Examination of Witnesses (Questions 220
- 236)
TUESDAY 13 NOVEMBER 2007
Dr Stephen Drinkwater and Dr Bridget Anderson
Q220 Chairman:
Does that imply that the wages would go up because they would
have to in order to get anybody, but somebody else would have
to pay, either the taxpayer or someone?
Dr Anderson: It would be very difficult to have
care in private homes because British people are reluctant to
do that. They are reluctant to live in because of work/life balance
and because there is a certain status about living in and being
in that kind of relationship in a private household. Perhaps what
would happen, but this is a complete hypothesis, is that wages
would have to go up in care homes and that then the amount that
is paid by local authorities per head for care of the elderly
would also have to go up.
Q221 Lord Paul:
Is it not already happening? People just cannot afford some of
the jobs which people used to have and they are not taking those
kinds of workers in households. Far fewer people are prepared
to employ them than before.
Dr Anderson: Far less demand?
Q222 Lord Paul:
Not far less demand but just affordability.
Dr Anderson: There are far fewer British workers,
but there are many overseas nationals working on a wide variety
of visas because there is no formal visa for this kind of work.
It is pieced together somewhat.
Q223 Lord Paul:
Last year your research paper stated that "many employers
were prepared to bend the rules or turn a blind eye to possible
infractions of immigration status". How common is this and
how serious are the infringements?
Dr Anderson: How long is a piece of string?
One of the misconceptions around illegal immigration is that basically
it is very simple: you are either legal or you are illegal. The
paper that you were referring to is really explaining that the
situation is much more complicated and introducing the notion
of semi-compliance which is basically people who are residing
perfectly legally, but breaking the conditions on which they were
allowed to enter. For example, students are allowed to work in
term time 20 hours a week. Many students work far more than that,
so we would call that semi-compliance. In terms of how prevalent
it is, in the research that we did before EU enlargement—and
we have to have all sorts of caveats about the sample because
it was not a random sample—just over two thirds of student
visa holders were working in excess of 30 hours a week outside
of term, so significantly breaching the rules. Interestingly,
over two thirds of au pair visa holders who are not allowed to
work outside the home were working outside the home as well as
for their host family. How prevalent is this? Well, it is difficult
to say. On the one hand, you might say "All this has been
done away with, with a sweep of the hand, because of EU enlargement
those people would no longer be semi-compliant". But of course
for A8 nationals there is still the question of whether those
who ought to register with the Workers' Registration Scheme have
registered, but you also have to look more deeply at the structural
questions and the complexity both of the immigration system and
of the de-regulation of the labour market to see there is space
here for bending the rules and it is easy to break the rules and
you might not even know that you are doing so. I would not like
to hazard a guess, but I would say that you need to look at the
structures. The structures are there for this kind of thing to
continue. How serious it is is a political decision. If you have
a student who is working 21 hours a week, 25 hours a week, 30
hours a week, when does that become a problem? One of the things
that we found that was interesting was that while some of the
infractions would not be a problem to the person on the Clapham
Omnibus, for example with au pairs, we found that most host families
actually were actively encouraging their au pair to work outside
the house, "Get yourself a job in a bar, earn a bit more
money", actually they are encouraging them to break the immigration
rules, but they are not thinking "Oh, I am facilitating illegal
immigration". Finally, you can see in the Government's document
Enforcing the Rules, which came out in March 2007, that
what is interesting about that is that it is not just about the
degree of infraction of the rules, but actually who does it. For
example, the Home Office gives the example of overstayers says
"Well, yes, people overstay. Those who overstay and who come
from a country with a high GDP do not create as much harm as those
who overstay and come from countries with a low GDP". This
is interesting. It is who is breaking the rules that seems to
matter politically.
Q224 Lord Paul:
Could you just explain how that happens that students from countries
with lower GDPs do more harm?
Dr Anderson: You would have to ask the Home
Office. They state that illegality causes harm but there are degrees
of harm from national security through to simply destroying the
integrity of the system, causing problems for the integrity of
the system. They locate illegality of different categories within
this spectrum and then, in the example they give of overstayers,
they say that the problem is which country those people come from,
whether they come from a wealthy country. Of course, a lot of
overstayers are from the States and from Australia and Canada.
They would allegedly cause a low degree of harm unlike other types
of overstayers who might claim asylum.
Q225 Lord Moonie:
What effect does illegal status have on the earnings and employment
conditions of migrants?
