Dear Nigel
10th June 2002
The Financial Times says that "Europe needs immigrants-skilled and unskilled." Every newspaper from the Sun to the Guardian agrees, as does every mainstream political party. The Home Office says Britain needs 150,000 immigrants a year for the next 20 years. The French interior ministry has said that the EU needs 75m immigrants by 2050.
This consensus is wrong. The demographic and economic arguments for large-scale immigration are not just flawed, but damaging to the interests of the most vulnerable people already in Europe (many of them immigrants). The truth is not that Europe needs immigrants, but that immigrants want Europe.
The standard argument is that we are suffering labour shortages, and must import workers to fill the gaps. Yet unemployment is a big problem in Europe. The EU zone has 13.3m unemployed, 7.6 per cent of the workforce. In Britain, according to the Labour Force Survey, there are 1.54m unemployed. There are another 2.32m who want to work but don't look because they do not have much hope-people such as housewives who can't afford childcare costs, and prematurely retired men. In London, where most immigrants arrive, there are 600,000 unemployed, higher than the national average.
It is clear that there are no immediate generalised labour shortages in Britain or Europe, but rather a labour surplus, in particular of unskilled workers. Surely it ought to be a political priority to find jobs for the unemployed who are already here, or train them for the jobs that exist.
In Britain, the unskilled are four times as likely to be unemployed as the skilled, and non-whites twice as likely as whites. It is they who will suffer from an influx of unskilled immigrants. There is incontrovertible evidence that increasing the pool of unskilled labour lowers unskilled wages and raises the level of unskilled unemployment. Blue collar workers in the US have suffered falling real wages and high joblessness because of the big influx of unskilled workers from Latin America.
It is true that there is also evidence of a shortage of skilled workers, from IT specialists to doctors, and we should bring them in where necessary-which is what the government is doing. If companies can't find particular types of workers in Britain, they are free to get work permits for any candidates they find abroad, and they are doing this in large numbers. Increasing the size of the labour market does not in itself increase unemployment, but it will if the skills profile of the immigrants doesn't fit the needs of the labour market.
Gordon Brown and most pundits tell us that immigration helps boost economic growth, citing the US as a prime example. But this can be disingenuous. Obviously GDP increases if the population does (each new person adds something to the economic output), but it doesn't follow that GDP per capita-the measure that matters-rises. GDP per capita has not increased faster in the US than Europe, despite its reliance on immigration. Indeed, if immigrants have a lower level of skills than the host population, immigration can depress GDP. Among the lowest-skilled immigrants to Britain, such as those from the Indian subcontinent, the level of economic inactivity is high.
Unsurprisingly, business organisations like the CBI insist that we need immigration. Employers like a large pool of willing workers with low expectations. The NHS, for example, is critically short of nurses, despite the fact that there are more trained nurses in Britain not working as nurses than there are working as nurses. But rather than improving its pay and conditions to entice British nurses back to hospitals, the NHS finds it cheaper to import thousands of nurses from the developing world.
The British textile industry tried to compete with low-wage economies in the 1950s and 1960s by importing large numbers of unskilled workers from Asia to work for wages that no British worker would accept. But that only gave them a few more years before they were undercut by industries in the developing world, leaving behind the poor Bangladeshi and Pakistani communities in our troubled northern towns. We cannot compete with the low-wage labour-intensive industries of the developing world and we shouldn't try.
The Home Office recently produced a report saying that Britain's 5m foreign born residents contribute about ?2.5 billion more each year in taxes than they receive in services, and cited that as proof of the economic benefit to the host population. But if you examine it more closely, the benefit evaporates. That figure includes immigrants from the EU (who already have the right to live and work here), including the army of bankers and other professionals working in London, whose unemployment rate is very low. For non-EU immigrants the figure is certain to be far less, and could be negative.
Furthermore, the immigrant community is far younger on average than the host community so they should be net contributors. When they grow older, claim pensions and use the health service more, the small contribution that the Home Office discerns is likely to disappear.
