UK: Proposed new living wage will attract more migrants from Eastern Europe

The UK Chancellor George Osborne's proposal to gradually raise the national living wage to £9 per hour by 2020 for those over 25 years of age, will attract more migrants from eastern European, experts have warned.

They claim that the higher living wage will "make the UK more attractive to every economic migrant."

The new national living wage will make the UK minimum wage one of the highest in Europe. It will be set at 60% of UK median earnings for anyone aged over 25, the Guardian says.

The newspaper said the OECD minimum wage statistics are only available as of 2013 but given the trend in minimum wage rate rises over recent years, the new UK rates will be close to the hourly level of France and more than double that of Spain, and most of the eastern European countries.

Currently the national living wage is a voluntary £7.85. The new living wage proposed by Osbourne will be introduced from April 2016 for employees aged 25 and over. The current minimum wage for over 21s is £6.50 per hour.

The government is maintaining the lower wage for those under 25s as it believes it will help them secure work and gain experience.

The move to hike the living wage will make it harder for the Conservative government to meet its election manifesto to cut net immigration to the tens of thousands of people very year, the Telegraph said.

Lord Green of Deddington, the founding chairman of MigrationWatch said: "When it comes fully into effect in two years' time, it will add to the incentive for east European migrants to come to Britain – if they are single.

"In later years, they would lose benefits if they were married and had children. It is possible that it will attract single under-25s more strongly than present."

Conservative MP Andrew Bridgen agrees, saying: "It is an unintended consequence – it will make the UK more attractive to every economic migrant."

He said this reinforces the "importance of border controls over who comes into our country" and Prime Minister David Cameron's renegotiation on this with the European Union.

60,000 people expected to lose their jobs

The National Institute for Economic and Social Research, which was commissioned by the Foreign Office to look into the effect of increased migration on the UK, said the new changes would make migrants more attractive to British employers.

Jonathan Portes, director of the institute said: "It is difficult to avoid the conclusion that the net impact of these change will be to make the UK labour market more attractive to low-paid EU migrants, and possibly, such migrants more attractive to UK employers."

He also said that there will also be a significant incentive for employers to employ the under-25s as they will be considerably cheaper.

The Office of Budget Responsibility has warned that 60,000 people are expected to lose their jobs as a result of these new changes.

The Country Land and Business Association (CLA) which represents rural businesses said that farmers and other rural businesses will now see a "significant inflation in their wage costs", noting that the cut in corporation tax to pay for it will not be benefit them. This is because hundreds of thousands of family businesses in rural England and Wales are unincorporated and therefore are taxed on higher tax rates.

"We now need an urgent plan for how to ensure rural businesses are not left behind and jobs in rural communities are not put at risk," its President Henry Robinson said.

A UK Independence Party (Ukip) spokesman said if the chancellor does something to make life easier for low paid workers, inevitably in doing so, and given the relatively low wage rates in the rest of Europe, he makes the UK an even more attractive place to work.

"Ukip has always thought that the in-work tax credits are marginal in decisions about whether to come here. We have a deeper philosophical disagreement that we cannot decide who comes to this country," the spokesman said.

The Prime Minister's official spokesperson however denied this. She said: "There are already differences within wage levels across the European Union. There are other countries that already pay higher wages and we are reducing pull factors with the changes that are being made to the tax credit system."