Dr Anderson: The first thing is that employers
have to know that you are illegal and they might not necessarily
know that you are illegal. Also, we cannot say that there is a
straightforward correlation between illegal status and poor earnings.
That is certainly the findings of research that we have done at
COMPAS because we found that with A8 nationals, certainly before
EU enlargement, there were people who were working illegally but
not earning significantly less than those who were working legally,
though I have to say this is a particular group. We find that
there are many reports of A8 nationals who are now presumably
all working legally and we hear reports of them working below
the minimum wage. I suppose all we can say is that it is complicated.
Q226 Lord Macdonald of Tradeston:
Dr Drinkwater, your written evidence suggests that recent migrants
from the A8 countries take up more low-skilled jobs in the UK
than other migrants. Why is this happening? Is there any general
pattern of different migrant groups doing different types of jobs
in the UK?
Dr Drinkwater: A lot of it has to do with what
we were discussing earlier about the actual migration strategies
and the nature of migration which has been taken up by these individuals.
In particular, the short-term migration would imply that the individual
may not be prepared to invest heavily in their human capital if
they are only going to stay for a short period, in addition to
the fact that they might be coming here not just purely for financial
reasons but for lifestyle choice reasons as well. I have seen
it compared to UK youngsters going to Australia, like backpacker
tourism in some ways. It is a rite of passage for many since they
gain an independence from their family. The other big thing is
skills in the English language. A8 migrants may have more difficulties
in English language than other migrants. For example, there is
only limited information on this from the Labour-Force Survey,
but from the questions that are available there, around about
a third of recent A8 migrants had difficulties either obtaining
or keeping a job because of language difficulties, compared with
less than 20% of other migrants. Language has an important impact
on the type of jobs that these individuals take, particularly
forcing them into the low-wage sector.
Q227 Lord Skidelsky:
What are the main determinants of the migrants' performance in
the labour market, in particular their earnings and employment
rates? How do the earnings of migrants compare to British workers
and does this change over time? Are there any particular policy
measures the Government can take to help migrants integrate better
into the UK labour market? Again, I am conscious of using the
word "migrant" here in a vague way.
Dr Drinkwater: Again, language is an important
issue here. A number of studies have found that in terms of the
UK, those with poorer English language skills, and in other host
countries, tend to earn lower wages, up to maybe 20% less than
other migrants. As in most labour economic studies, another very
important determinant is other forms of human capital, particularly
in terms of education and experience. Given that most migrants
tend to be relatively young, the experience issue may not be so
important but their education is very important and even when
migrants come with higher levels of education from their home
country, they might actually still have relatively low-wage jobs
because those qualifications may not be recognised by employers
at the same levels. Another important point to note is that we
are talking about different types of migrants, and migrants from
different countries of origin display a huge variation, particularly
in terms of earnings of different migrant groups. For instance,
a recent IPPR report which was publicised on the Despatches
Channel 4 documentary showed that hourly earnings ranged from
over £17 per hour for migrants from the US to £7 an
hour for migrants from Poland and then in the middle of that was
the UK born's average earnings of about £11 an hour. There
is a huge degree of variation amongst the different migrant groups
and that is linked in terms of their occupational attainment and
also to the nature of migration, whether the migration is permanent
or on a much more temporary basis.
Q228 Lord Skidelsky:
I can see very much that wage patterns amongst migrants and particularly
low-wage migrants are a problem maybe for native workers, but
are any of these things problems for the migrants themselves.
They come here for a variety of motives and they earn wages that
we would consider very low, but that is perhaps not the most important
thing for them, yet we are discussing their problems. I sometimes
feel that there are not any problems for them or not that many.
Dr Drinkwater: In terms of the survey evidence
that we have done, that is true, certainly at the start, in the
sense that they are prepared in some ways to take low wages as
they think that their actual status is somewhat higher because
of the potential progression which they could encounter later
on in their labour market careers if they stay for longer in the
UK. For example, and we have been mainly looking at Polish migrants,
they think there are barriers to further progression in Poland.
At the start, they are also willing to trade off lower wages for
having these lifestyle changes. But we are only starting to see
this, given enlargement is still only a relatively recent phenomenon,
and over time there may be greater disquiet if there is not as
great a progression through the labour market as they might have
wanted to see.