We are also told that our fertility is so low that we are suffering population decline. This is not true in Britain-there are still more births than deaths each year, and that is almost certain to continue for the next 20 years. Fertility is low, at 1.64 babies per woman, but demographers agree that it is certain to rise again when the trend for later births stops. Surveys show British women want an average of two babies each and it is unlikely that they will perpetually have fewer than they want.
If the population does decline in Britain in a few decades' time, and we decide we want to reverse it, then we can quickly turn on the immigration tap. In the meantime, after two decades of stability, our population is expanding fast: the current level of immigration to Britain-nearly 200,000 net incomers a year-has quadrupled the rate of population growth. Those who want large-scale immigration and population growth have to tell us where they would like it to stop. Last year we swept past 60m people. Would they like us to stop at 70m or 100m? We are already one of the world's most densely populated countries, a mature nation that is not in the business of nation building as Canada and Australia still are. A growing population means more pressure to cover the countryside with houses, more environmental degradation and more congestion.
Commentators often say that we need immigrants to deal with an ageing population, to provide the workers to care for us and generate the wealth to pay for our pensions. Certainly we are ageing as a nation and our dependency ratio of workers to retired people is set to fall from 4 to 1 now, to 2.5 to 1 by 2050. But immigration is no fix for this, for the simple reason that immigrants grow old too. If you import 1m people now, then to look after them when they retire, you will need to import 4m, and then 16m and so on.
The fact is that when longevity rises and the birth rate falls the only way to prevent a rising average age is either to cull everyone at a certain age, or to have a perpetually expanding population. The alternative is to learn to adapt to ageing by, among other things, raising the retirement age. UN forecasts suggest that for Britain to prevent the average age of the population from rising, it would need 1m immigrants a year, doubling the population to over 130m by 2050. Then you would face the same problem with double the population.
None of Britain's top experts on ageing-such as Alan Walker at Sheffield University or Sarah Harper at the Oxford Institute of Ageing-believe that immigration is any sort of answer to an ageing society. Immigration is merely a short-term fix for an ageing population that makes the inevitable adjustment more difficult in the long run.
Yours
Anthony
Dear Anthony
11th June 2002
In your comments on the labour market you make a profound-but very common-mistake. You imply that unemployment and labour scarcity do not occur together (part of the notorious "lump of labour" fallacy). But one type of unskilled worker can be unemployed while there is a grave shortage of another type.
Why don't workers move from one type to the other? For a worker, the wage on offer is crucial to their willingness to work. That means you can have high rates of unemployment where workers, given their education, experience, age, gender and reasonable expectations will not do the work on offer. This is also affected by the social security system, the size of the black economy and so on.
Moreover, if the jobs on offer are not done, these may be complementary to other jobs, so a failure to fill the vacancies may increase unemployment. If the jobs are filled, this could lift the overall demand for labour so that the unemployed could get work at pay they were willing to accept. This is the virtuous circle seen in Germany in the 1950s and 1960s: German-born workers moved up the work hierarchy (into "clean" white collar jobs in services) while immigrants replaced them in "dirty" jobs, first in agriculture and mining, then in manufacturing.
You assert: "There is incontrovertible evidence that increasing the pool of unskilled labour lowers unskilled wages and raises the level of unskilled unemployment." But where is the evidence? We do know-from nearly 200 studies in the US (I can supply references if needed)-that no one has been able to track any significant impact whatsoever either on unskilled wages or levels of unskilled unemployment as the result of increased unskilled immigration. Where there is an effect, it is very small and affects not US-born workers but earlier cohorts of immigrants.
How could this be so? For the same reason mentioned earlier. In general, unskilled immigrants come to do the jobs the natives have abandoned and will not do, and in doing them, raise the demand for native workers. In the Los Angeles garment industry in the 1980s, for example, the availability of Mexican illegal production workers increased the demand for American managers, technicians, designers, truckers, let alone landladies and supermarket staff. In this country, jobs the natives will not do on a permanent basis are legion-in hotels and restaurants, in construction, in public health, in agriculture. If there are no workers to pick the harvest, the crops rot in the field-this was threatened last year with the Hereford strawberry crop and this year with the daffodil harvest-and imports must make up the loss. Alternatively, you propose increasing pay to employ native workers. But that would raise prices and again hit the poor hardest.
