TRAINING AND APPRENTICESHIP
86. Liam Byrne MP told us that there was
a danger of immigration discouraging British employers from investing
in training of local workers, particularly at "the low end"
of the labour market. He said: "That is one of the reasons
why I have said that when the points system is introduced ...
I do not see a need for low skilled migration from outside Europe"
(Q 521). Mr Portes of the DWP added: "There clearly
is a risk here that too much migration in some of the wrong sectors
would indeed reduce the incentives [for training]." Mr Portes
said that the Migration Advisory Committee will take this risk
into account when "advising on which sectors migrants might
help to fill in terms of labour market shortages" (Q 521).
87. Brendan Barber of the TUC warned that large
infrastructure projects such as the London Olympics "could
be entirely undertaken by migrant labour, if one simply left the
key contractors to make these [recruitment] decisions for themselves.
If that were to be the case, rather than there to be a positive
investment in the skills and training of others in the communities
of East London ... if it passed the East London economy by, that
would be a disaster" (Q 194).
88. Jack Dromey of Unite said that "this
is also a tremendous opportunity for Government to use the power
of public procurement to target those young white kids out of
work in Barking and those young second generation Bangladeshi
kids in Tower Hamlets with a view to offering them apprenticeships,
such that a legacy of 2012 becomes a project of which we are all
proud ... [with] a new generation of Barking and Bangladeshi bricklayers"
89. UCATT, the largest specialist union representing
construction workers in the UK and Republic of Ireland, emphasised
"the continued necessity of migrant workers for the construction
sector", but also argued that "more apprenticeship places
must be offered to young people in the construction industry"
(p 509). It pointed out that in 2006 there were 50,000 applications
for construction apprenticeships but only 9,000 places available.
(UCATT p 509). Stephen Ratcliffe of the Construction Confederation
said that immigration did not affect employers' incentives to
provide apprenticeship to young British people (Q 137).
90. Employer organisations such as the CBI and
the Recruitment and Employment Confederation noted that training
is at an all-time high in the UK. They advocated a "twin-track"
approach which involves encouraging immigration to fill shortages
in the short term while at the same time investing in domestic
skill development to help fill shortages in the long term (CBI
91. The empirical evidence on the impact of immigration
on the provision of apprenticeships to young British workers is
limited. Professor Linda Clarke, of the University of Westminster,
studied the recruitment practices of employers at Terminal 5,
one of Europe's largest construction projects. According to LFS
data, only 2.8% of those employed in the construction industry
are from ethnic minority groups although they constitute 7% of
the economically active population. Professor Clarke identified
employers' reliance on recruitment agencies, "which tend
to target a traditional white male and migrant workforce rather
than local and diverse labour", as one of the key obstacles
to a more inclusive and local labour force at Terminal 5 (p 432).
She also noted that "the recruitment of migrant workersavailable
quickly and possessing the necessary skills and experienceappears
to many stakeholders as justifiable. It was claimed too that if
training is provided by a company, there is the danger of 'poaching'
by competitors, and therefore skilled migrants are preferred [by
employers] to taking on apprentices" (p 430).
92. A number of witnesses suggested that there
is a potential adverse impact of immigration on training opportunities
for British workers in other sectors besides construction. For
example, Professor Pearson suggested that, in the NHS, "the
employment of overseas nationals in training roles limited the
career development of junior UK doctors, potentially reducing
the long attractiveness of a medical career to UK nationals"
(p 485). Dr Edwin Borman of the British Medical Association
explained how immigration of migrant doctors and the increased
number of UK-born doctors has led to an oversupply of doctors
seeking postgraduate training posts in Britain. He suggested that
this was partly due to an "utter failure of an effective
medical planning structure" (Q 302).
93. Our recent report on apprenticeship and
skills argued that the Government was not doing enough to develop
high quality apprenticeships.
Although the evidence is limited, there is a clear danger that
immigration has some adverse impact on training opportunities
and apprenticeships offered to British workers. The Government
acknowledged this danger in its evidence to us (Q 521). If
immigration has adverse impacts on training, apprenticeships and
domestic skill development, the twin track approach advocated
by many employersimmigration to fill shortages in the short
run, and skill development of British workers to fill shortages
in the long runwill not work. The Government should
consider further measures to ensure that employers recruiting
immigrants are also investing in training and skills development
of British workers.
MACRO-IMPACTS: INFLATION AND UNEMPLOYMENT
94. Professor Nickell suggested that immigration
may reduce the equilibrium rate of unemployment. "This will
happen if, for example, immigrant workers are more flexible and
reduce the extent of skill mismatch, are more elastic suppliers
of labour with higher levels of motivation and reliability ...
This effect may, however, decrease over very long periods of time
as migrants become more like the native population" He went
on to say that "there is certainly a broad acceptance in
the UK ... that immigration has had a tendency to reduce inflationary
pressure" but cautions that "rigorous empirical analysis
in this area is in short supply".