Dr Anderson: We also have to look at the costs
of agencies in terms of the cost of the investment in coming to
the UK. It is slightly different for A8 nationals, but people
who are travelling a long way and have perhaps borrowed extensively
and deeply thinking that they were going to be able to repay,
not really knowing the cost of living in the UK and so on, that
is a real problem. I just draw your attention to the recent report
of the Low Pay Commission which found that six of employers say
that they employ migrants as a wage depressing measure which I
thought was quite interesting.
Q229 Lord Turner of Ecchinswell:
What do you know or other people know about the impact of migrant
workers? I am using that in the strict sense that you defined
it as, which actually was an extremely useful reminder that we
need to be precise there. What do we know about the impact of
migrant workers on the enforcement of the minimum wage? You implied
earlier that employers might prefer migrant workers because it
makes retention easier, because people need to stay with that
employer because their quasi-legal status may sometimes make it
difficult to move. Is that also true otherwise that they sometimes
have a collusive relationship with an employee where they are
helping the employee exist in the grey areas of their work status
but the flip side of it is the minimum wage is not entirely complied
with? Is there any evidence of that sort of behaviour?
Dr Anderson: I would hesitate to use the word
"collusion" because that suggests a certain equality
whereas actually of course people can be very anxious about their
status or, even if they are perfectly legal, that their visa will
not be renewed if they put their head above the parapet. I thought
it was interesting that 20 of the 15 employers who were investigated
monthly by the Low Pay Commission and had registered with the
workers' registration scheme, 20 since 2004, have been found
to be in breach of national minimum wage legislation, and in fact
the Low Pay Commission found that the evidence of migrant worker
exploitation was "compelling". So there does seem to
be some issue here. I also emphasise the importance of agency
working. It is very difficult to tell. There is no doubt that
migrant labour is very important for businesses and employment
agencies. The workers' registration scheme data suggests that,
but it is not disaggregated so you cannot actually tell the proportion.
However, that has an impact on deductions, on actually who the
employer is, it has all sorts of enforcement issues and has also
been recognised as a problem for health and safety. People talk
about the ping-pong of who is responsible for health and safety
when you have employment agencies working.
Q230 Chairman:
Dr Drinkwater, you have apparently examined the impact of migration
on the Welsh labour market. We had mention before of how the Welsh
workers came to England and were migrant labour some time ago.
This is immigration on the Welsh labour market. How does it differ
from England or the rest of the UK?
Dr Drinkwater: The first thing is that the scale
of it differs. If you look at the Workers Registration Scheme
data, Wales has received the least number of migrants from the
new accession countries and substantially less than other parts
of the UK. To some extent, that has less impact on Wales in general,
but there are pockets where there has been a large degree of immigration,
for example in Llanelli, which has now been termed "Llaneski"
because of the large number of Polish migrants there, and also
in parts of North Wales such as Wrexham. So it does have an impact
on certain areas. In terms of the total numbers, they are relatively
low in Wales but there have been differences. Even though the
characteristics of migrants tend to be similar, the sectors they
have moved into are slightly different in that there are many
in manufacturing and fewer in agriculture in Wales, despite it
being a rural country, but the types of agriculture which go on
there are not conducive in some ways to the migrants who are coming
from the A8 countries. The other interesting thing, is that there
has been a migration, particularly of young and skilled Welsh
people, to England. What migration can do is replace some of what
might be termed as a brain drain from Wales. That has not been
analysed too much but it is an issue which could be seen as a
positive benefit for Wales.
Q231 Lord Layard:
May I ask about legality? Do you have any estimate of how many
illegal migrants are working in Britain? Do you have any idea
about how many of them are paying tax or not paying tax? What
can one say about the differential impact of illegal immigration
on the economy compared with legal immigration?
Dr Anderson: One thing to say, as I indicated
in my earlier answer about semi-compliance, is that we have a
real definitional issue here. The Government estimate more or
less half a million people, but that estimate is based on illegal
residents. If we, as your question suggests, look at illegal working,
then we have to include semi-compliance and where that becomes
a problem and where you draw the line is very vague, so actually
giving numbers about that, rather than simply saying the conditions
are such that it is likely to be significant, is very difficult.