You persist: "Blue collar workers in the US have suffered falling wages and high joblessness because of the big influx of unskilled workers from Latin America." Is this the US where nine years of sustained growth in the 1990s lowered unemployment to historically low levels? There is a ton of evidence on the causes of declining wages in the US from 1970 and none of it, so far as I know, attributes it to immigration. In any case, as a proportion of the US labour force, there is no "big influx."
However, where your argument really goes pear-shaped is on ageing. The standard of living of the growing number of the aged depends upon a growing economy, able to provide an increasing volume of labour intensive services needed (many of them requiring unskilled workers). But the native labour force is projected to contract sharply-which implies a growing price for those services, hitting the aged poor worst.
This problem only arises, however, because we are locked in these little national boxes that prohibit the movement of eager workers to where they are needed. You speak of "us" and "we" and by that you do not mean the inhabitants of the world, only the 1 per cent who live on these islands. Immigration controls seek to stop unskilled workers moving to where they are needed, forcing a war of attrition along the borders which ends, if the illegal immigrant is successful, in a clandestine economy where they may be harshly exploited, undermining working conditions for the legal worker. It is as absurd as the war on narcotics. Moreover, anyone who gets through and becomes legal (as under the various amnesties offered by different governments), is obliged to get citizenship-that is, is forced into exile and must abandon their homes and bring their families.
The overwhelming majority of people in all countries do not want to move and migration will only ever concern a small minority of the world's workers. But that minority can have a major effect on economic development. Some studies suggest that increased migration currently means a flow of remittances from workers to their families back home of $200 billion annually (compared to the most recent western aid figure of $51 billion). And the skills of returning workers from the west can be a boost to development.
In time, we should aim to move to one world for work, where all have the right to travel and work as they wish. Immigration controls are one of the last great barriers to redistributing the world's wealth and keeping the developing countries poor. Now, there is an opportunity to resolve problems here, such as care for the aged, at the same time as enhancing the flow of resources to the developing countries-provided chauvinism does not block the process in the name of national sovereignty.
Yours
Nigel
Dear Nigel
12th June 2002
You claim that unskilled immigration doesn't lead to lower wages for native unskilled workers, and ask for evidence that it does. You shall have it.
The best econometric research is from the US, where low level, highly skilled immigration witnessed until the 1970s was good for US workers. However, since then US immigration has quadrupled to 1.2m people a year and is now almost totally unskilled. There is now a consensus among economists that US blue-collar workers and minorities lose out.
A 1998 report by the pro-immigration think tank the Centre for Immigration Studies found that for the 25m Americans employed in low-skilled jobs, their wages were reduced by 12 per cent or $1,915 per person as a result of the influx of unskilled workers. It found that a 1 per cent increase in immigrants leads to a 0.8 per cent decrease in unskilled wages, and that those who suffer worst are blacks and Hispanics.
A 1997 US National Academy of Sciences study found that high levels of unskilled immigration had a negative impact on low skill, less-educated Americans, exacerbating the gap between unskilled and skilled.
Yes, there are other factors reducing wages such as cheap imports. But 1995 research by the US government's Bureau of Labour Statistics estimates that a full 50 per cent of real wage loss among low-skilled Americans is due to competition from low-skilled immigrants.
If economic studies don't convince you, perhaps industrial trends will. The unionised furniture factories of San Francisco were forced out of business by the lower-paying immigrant-laden plants of southern California. In the Mission Foods tortilla factory strike, wages were cut by 40 per cent and when native workers went on strike, they were replaced with Mexican immigrants. A 1998 General Accounting Office study found that a decade of heavy immigration to Los Angeles had changed the janitor industry from a unionised higher paid black workforce to a non-unionised lower paid Hispanic one.
