Immigrants, they get the job done
The Government needs to rethink and improve their immigration plans to a more liberal system which reduces restrictions and allows a more free movement of migrants.
The UK has notoriously hostile immigration policies. This is hardly surprising for a Conservative government, but their hostility towards migrants were exacerbated during Theresa May’s tenure as Home Secretary: pledging to fulfil Cameron’s manifesto policy to reduce net migration by ‘tens of thousands’. This included the introduction of the Right to Rent Scheme and cutting fundamental services (including the NHS) to illegal immigrants. Since then, the Government has continued to commit to hostile immigration policies: restricting illegal immigrants in ways which have been unduly detrimental to legal asylum seekers and reducing low skilled migration.
Earlier this year, the UK introduced a points-based immigration system which required migrants to have a total of 70 points to be able to work in the UK. The characteristics however are unreasonably stringent and make it excessively difficult for ‘low skilled’ workers to migrate to the UK. Such characteristics include, for instance, having a relevant PhD, having a salary of at least £25,600, meeting English speaking requirements, having a secure job offer in a ‘highly skilled area’ and so on. At Conservative Party Conference, Suella Braverman made a speech in which she pledged ‘to deliver the kind of migration that grows our economy’ and believes the way to do this is by ‘not relying wholly on low skilled foreign workers’. It seems therefore that the Government will continue in their aim to reduce low skilled immigration.
One of the most fundamental problems with this commitment is largely a result of the misconstrued economics behind their policies. The Government continuously declares themselves as a pro-growth party, but their dedication towards reducing the number of low skilled migrant workers is only restricting their ability to fulfil this. This is because low skilled migrants are needed to fill employment gaps. Despite there being a plentiful number of jobs available, due to the mismatch between these vacancies and the jobs people are looking for, these roles are not being filled. Persistent employment gaps can be hugely detrimental to the economy. This is partly a result of the increased wages firms have to offer to attract workers into these vacancies, ultimately leading to increased business costs which are then passed onto the consumer through higher prices. This then leads to less consumption in the economy as people restrict their spending, leading to economic contraction – going against the Government's initial aims to generate growth. As reported by the Financial Times, ‘UK businesses expect to raise their prices at the fastest pace since records began to offset higher wage costs driven by a tight labour market’.
Despite these concerns, the Government continues in their justification that by creating a gap in the labour market, wages of workers will rise as companies compete for scarce labour. As a result, business costs will surge and companies will be incentivised to invest in capital rather than labour, thus increasing productivity. However, this assumes that all companies will be able to adapt to inflated wages and act accordingly. In reality, this is not the case. With soaring energy costs, supply chain problems and an increase in inflation, many companies no longer have the ability to pay employees higher wages. At best, this negatively impacts a company's ability to meet output demands and at worse, makes firms go bust. With these risks, businesses are less likely to invest, despite the government’s initial conceptions that with higher business costs, investment will increase. In addition to reduced investment, as firms go bust, job losses will become inevitable and consumers will face significantly less disposable income. This again will lead to a reduction in consumption in the economy. Once more, even when firms have the ability to invest, in certain sectors of the economy such as childcare, investment into capital isn’t cost-efficient as such jobs are difficult to automate. Thus the Government’s assumption that all firms will choose to innovate when wages increase is flawed.
Moreover, in addition to price increases, job vacancies damage the economy as low skilled workers complement higher skilled workers. By complementing the existing workforce, low skilled immigrants allow for a more effective, functional economy. One such example of this complementarity is ‘the nanny effect’ – this is that low skilled workers provide childcare and house care services such as cleaning which allow high skilled workers the opportunity to return back to work after childbirth. Thus, where there are low skilled immigrants present, more high skilled workers can return to their roles in the labour market.
It is clear therefore that low skilled immigration isn’t as detrimental to the economy as the Government makes it out to be- and the only benefit of introducing such anti-growth policies is because they believe it is what the British public want and thus, what will keep them in power. However, even this seems counterintuitive, particularly as statistics show a warming of public attitudes towards immigration. In fact, support for reducing immigration is at the lowest it has been since 2015 with only 4 in 10 people in the general public preferring a reduction in immigration. Moreover, latest findings conclude that 46% of people believe that immigration has had a positive impact on Britain, in contrast to a mere 29% of people believing it has had a negative impact.
The Government ought to understand that, however politically controversial they deem immigration to be amongst the electorate, there is no denying that it brings economic benefits. Now that the public don’t have particularly negative views on immigration, rather than pursuing a policy that reduces long term growth and living standards, the Government needs to rethink and improve their immigration plans to a more liberal system which reduces restrictions and allows a more free movement of migrants, including low skilled migrants. It would also be economically beneficial for the Government to better communicate the benefits of free movement to the British people rather than blaming migrants for Britain's economic downfalls, this in turn will further reduce people’s support for hostile immigration policies and thus will support economic growth aims.