95. Professor Blanchflower argued that the
recent inflow of workers from Eastern Europe has lowered the natural
rate of unemployment. He suggested that immigration also seems
to have reduced inflationary pressures by increasing potential
supply more than demand for several reasons: because locals may
have cut consumption because of greater fear of unemployment;
because remittances by migrant workers mean that less of their
earnings is spent in the UK; and because firms may substitute
some labour for capital which would curb the rise of investment.
The NIESR economic model suggested that A8 immigration lowered
inflation slightly in the short and medium term. The model then
shows inflation almost returning to its base level over a period
of 10 years. (p 151).
96. Richard Barwell of the Bank of England has
cited the importance of immigrants' length of stay in determining
the impact on inflation. "If the majority of immigrants do
intend to return home in the near future, it is likely that they
will try to save a large fraction of their income. So recent inflows
may have had only a muted impact on aggregate demand." On
balance, immigrants have probably had a larger impact on aggregate
supply than demand, "so migration has probably helped to
ease inflationary pressures in the economy, at least temporarily."
This is particularly true of EU immigration because so much of
it is temporary. It is less true of immigration from outside the
97. In the short term, immigration creates
winners and losers in economic terms. The biggest winners include
immigrants and their employers in the UK. Consumers may also benefit
from immigration through lower prices. The losers are likely to
include those employed in low-paid jobs and directly competing
with new immigrant workers. This group includes some ethnic minorities
and a significant share of immigrants already working in the UK.
98. In the short term, immigration may put
pressure on the employment opportunities of young people. In the
long run, the economic impacts of immigration on the resident
population are likely to be fairly small. Thus a key question
is how quickly the economy adjusts to immigration. Much more empirical
work might usefully be done on the labour market and macroeconomic
impacts of immigration in the UK.
30 Shared protections, shared values: next steps on
migration, speech by the Home Secretary, Jacqui Smith MP, at the
London School of Economics and Political Science on 5 December
Home Affairs Select Committee hearing with Liam Byrne and Lin
Homer on November 27, 2007 available at: http://www.publications.parliament.uk/pa/cm200708/cmselect/cmhaff/123/7112701.htm Back
A recent report by the International Development Select Committee
of the House of Common focused on migration and development, see:
For more on the theory of the short-run impacts, see Borjas, G.
(1995), "The Economic Benefits from Immigration", Journal
of Economic Perspectives 9(2): 322. Back
The Home Office did subsequently produce a calculation which claimed
an estimated 0.15% annual gain in GDP per capita for the resident
working population (Q 512-513, p358). However, the methodology
behind this calculation, especially the assumption that the impact
of immigration on the returns to capital is similar to the impact
on the returns to labour, is questionable. Back
It should be noted even this slightly positive impact on GDP per
capita may not be present at the GNP per capita level once the
impact of investment income returns to overseas capital is taken
into account. (NIESR Q 239-242). Back
Ernst Ernst & Young ITEM Club Special Report: Migration and
the UK economy, December 2007. Available at: http://www.ey.com/global/assets.nsf/UK/ITEM_Club_Special_Report_-_Migration_and_the_UK_economy/$file/EY_ITEM_Migration_Report_Dec_2007.pdf
See Smith, J. and B. Edmonston, ed. (1997) The New Americans,
Economic, Demographic and Fiscal Impacts of Immigration, National
Academy Press, Washington D.C. Back
Dustmann et al, A Study of Migrant Workers and the National Minimum
Wage and Enforcement Issues that Arise, Low Pay Commission (2007) Back
Institute of Directors, Immigration: a business perspective, (January
2007), p 15 Back
Low Pay Commission Report 2006, National Minimum Wage Back
Steve French and Jutta Möhrke, The impact of 'new arrivals'
upon the North Staffordshire labour market, Low Pay Commission,
November 2006 Back
Home Office, Control of Immigration Statistics 2006, Table 6.7,
p 88 Back
DWP Working Paper 29, Gilpin et al, The impact of free movement
of workers from Central and Eastern Europe on the UK labour market,
February 2006 Back
Dustmann et al, The local labour market effects of immigration
in the UK, Home Office Online Report 06/03, 2003 Back
Ernst & Young ITEM Club Special Report: Migration and the
UK economy, p.9, December 2007. Available at: http://www.ey.com/global/assets.nsf/UK/ITEM_Club_Special_Report_-_Migration_and_the_UK_economy/$file/EY_ITEM_Migration_Report_Dec_2007.pdf Back
Economic Affairs Committee, 5th Report (2006-07), Apprenticeship:
a key route to skill (HL 138) Back
Professor Stephen Nickell, Immigration: Trends and Macroeconomic
Implications, paper prepared for the Bank of International Settlements
conference in honour of Palle Anderson on 'Globalisation and Population
Trends: Implication for Labour Markets and Inflation', 2/3 December
2007, p 12 Back
Richard Barwell, The macroeconomic impact of international migration,
Bank of England Quarterly Bulletin, First Quarter 2007 Back