Friday, 17 March 2017
Discussion thread: Impact of immigration on UK wages
Interesting comments yesterday sparked by BE, so more on the topic for today is in order.
Economics is hard and open to interpretation. However, since 2010 there have been around1.5 million new UK jobs created. At around 250,000 a year, more than the EU combined, albeit less than Germany and but Spain and Greece have seen big declines to the net is greater in the UK. Osborne's boast was technically true.
During that time the population has increased by just over 2.4 million (crazy eh!).
A proportion of the population 'growth' is really due to ageing of the population over pure immigration.
According to ONS date, net migration has been just over 1.25 million during this time. Which is why overall the UK unemployment rate has fallen - as job growth has been stronger than immigration (some immigration is for students too rather than pure job-seeking immigration, then again, official stats do not account for the black economy, which probably invalidates much of the data!)
Of course, immigrants doing jobs adds to GDP, so more jobs will beget more jobs to some extent. Economists calculations around this concept though are a severe overstretch of credibility however and they arrive a wildly varying conclusions, unsurprisingly aligned on the starting political viewpoint.
As ever though, nobody accounts for the fact that new jobs are increasingly lower paying than previously - this is the car washer effect. At the bottom of the wage stack, study after study shows wages being held down, even when the gaurdianistas are trying to prove otherwise.
Still too nobody has worked out how to account for the impact on the welfare state. As a proxy I can see the NHS spending is going up over 8% and yet the whole service is in crisis and the social welfare bill goes up even as the Tories are accused of hideous bedroom taxes etc.
Additionally, the tax income for the Government has grown at a far slower rate than the economic expansion would expect (i.e. below the expected net increase in GDP).
All this circumstantially points to the conclusion that overly open borders promote low-wage immigration which on balance detracts more than benefits the country as a whole; this is before we get to any social cohesion aspects.
Where the balance is, is hard to know and worse, because we can only ever look at historical data, we will never be able to get it right, Brexit or no Brexit.
What do you think?