Immigration's Inconvenient Truth? UCL Study Says Nothing About UK Immigration and Low Pay

Yet another academic report, this time by University College London, concludes that European migrants to the UK pay more in to the system than they take out in welfare and public services.

But far from being the final word on the immigration debate, it will have little or no impact on wider public opinion about the controversial issue.

Those who feel as though they see no tangible benefits of migration – even if they are broadly better off because of it – are often the low paid, for who the news will be little consolation.

They look at their own situations – little or no work, bad pay, zero hour contracts, welfare cuts – and feel they lose out from migration. That jobs are taken and pay is held down by migrants willing to work longer, harder and for less than the natives, especially in low-skilled work.

The latest UCL study, conducted by its Centre for Research and Analysis of Migration (Cream), found that European migrants to the UK in the years between 2000 and 2011 paid in £20bn (€25.5bn, $31.9bn) into the system.

Over the same period, migrants from the 15 wealthiest EU countries, such as France and Germany, paid 64% more into the UK system than they took out.

And those from the A-10 countries – the poorer eastern European states who joined the EU later and are at the centre of the debate around UK immigration – paid in 12% more than they extracted in public services.

This effectively means that EU migrants subsidise public services for UK citizens. And, by spending their money in the UK economy, they help to create more jobs and revenue for the Treasury.

'No argument'

Clustered in deprived towns and cities with large growing migrant populations, poorer Britons see this immigration first hand and draw flawed conclusions based on the fallacy that correlation equals causation: there has been an increase in immigration, we are becoming worse off, therefore immigration is making us worse off.

So it is no surprise that polling should show around three quarters of Britons want to cut the number of immigrants in the country. According to a YouGov poll in August 2014, 56% of Britons said immigration was the biggest issue facing the country. Behind it came the economy.

This feeling that the poor, low-skilled Britons are losing out economically is compounded by the emotional sense of loss in reaction to a rapid change in the demography and culture of many local communities.

It has powered the surge in the popularity of Ukip, a populist eurosceptic party which argues there are too many immigrants in Britain and wants to leave the EU because of its free movement of labour policy.

Cold statistics showing that European migrants contribute more than they take out of the economy will not change many Ukip-leaning minds. Especially when they are pitched against rhetoric.

"There is no question that it's pushed wage inflation down," said Nigel Farage, Ukip leader, in a fiery speech. "It's helped big companies and big corporations and big landowners to make bigger profits - no argument about that."

There is some research suggesting the lowest paid have had their wages pushed down by immigration.

A previous study in 2013 by UCL's Cream found that for every 1% rise in the share of migrants in the UK-born working age population, there was 0.6% trimmed off the wages of the bottom 5% of earners and a 0.4% fall for the lowest 10%.

Another piece of research by the Special Economics Research Centre found that native unskilled and semi-skilled workers in the UK saw a 0.5% fall in their pay as a consequence of immigration.

"Closer examination reveals that the biggest effect is in the semi/unskilled services sector, where a 10 percentage point rise in the proportion of immigrants is associated with a 5 percent reduction in pay," said the 2008 study, called The Impact of Immigration on Occupational Wages: Evidence from Britain.

Yet these studies also show that the wages of the higher paid are slightly increased by immigration. On average, there is a small uplift in the wages of native British workers from immigration.

Distraction

Jonathan Portes, director of the National Institute of Economic and Social Research, said the evidence on migration and pay is tentative, dated and incomplete. We need more of it before drawing any concrete conclusions. And in any case, it is not the most important factor in low pay.

"Any impact at the lower end is pretty small compared to all the other things going on, like the National Minimum Wage and other changes to the labour market," Portes said.

"It's certainly not the main thing, or one of the main things, responsible for downward wage pressure according to the evidence we've seen so far. But it's also fair to say that we could use some better and more up to date evidence.

"There's quite good evidence on unemployment and employment, which says that there is basically no impact. But the evidence on wages is less strong so far."

Instead, policymakers should focus on tackling education problems, skills shortages, training and making young British people more competitive in a modern, globalised labour market.

"All those issues have been structural problems with the labour market for some time. They haven't gone away," Portes said.

"They were present before we had large-scale immigration from eastern Europe and they'd still be present if we didn't have large-scale immigration from eastern Europe. So we know where the problems are, we've just got to get on and solve them.

"People who talk about immigration as being either the problem or the solution with respect to low pay are trying to distract attention from the real questions."