Low paid jobs for British born workers

I have always had a problem with those who focus on the need to reduce low skilled immigration. Skilled migrants are OK, so the argument goes, because the UK needs their skills, but we don’t need low skilled immigrants because British workers can do those jobs. At a microeconomic level it makes sense, and in a world where there is widespread unskilled unemployment it may make sense. But in a high employment economy like the UK today, it makes no sense at the macro level.

To see this, let’s think about a stylised example. Suppose there are a fixed number of jobs at each skill level. You will always need the same number of engineers, care workers and so on. To make things easy suppose 50% of jobs are skilled and 50% are unskilled. You then allow some skilled immigration but not unskilled immigration. These immigrants demand goods and services like anyone else, increasing the overall number of jobs in the economy but not its skill mix. That has to mean that among British born workers, less than 50% are now skilled and over 50% are unskilled. The immigration system is shifting the British born workforce into more unskilled jobs.

It gets worse if we recognise that a skill based immigration system is, in essence, about pay, not skill. With the exception of those with a recognised qualification like a PhD, it is hard to measure how people's skills compare. What you can assess is how much they will be paid in the job they have been offered. So in the first instance an immigration system that is designed to exclude unskilled workers is actually excluding low paid workers. If you combine that insight into the stylised example above, it must mean that the immigration system is shifting the British born workforce into lower paid jobs.

So when people call for an end to unskilled immigration, they are in effect calling for more British born workers to be low paid.

That is a necessary conclusion from the assumptions I have made, but are my assumptions wrong? Home Secretary Priti Patel says there are 8.5 million economically inactive people in the UK who could do these unskilled jobs. By implication, unskilled migration is preventing these people getting jobs. The ONS estimate that only 1.9 million of those people want a job, and it is an open question how many can actually do the kind of jobs we are talking about, as very few are discouraged workers and many more are students, the sick, carers, or have retired early.

A second key assumption I made is that the number of high and low paid jobs does not change. Could stopping most low paid immigration force firms who pay low wages to pay more, or invest in labour saving machinery? For example, in talking about the care sector, the recent MAC report says

“We remain of the view that the very real problems in this sector are caused by a failure to offer competitive terms and conditions, something that is itself caused by a failure to have a sustainable funding model.”

But as Polly Toynbee points out, working in the care sector (which should be classed as skilled but isn’t because the pay is so bad) is poorly paid because the money comes from the government via local authorities. Restricting immigration will not push up wages because the government ensures there is no money to pay higher wages. All that would happen is firms would be unprofitable and close down. A social care disaster is a very expensive way of getting the government to pay more.

But there is a more general point to be made here. We have a more efficient way of raising low pay than starving particular sectors of overseas workers, and that is by raising the minimum wage and enforcing that minimum. Take the food processing sector, which is another area that depends on many low paid workers from overseas. If you steadily raise the minimum wage, and pre-commit to doing so, you give firms time to adjust through mechanisation or raising wages. If the flow of workers suddenly dries up, it is more likely the firm will decide to locate its production overseas, which in turn may damage domestic supply industries.

One Brexiter, the CEO of the Scottish Seafood Association, has already said the plans would be disastrous for the Scottish fishing industry, for exactly this reason. As Jonathan Portes points out, the government’s plans largely follow MACs recommendations, and they could have been a lot worse. In practice the number of sectors where some unskilled immigration is allowed in is likely to expand from industry pressure.

If it doesn’t, then the UK food processing industry is not the only one that is likely to shrink. The UK tourism industry, that brings in lots of export earnings, will also be hard hit. Some industries cannot be so easily shifted overseas. The construction sector may just have to delay completion of some projects. I have already noted the problems in the care sector.

Why has the government chosen to go with the 'skilled immigrants good/unskilled immigrants bad' idea? As Bronwen Maddox says, it is a political rather than economic choice. It reflects the fact that the economic case for immigration cuts through. As I noted here, the salience of immigration has been falling since just before the referendum vote. It is easy to put that down to voters thinking that Brexit has solved the immigration problem, but an IPSOS/MORI poll suggests that is not the most important factor.

