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Exposed: the myth that wages are being driven down by migrants

Ed Miliband’s speech last week blamed low wages on immigration from eastern Europe, but Tom Walker finds the figures tell a very different story

Published Tue 3 Jul 2012
Issue No. 2310

It can seem like common sense that migrant workers would cause wages to fall. After all, if they’re willing to do the same work for a lower wage, surely there will be downward pressure on pay?

Labour leader Ed Miliband is the latest to propagate this myth. He argues that “migration, especially from the expanded EU” has had “a direct effect on wages, especially in lower skilled jobs”.

But the expansion of the EU is one of the more studied cases of mass migration—and the statistics show that Miliband is dead wrong.

In 2004, eight eastern European countries joined the EU—the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, Slovakia and Slovenia. Since then there have been several major studies into the effects.

One shows that even though 560,000 migrants came to Britain in the two years from 2004, it had no measurable impact on wages.

Studies into migration usually have the problem that it is impossible to know what would have happened if the migrants had not come. The authors argue that 2004 was a “natural experiment”.

Some areas received large numbers of migrants while others got very few. The tiny difference they found between these areas suggested that migrants may even increase wages.

The study also says that in the year after EU expansion, low-skilled and low-paid workers saw their wages rise by more than in previous years—and they certainly did not fall as Miliband claims.

Boom

That was during the economic boom. But what about now?More recent figures show that from EU expansion in 2004 until 2008, the average migrant’s wage fell.

That reflects the higher proportion of migrants coming from eastern Europe, compared to higher-earning migrants from Western countries.

But non-migrants’ wages continued the long rise they had been on since 1998, even while hundreds of thousands of migrants were arriving.

It’s only after 2008, with the onset of economic crisis, that wages started to fall. Since then both migrant and non-migrant workers have been involved in struggles over pay.

Migrant workers took part in the electricians’ strikes last winter, which defeated a 35 percent pay cut.

The data shows clearly that it’s not migrants who hold down wages. It’s the bankers and their crisis, and the bosses who are taking advantage of it—who should take the blame. Unity between migrant and non-migrant workers is the best way to beat them back.


Do migrants take ‘our’ jobs?

One of the most common myths is that migrants cause unemployment by taking jobs that could have gone to someone else. But the number of jobs available is not fixed. Jobs are created and snatched away by bosses for reasons that have nothing to do with migration.

The figures show that workers migrate when there are jobs available, as there were in Britain in 2004. Fewer people come when the number of jobs goes down.


Who pays more for services?

Ed Miliband argues that migrants put “pressures on scarce resources such as housing and schools”. But migrants make much less use of public services—and pay more taxes to fund them.

In 2008-9, eastern European migrants made up 0.91 percent of the population. But they accounted for just 0.6 percent of public spending—while paying 0.96 percent of the total tax collected.

They paid an estimated 1.3 percent of all VAT. And remember all the migrants whose work makes public services possible.


Are ‘they’ here to get benefits?

The idea that migrants just come over and go on the dole is far from the truth. In fact migrants are 60 percent less likely to claim state benefits than people born in Britain.

They are also 58 percent less likely to live in social housing. This is not something to celebrate. Welfare should be for everyone, whatever country they were born in.

Sources: Characteristics and Outcomes of Migrants in the UK Labour Market, C Rienzo (Migration Observatory 2012); New Labour? The Impact of Migration from Central and Eastern European Countries on the UK Labour Market, Lemos and Portes (IZA 2008); Assessing the Fiscal Costs and Benefits of A8 Migration to the UK, Dustmann et al (CReAM 2009)


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Background Check
Tue 3 Jul 2012, 17:54 BST
Issue No. 2310
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