Memorandum by the Commission for Racial
Equality
THE CHARACTERISTICS
OF IMMIGRANTS
TO THE
UK
Recent migration to the UK has been characterised
by a marked diversification in terms of country of origin (Kyambi,
2005), with one academic coining the term "super diversity"
to describe this (Vertovec, 2005, 2006). One of the most obvious
recent changes in the composition of migrant inflows has come
as a result of the enlargement of the European Union that occurred
in May 2004. With eight Central and Eastern European states (termed
the "A8") joining the EU, and their citizens being given
the right to work in the UK, significant migration has occurred
between the new member states and Britain. The UK has also experienced
rising number of people coming from outside of the EU on work
permits over the past 10 years.
Immigrants to the UK have generally been more
highly qualified than the native-born population, which is in
contrast to much of the migration that occurs to countries such
as the US (Schmitt and Wadsworth, 2006). Recently, however, the
inflow has become more concentrated at the lower end of the skills
spectrum (Salt, 2004). This is a complicated picture though, with
migrants from the A8 states generally being relatively highly
skilled but nonetheless employed in low-skilled jobs which employers
have difficulties fitting from the local labour market. In this
respect, A8 migrants can be seen as "high quality migrants
in low-skill jobs" (Anderson, et at 2006: 34). Because
of the selective and employer-led nature of the work permit and
Highly Skilled Migrant Programme for migrants from outside of
the EU, people coming to the UK on these schemes tend to be relatively
highly skilled.
There are wide variations in the labour market
outcomes of immigrants in the UK, reflecting their diverse modes
of entry. Nationals of the new EU member states have very high
employment rates, by virtue of the fact that their main reason
for moving to the UK is for employment. At the other end of the
scale, refugees suffer from very low employment rates because
of problems ranging from the issues regarding the recognition
of overseas qualifications, to trauma experienced in their home
countries.
Overall, members of the foreign-born population[20]
appear to be slightly less likely to be in employment than the
UK-born population, but have higher average incomes (Cooley et
al, 2005). Part of the difference in employment rates is due
to the higher proportion of students in the foreign-born group—a
consequence of the attractiveness of British universities to international
students—but most of the difference is due to inactivity
amongst the foreign-born population. This higher rate of inactivity
is due to a number a factors, possibly including people holding
immigration statuses that do not allow them to work, cultural
factors among some country-of-birth groups that mean female participation
rates are low, tack of transferability of foreign qualifications,
English language difficulties, higher rates of disability and
discrimination.
ECONOMIC IMPACTS
OF IMMIGRATION
The economic impacts of immigration on the receiving
country are the subject of considerable public and academic debate.
Public perceptions of the impact of immigration on the labour
market often start from the observation that immigration increases
the supply of labour. It is thus argued that it results in more
competition for jobs, lowering wages and increasing unemployment.
This simplified model makes the mistake of assuming that there
is a so-called "lump of labour"—ie a fixed number
of jobs to be performed in the economy—and that "work
is given to one person at the cost of another" (Nonneman
2007: 15). In reality, immigration increases both the supply of
labour and also the demand for workers, since immigrants are not
only workers but consumers too (Bercow 2005; Nonneman 2007).
There has considerable academic interest in
the labour market impacts of immigration, although much of the
empirical analysis that exists is conducted using US rather than
UK or European data. There has been a long-standing debate between
American economists over the labour market impacts of migration
to the US (usefully summarised by Lowenstein 2006). George Borjas,
for instance, has found that immigration has negative impacts
on the employment prospects and wages of native workers (Borjas
1999), whereas David Card has found that even large, sudden migrations
such as the Mariel boatlift have little impact on the receiving
labour market (Card 1990) and that evidence for overall negative
impacts on the US labour market is scant (Card 2005).
The most authoritative study carried out in
the UK is that by Dustmann et al, (2005), who find "little
evidence of overall adverse effects of immigration on native outcomes"
(Dustmann et al, 2005: F337). They do find some variation
in employment impacts by education levels, with some evidence
of negative impacts on "those with intermediate education
levels, but this is offset in the aggregate by positive effects
on employment among the better qualified" (ibid).
In terms of impacts on wages of the native born, they tentatively
suggest that the impacts are, if anything, positive. Dustmann
et al also note that one of the reasons why their results
contrast with American studies, such as those by Borjas, that
suggest negative labour market impacts, is that immigrants to
the UK are more concentrated in the upper end of the skills spectrum
than those moving to the US, an observation also made by Schmitt
and Wadsworth (2006). There is also evidence to suggest that the
lack of negative impacts on UK-born workers is due to migrants
to the UK having skills that complement, rather than substitute,
those of the native-born workforce (Manacorda et al, 2006).
Much of the research on the economic impacts
of migration to the UK pre-dates the enlargement of the EU in
May 2004, when nationals of the A8 states gained access to the
UK labour market. Labour migrants from the new member states are
generally well educated but working in relatively low-skilled
jobs in the UK which employers often report are difficult to fill
from the domestic labour force (Anderson et al 2006).