Half the people surveyed are less worried about immigration because they have understood the importance of the contribution immigrants make. Now immigrants with skills, in many people's minds, provide a clear contribution to the economy because of their skill, particularly if there are not enough workers with similar skills from the UK. That does not apply to unskilled workers, hence the focus on stopping unskilled immigration. In addition, all the negative stories they read about immigrants involve those who are unskilled.

As a result, politicians who want to appear ‘anti-immigrant’ focus on stopping unskilled immigration. But if you asked voters do they want British born workers to do more low paid work, the answer would be an overwhelming no. Thinking in macro terms is not easy. The reality is that, unless the government is planning to close down whole industries, restricting low paid immigration implies lower pay for British born workers.

Problems with triangulating over immigration

I have talked before about why triangulation over austerity did not work for Labour, but why triangulation over Brexit seems to be more successful. Tony Blair’s latest intervention suggests it is worth asking the same question about immigration. (The report that he launched is well worth reading.) It is a question that lies at the heart of many Labour MPs views on the politics of Brexit.

One of the lessons from austerity is that it is very dangerous to triangulate on an issue where you appear, as a result, to admit fault or blame. If the deficit is a problem (in 2011, say), why did you let it get so large on your watch? This was why ‘too far, too fast’ failed: you acknowledge a problem, and therefore implicitly admit guilt. Getting over the idea that there is a delicate balancing act between reducing the deficit and protecting the recovery is difficult, particularly as it is also an incorrect idea.

It is an obvious point, but exactly the same was true for immigration. Just look at the headlines. The parallels with immigration and the deficit are clear. In office, Labour did the right thing in ignoring the deficit in 2009, and they also did the right thing in allowing substantial EU immigration before then. In both cases the instincts of many voters is to do the opposite: the government should tighten its belt in a recession just like the rest of us, and the country should be able to control and limit who comes in. In both cases, the moment a government that in the past appeared to ignore these voter instincts starts to appear to suggest the instincts are valid, they trash their own record.

You could argue that while this is clearly right for Miliband and 2015, it has less salience for Corbyn rather than Blair today. You could go further and say that what works for Brexit will work with immigration. Just as triangulation gets you the votes of those who sort of want Brexit but worry about the economic consequences, so too could triangulation over immigration get you the votes of those who want to control immigration but are worried about the economic consequences of May’s obsession with hitting targets.

Here I think we need to look at a second problem with triangulation, which is that the nature of the political debate is influenced by it (is endogenous to it). With Brexit it means that neither of the two main political parties is making the case against Brexit, so the (non-partisan) mainstream political debate tends to ignore the anti-Brexit case. One of the unfortunate consequences of the way the BBC and others interpret impartiality is to see it in terms of the two main political parties, rather than (in this case) the population as a whole, so the views of half the population get largely ignored.

You could argue that this may be of secondary importance for an issue like Brexit, because the anti-Brexit case is still fresh in the mind from the referendum campaign. But that is much less true of immigration. Immigration is now well and truly defined in the media as a ‘problem’, and it is very rare to hear a politician (or anyone else) sing its praises. (Jonathan Portes does his best, but when a well known BBC commentator says his views will not win many votes, you get a clear idea of what is going on. [1]) May is quite safe from the media when she says immigration reduces wages and access to public services. The implication of all this together with a large partisan print media is politicians fear talking about the benefits of immigration because that may ruin a carefully triangulated position.

The reality is of course very different. Study after study after study (from academics, not partisan think tanks) shows how much we benefit from EU migration, and how it has virtually no impact on wages. Immigration increases the resources available to provide public services by more than it uses those services. Yet this knowledge is not reflected in the media discourse. The reason is straightforward: the political right wants to use immigration as both an excuse (for the impact of austerity) and a weapon (to achieve Brexit, for example), and the left by and large keeps quiet because it is triangulating.

