for the people who were already here".
If you want to look at the country en masse, immigration is an economic good. GDP goes up, there's not a strong link between immigration and unemployment, and there's not a huge impact on median wages, some studies show a slight positive, some a slight negative. So if you're asking what's "best for Britain", in the politician's parlance, that's your answer. However, the reason median earnings don't change much is because higher earners are benefiting and lower earners are losing out.
You can't really look at the effects of immigration without breaking Britain up into constituencies – high earners, employers, median earners, low earners, unskilled workers. And here it becomes not only complex but more political than economic. Martin Ruhs, also from the Migration Observatory, says: "Some studies conclude that most of the adverse impact of immigration is on migrants who are already here. Which you'd expect, since that's the group most similar to the migrants, so they're competing for the same jobs."
It's ironic that this has led some on the left to conclude that immigration therefore doesn't matter, because you're firing Peter to employ Paul. Someone living here for 30 years would disagree pretty strenuously with that. But maybe that's a subtlety too far, so let's say for the sake of argument that you have set all migrants aside and want to devise policy with the best possible outcome for British workers. Limiting immigration, where it has an outcome, is good for the lowest paid and bad for the highest – and that's great, but it's also quite incongruous from this government, and it's not very clearly articulated.
If a government did say clearly that it was looking to improve the lot of the low-skilled, low-paid British worker, that would open a discussion about whether or not migration caps were the best way to go about it. I think they're circuitous: if you look at migration sectorially, two huge importers of manpower are healthcare and social care, where wages have been driven down in part by the contracting-out of local authority services. Migrants who come in on family or student visas will typically work longer hours for less money because they're not entitled to benefits (the same reason they'll take high-risk black market work; the same reason EU workers are not found to depress British employment prospects, because of benefit entitlements).
Now this isn't really an argument against migration or against benefits; it's an argument for fairer wage settlements and a higher minimum wage. It's an argument against involving the private sector in public duties, because what they call "efficiency" any sensible person would call "forcing down wages".
So, sure, bring down net migration if you want to, but don't expect that to be the answer. If it is, you're not being straight about the question.