What research does exist on the impacts of migrants
from the new EU member states has suggested that these are generally
positive, if somewhat modest (Portes and French 2005; Gilpin et
al, 2006; Blanchflower et al, 2007). Blanchflower et
al, suggest that migration from the A8 may have reduced the
UK's natural rate of unemployment, and Gordon et al (2007)
argue that, in London, immigration has encouraged job growth in
the sectors that migrants are concentrated in, albeit because
of wage deflation in these sectors.
While much of the debate over the economic impacts
of immigration surrounds the impacts on labour markets, we should
recognise that the economic impacts are in fact wider than this.
Debates also often focus on attempts to calculate the economic
"contributions" of immigrants, but this can be unhelpful.
On the surface, the economic contribution of a low-paid migrant
working as a cleaner or security guard, for instance, may seem
small, but it is important to recognise that their work may support
that of more highly paid workers, whose contribution appears larger,
and therefore migrants may be contributing significantly to value-added
regardless of their own position on the skills and pay spectrum.
FISCAL IMPACTS
OF IMMIGRATION
Along with the wider economic impacts of immigration,
whether migrants are net contributors to the exchequer or net
recipients of welfare spending has been one of the key public
concerns surrounding immigration. The first major attempt to quantify
the fiscal impacts of the foreign-born population in the UK was
carried out by Gott and Johnston (2002), who found that the foreign
born were net contributors to the exchequer to the tune of £2.5
billion in 1999-2000. However, the methodology of the study was
criticised on a number of grounds, including that it did not take
account of the fiscal cycle, with the year in question being one
of budget surplus (Lilley, 2005).
Taking account of these criticisms, IPPR conducted
a study using updated methodology for the years 1999-2000 through
to 2003-04, finding that migrants consistently make a relatively
higher contribution than the UK-born population (Sriskandarajah
et al, 2005). In years where there is a budget deficit,
the study finds, migrants are, on average, smaller net recipients
than non-migrants. The study also found that this positive contribution
had risen over the period, and noted that it might continue to
rise as a result of migration from the new EU member states.
The IPPR study has also faced methodological
criticism, with MigrationWatch arguing that it should have classified
dependent children with one UK-born and one foreign-born parent
as, in effect, half migrant, half non-migrant (MigrationWatch
UK 2006). Since children are naturally net recipients of public
expenditure, they MigrationWatch argue that this makes the actual
net contribution of migrants to the exchequer negative. One of
the problems with this rebuttal is that MigrationWatch fail to
apportion non-dependent children (ie adults born in the UK to
one or two immigrant parents) in the same way. As the original
IPPR study notes, "defining dependent but not non-dependent
children as immigrants in the analysis is likely to result in
an underestimate of the long-run net fiscal contribution of immigrants"
(Sriskandarajah et al, 2005: 4), since non-dependent children
will be of working age and therefore are likely to be net fiscal
contributors. Neither the IPPR study nor the MigrationWatch critique
are able to calculate the contribution of this group due to the
design of the Labour Force Survey, which only records parents'
country of birth for dependent children. If this were possible,
the fiscal contribution of immigrants would likely be positive,
but it is clear that more research is required.
The consensus from studies conducted overseas
seems to be that the fiscal impact of immigration is mildly positive,
although there is some variation, with some indicating a positive
fiscal contribution from immigrants, such as in Germany (Bonin
2006) and the US (Bolin 2006), and some a negative or more mixed
impact depending on the age of immigrants, such as in the Netherlands
(Roodenburg et al, 2003).
IMPACTS OF
IMMIGRATION ON
PUBLIC SERVICES
There has been increasing media coverage of
the impacts that recent immigration has had on public service
delivery in the UK, with reports of hospitals and schools unable
to cope with rapidly increasing demand. Beyond the anecdotal evidence
employed by newspapers, perhaps the most that can be said about
the public service impacts of immigration is that more research
is needed. Very little systematic evidence has been collected
with which to substantiate claims about the negative impacts of
immigration on public services.
On the surface, migrants from the new EU member
states should place few demands on public services, as they tend
to be young and without children (see Home Office et al, 2007),
and therefore not heavy users of schools or hospitals. There may
be very localised effects though, where concentrations of migrant
workers are found in areas not used to delivering services to
rapidly changing populations. This impact may be accentuated by
the transient nature of migration from the A8 states, with migrants
coming into an area but only staying for a short while before
returning home or moving on to a third location. This has implications
for local government financing, which is often based on outdated
population estimates (see Slough Borough Council 2006; Travers
et al, 2007).
At the root of these problems is not immigration
per se, but rather the outdated way in which population statistics
are collected and calculated. Migrants living in towns such as
Slough, whose council has complained about funding allocation,
are contributing to the local economy and paying taxes to central
government, but due to the nature of the local government funding
system in the UK, this tax revenue is slow to return to local
authorities, leaving them short of funding despite the overall
benefits of the migrants' presence. Furthermore, problems with
local-level population statistics are not only caused by the inflow
of migrants, but also by emigration of British nationals and by
population movement more generally, including internal migration
within the UK.