People in the media may object by quoting polls that suggest the public overwhelming wants to control immigration: they are just reflecting that opinion. (But see footnote [1].) But polls also say people want less taxes. If you dig deeper public attitudes are far more nuanced than the public debate suggests. Here is some data, from an international study, by IPSOS-MORI:

“British people have become more positive about the impact of immigration over recent years. Forty-five per cent say immigration has been good the economy, up from 38% a year ago and from 27% in 2011, and 38% say immigration has made it harder for native Britons to get a job, down from 48% a year ago and 62% in 2011. However, Britain is one of the countries most worried about the pressure placed on public services by immigration, with 59% concerned – although this too is down from 68% a year ago and from 76% in 2011, when Britain was the most worried of all the countries surveyed.”

In other words, as I have emphasised before, the thing that most worries people in the UK about immigration is a myth. Yet triangulation, together with the way the media creates what I call ‘politicised truths’, means that voters are unlikely to find out what the facts are. [2]

The way this ambivalence is often articulated is through the issue of skill. 75% of people want skilled migration to stay the same or increase, while the consensus is that we should have less low or semi-skilled migrants. Yet if you name some categories of semi-skilled migrants, it turns out a majority want the same or more care worker, waiters, construction workers [3] and fruit pickers. As Rick says “apart from the care workers, construction workers, waiters and fruit pickers, what have low skilled* EU migrants ever done for us?” Skill has just become a way of people reconciling their wish for lower immigration in abstract with a recognition that immigration is good for the economy. It is like wanting lower taxes achieved through improving the efficiency of public services.

So how can something that people are ambivalent about become a major political issue that helped push us out of the EU? One answer is the sheer weight of numbers, and for some particular regions not previously experiencing inward migration that seems to be true. (It also reflects the inertia in public service provision.) But the rise of anti-immigration sentiment elsewhere in Europe where recent flows are not exceptional suggests other forces are at work. In part it is far-right parties exploiting fears about terrorism. But much more importantly in the UK, it reflects the deliberate exploitation of immigration as an issue by the Conservative party.

This predates the increase in immigration from Eastern Europe. In 2001 William Hague talked about Tony Blair wanting to turn the UK into a ‘foreign land’. The political temptation on the right to play the immigration card is strong, but until Brexit it has always been duplicitous. The wiser heads in the Cameron/Osborne government never wanted to hit their own targets because of the economic damage it would cause, and as a result they did not even bother to use all the controls that were available with free movement. As Chris Dillow says, immigration was the only scapegoat left to deflect concern about austerity and stagnant productivity. Immigration scapegoating became part of what I have called neoliberal overreach. [4]

This is I think the main reason why triangulation over immigration is not an effective strategy. By trying to appeal to those who are moderately concerned about immigration, Labour falls into a right wing trap, which is to implicitly validate their scapegoating. You can only convincingly argue that scarce public services are due to austerity rather than immigration if you can argue at the same time that immigration brings more resources to the public sector than it uses. You can only argue that economic policy is responsible for stagnant wages if you also say that it is not the fault of immigrants. Labour should go with its members and argue for the benefits of immigration, and in particular free movement with the EU. [5]

[1] This simple exchange illustrated so clearly to me why the BBC’s so called mission to inform and explain is often no more than a joke. Rather than regard popular beliefs that are incorrect as something the BBC has a duty to try and reverse, they are instead used to dismiss expertise.

[2] This is not just a UK phenomenon: around the world politicians use immigrants as scapegoats.

[3] I’m often told that economic studies of the benefits of immigration ignore ‘existing capital like housing’. Yet we need migrants to help build more houses for natives as well as migrants. The only thing that migrants cannot bring to the UK is more land, but with an effective regional policy which we desperately need anyway we have plenty of land.

[4] Some have asked why I called it overreach, when most just talk about the collapse of neoliberalism? For a start, using immigration as a political weapon is not a natural consequence of neoliberalism, and instead comes more from the social conservative part of right wing parties. Also while I think neoliberalism encouraged austerity, I can quite imagine those with neoliberal views forsaking it.

[5] There is an argument that free movement should be opposed because it is unfair to non-EU migrants. Yet you could make the same point about any trade agreement between two countries: it is unfair on all other countries. Arguments about equity that make some people worse off and no one better off give equity a bad name.