The other question, of course, is that people's status does change
over time; it is not static. Once you are legal, you can become
illegal: once you are illegal, you can become legal. It is important
too to recognise that just because you are illegally resident
does not actually mean that you are breaking the law in other
ways. You might well in fact be paying tax and national insurance
if you are working on false documents, as many people are. Certainly
in the research we did pre-EU enlargement we found that many of
the people who were working, both in a semi-compliant and totally
illegal way, were paying tax and national insurance. Certain types
of workers such as workers under the seasonal agricultural workers
scheme do not have to pay national insurance and that is part
of the deal. It is a more complicated picture really.
Q232 Lord Paul:
After hearing your views on the whole question of illegality,
do you have any idea how many workers are illegal under your definition?
Dr Anderson: I really would not like to say.
Q233 Lord Paul:
Do most illegal immigrants avoid paying tax? How does this illegality
influence the economic impact?
Dr Anderson: Quite frankly, I do not know how
I would say illegality affects economic impact because, as I indicated,
I have such a problem with what we mean by illegality and whether
we count the au pair moonlighting in a bar as an illegal worker.
In research I have done, very often people who are illegal straightforwardly,
working and residing illegally, are quite anxious to be as legal
as possible because they do not want their immigration status
to get found out. It is more complicated.
Q234 Lord Moonie:
What differences have you found between intended and actual duration
of stay in the UK?
Dr Drinkwater: We have both done some work on
this and it relates back to what I was saying earlier about the
type and nature of migration which has come in particular from
A8 countries where it has been much more short term, circular,
and seasonal migration. If you look at the statistics published
by the Government in terms of the Workers Registration Scheme,
they indicate that about 55 of people who initially register
on the scheme say they intend to stay for less than three months
and a further 25% say they do not know. It is very different
from the types of migration we have observed in the past, particularly
from new Commonwealth countries. Whether or not that is an accurate
representation of what they do say is another matter and whether
or not, in particular, they are saying it because they do not
know what to expect when they come or because they fill in a government
survey and they do not want to say they are going to stay for
a long time. Work we have done in Surrey, and in COMPAS as well,
seems to indicate a lower proportion would stay for that short
period of time and a higher proportion stay for longer, perhaps
permanently. A lot of it is to do with the fact that they have
come here and they have maybe settled down and stayed longer than
they initially intended.
Dr Anderson: It is also that people change their
minds. They can change their minds both ways but methodologically
research will pick up the people who stay and they will not pick
up the people who go. Although I am in broad agreement, we have
to have some kind of caveat about the problems of research in
this particular area.
Q235 Lord Macdonald of Tradeston:
We have heard that many recent migrants are over-qualified for
the jobs they are doing. Is there any impact of that skills mismatch
and do you expect such migrants in low-skilled jobs to move on
soon to jobs which better match their skills? Is there evidence
of this?
Dr Drinkwater: Traditionally it has been found
in research into the economic impact of migration that migrants
may come to the country and start in an entry-level job simply
because they have relatively low country-specific skills such
as language and human capital from the host country and that then
they actually progress quite rapidly through the labour market
and stay a long time. Again, you need to bear in mind the type
of migrant that you are talking about. They may not be in some
ways either that interested in staying on for long periods of
time, so they are may be relatively happy to accept low-paid jobs
to start off with or the fact that they are trading that off against
other factors such as lifestyle choices. Then there is a third
category: those who actually do want to progress. If they are
unable to progress, then they might see that as an issue and either
migrate back to their country of origin or change jobs.
Q236 Lord Skidelsky:
Do you have any comments on the Government's recent written submission
to this inquiry?
Dr Anderson: I was very struck by the fact that
they used the term "work ethic" and "reliability"
and all these words which are applied to migrants so easily without
really unpacking some of what employers might really be alluding
to by these terms. I would advocate some care with understanding
the presentation of demand, precisely for the reasons I outlined
earlier, that I think that while the Government are using the
term "immigrant" to talk about "foreign born",
employers are really talking about relatively new arrivals, in
fact quite often discuss how they get tainted after their experience
of being in the UK. I was interested in the alternatives to immigration
to reduce labour shortages, such as helping lone parents through
access to employment. It seems to me from a lot of my research
that the advantage of migrant labour is precisely this work/life
balance, flexibility, easy to dispose, easy to hold on to. That
is precisely what groups like lone parents cannot do. A simple
substitution is going to be a lot more difficult than is made
out.
Chairman: That is very interesting and
very helpful to us. You made the point about the uncertainties
but you did give us a lot of very useful information in between
the uncertainties and it was important that you should talk about
the uncertainties themselves. Thank you both very much indeed;
we are very grateful to you.
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