Summary
1. The government review of the literature on the impact of immigration on UK native employment focused on the link between immigration and unemployment. It concluded that there was evidence of labour market displacement in times of recession but relatively little evidence in times of economic growth. The other aspect, that the majority of these studies have not addressed, is the possibility that, in the absence of migrant labour, employers would have been obliged to raise wages and / or recruit young British workers.
Recent research
2. This week the Home Office and the Department of Business Innovation and Skills (BIS) published a review of the evidence into the impacts of immigration on UK employment. Economic theory suggests that, when additional migrant workers enter a labour market, this can result in lower wages and/or displacement of existing workers. Over time the labour market adapts and expands to absorb the extra workers and employment rates and wages return to their previous levels. The size and duration of the impact depend on economic conditions and the extent to which, in practice, migrants compete for jobs with the native population. However, the UK has been experiencing a continuous high flow of migrants for over fifteen years so every year it has experienced the impact of new workers into the labour market..
3. Economists have analysed various data sources seeking to quantify associations that are statistically robust (statistically significant). This is made harder when the number of immigrants is relatively small compared to the size of the overall labour market so earlier studies, when migration numbers were lower, could find no statistically significant association.
4. After reviewing the extensive research literature the government report found:
- There is relatively little evidence that migration has caused statistically significant displacement of UK natives from the labour market when the economy was strong
- There is evidence of some labour market displacement, particularly by non-EU migrants, in recent years when the economy was in recession
- Only one of the reports examined whether migration from the EU made a difference to employment levels; it suggested that immigration from EU countries had the same kind of impact as non-EU immigration, although the results were not statistically significant.
- Displacement effects are concentrated on lower skilled natives where competition with migrants is the greatest
5. However, most of these studies looked at the possible impact on unemployment, not employment, and so may not give the full picture. If employers had not had large numbers of migrant workers to turn to, particularly for lower-paid jobs, they would have had little option but to turn more to British workers with offers of employment, training and apprenticeships. In fact, the increase in numbers of the non UK-born in employment has accounted for half the total increase in employment since the election. And in the last year young EU migrants have arrived in London to find work while youth unemployment in London remains the highest of any region in the country and the percentage of employers in the Capital recruiting directly from those leaving school has fallen to 3%. It is legitimate, therefore, to ask how many more young British workers would be in employment without this wave of migration.