As well as being consumers of public services,
migrants are also a significant factor in the provision of those
services. Research evidence suggests that 29.4% of all doctors
employed in the NHS in 2003 were trained overseas, compared to
23.7% in 1993. Around 10% of the UK's nurses trained overseas,
and 43.5% of new registrations on the Nursing and Midwifery Council
register between 1999 and 2004 were from outside of the UK. By
2003, 17% of all dentists registered with the General Dental Council
were from overseas, and 41% of new dentist registrations in 2003
were from abroad (Kelly et al, 2005).
THE POINTS-BASED
SYSTEM
In February 2005, the Government set out proposals
for a new, tiered, points-based immigration system to replace
the current complex system for labour migrants coming to the UK
from outside of the European Economic Area (EEA). One of the key
advantages of this system is that it will replace what is currently
a highly complex system with many different routes of entry with
one that will be much more transparent and composed of five tiers.
The new points-based system often draws comparisons
with the Australian system for selecting immigrants. However,
whereas Australia uses a points-based system for selecting people
who want to move to Australia on a permanent basis (ie for settlement),
the UK system will be used to select labour migrants coming for
shorter periods (although these migrants will potentially be eligible
for settlement after a period of time in the UK). By contrast,
Australia operates a non-points based work permit system for labour
migrants. Applying a points-based system to labour migrants has
the potential to reduce the responsiveness of the immigration
system to labour demand since it may be the case that businesses
are unable to employ non-EEA nationals because they do not meet
the points criteria, even if they are the preferred candidate
and no local applicants are suitable (Cooley et al, 2005).
Another potential problem with the new points-based
system is that is will involve the ending of low-skilled migration
from outside of the EEA. The Government's rationale for this is
that migrants from the EU accession states are filling low-skilled
vacancies in the labour market and that low-skilled migration
from outside of the EU is therefore not required (Home Office
2005). While it is true that the EU accession countries appear
well-placed to supply the UK with sufficient migrant workers to
fill low-skilled vacancies in the labour market for some time
to come, these is a significant correlation between economic conditions
in accession countries and the level of migration from those countries
to the UK (Cooley et al, 2005; Blanchflower et al, 2007),
suggesting that as the new EU member states' economies expand,
they will cease to be major migrant-sending countries. This, combined
with potential growth in low-skilled jobs in the service sector
that cannot be performed remotely (Goos and Manning 2003; Cooley
et al, 2005; McKinsey Global Institute 2005), suggests
that the Government might need to rethink its strategy of phasing
out low-skilled migration from outside of the EEA in the long
term. With continually large income disparities between developed
and developing, it is also possible that attempting to severely
restrict low-skilled migration from outside of Europe may result
in more people attempting to reach the UK illegally.
MIGRATION STATISTICS
One of the key issues in the study of the economic
impacts of immigration is the lack of availability of reliable
statistics. The best source of data we have on immigrants' economic
outcomes is the Labour Force Survey, although use of the LFS relies
on defining immigrants as either foreign born or foreign nationals,
as the survey does not include questions on immigration status.
This means that analysis of the immigrant population carried out
using the LFS may include British people who happen to have been
born abroad as part of the immigrant population, for example.
It also makes it impossible to define between categories of entrant,
and we cannot therefore separate out the economic impacts of those
migrants who come here for economic reasons, such as work permit
holders or A8 nationals, from people coming for non-economic reasons,
such as asylum seekers.
One of the key statistical challenges relating
to migration is to generate reliable data on the stock of migrants
from the new EU member states who are in the UK at any one time.
White data is collected under the Worker Registration Scheme,
there is no requirement (or indeed possibility) for a migrant
to de-register when they leave the UK, This means that the only
statistics available are on net rather than gross immigration,
such as those given in the regular Accession Monitoring Reports,
or are based on the LFS (eg Walling 2007), which may under-sample
short-term migrants.
The lack of availability of good-quality data
does not only make it difficult for researchers to generate evidence-based
analysis, but also hinders local government attempts to provide
services to shifting demographics, as noted above. Improvements
to the data collected on immigrants need to take two forms. Firstly,
we need better, more reliable data on the inflow and outflow of
migrants, including more accurate disaggregation of their localities
within the UK. This could be achieved by boosting the sample size
of the International Passenger Survey, which is the present source
of national statistics on total international migration. Secondly,
there is a need for better data on the in-country performance
and characteristics of immigrants, which could perhaps be achieved
through modifications to the Labour Force Survey.
September 2007
20 Note that the foreign-born population might not
necessarily correspond with popular conceptions of the "immigrant
population", since it will include people born to British
nationals overseas, who now live in the UK, and naturalised immigrants
who arrived in the UK a tong time ago and who consider themselves
to be British. Back
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