If you won't believe me perhaps you will believe Robert Reich, Clinton's labour secretary, who said: "Undoubtedly, access to lower-wage foreign workers has a depressing effect on wages." Or George Borjas, professor of public policy at Harvard, and a Cuban ?gr?who wrote: "I have estimated that native workers lose about $133 billion a year as a result of this immigration, mainly because immigrants drive down wages. No wonder Americans are in a mean mood about immigration."
Britain's top labour economist, Richard Layard of the LSE, who helped to design Labour's welfare to work programme, said in a letter to the Financial Times: "There is a huge amount of evidence that any increase in the number of unskilled workers lowers unskilled wages and increases the unskilled unemployment rate. If we are concerned about fairness, we ought not to ignore these facts. Employers gain from unskilled immigration. But the unskilled do not."
You accuse me of the lump of labour fallacy, but it is obvious that high levels of job vacancies can exist side by side with high levels of unemployment. I believe the solution is to make the labour market work more effectively, to retrain people and give them incentives to work rather than to bring in cheap foreign labour.
Immigration is good for immigrants-otherwise they would go home. But despite wage remittances immigration to the rich world is not necessarily good for the countries they come from. About 65 per cent of immigrants to Britain don't return home at all. And a report by Addis Ababa University says the brain drain costs Africa $4 billion a year.
If the aim is to help the developing world, it is far better to increase aid and tear down the barriers to trade that stop poor countries selling their goods to rich countries. You cannot expect western societies to accept immigration as a development policy.
Yours
Anthony
Dear Anthony
15th June 2002
Every American generation believes that past immigration was good while now it is not-this is the stuff of right-wing populism. Evidence suggests that the quality of immigrants-measured by the standard of completed education-has continued to improve as, for example, Mexico's school system has expanded. It is nonsense to say that US immigration is now "almost totally unskilled." The government tries to steer legal immigration towards the skill gaps-hence the flow of Chinese and Indian programmers to Silicon Valley.
The Centre for Immigration Studies that you cite is not "pro-immigration" but the reverse. You quote "A 1997 National Academy of Sciences study." I presume this refers to "The New Americans: economic, demographic and fiscal effects of immigration" (National Academy Press). This is a balanced and dispassionate assessment of the advantages and disadvantages of immigration. I could find nothing corresponding to your account in it. I could continue; I could also cite a mass of counter-evidence. Let it suffice to quote the same George Borjas whom you try to recruit: "The methodological arsenal of modern econometrics cannot find a single shred of evidence that immigrants have a major adverse impact on the earnings and job opportunities of natives of the US" (The Changing Course of International Migration, OECD, 1993)
On the complementarity of immigrant to native workers, McCarthy and Valdez (Current and Future Effects of Mexican Immigration in California, Rand) show how in the 1960s the unskilled illegal Mexicans in the garment and textile industries of Los Angeles increased the demand for US-born workers by 50 per cent.
If economic evidence does not convince you, consider some history. Between 1945 and 1950 8m "ethnic Germans" arrived in West Germany. Unemployment peaked at 10.5 per cent before falling to 2 per cent again.
In the US, the postwar baby boom added 4m extra workers in the later 1960s and early 1970s (four times the number of immigrant arrivals in that period) without any detectable effect on the national economy. Between 1960 and 1980, 8.5m extra women workers-mainly unskilled-entered the US labour force without any effect on wages or unemployment.
The flight of nearly 1m Cubans to Miami in the 1970s and 1980s had no apparent negative effect; on the contrary, it seems to have reversed the decline of the city.
Some 900,000 pieds noirs (French colonial settlers) fled to southern France in the spring of 1962. By December, the rate of unemployment in the areas in which they settled, reached 20 per cent; one year later it was 6 per cent, before returning to, or bettering, the national average.
In the 1970s, the French government threatened to remove half a million Algerians and Africans, to make jobs available for the French-born unemployed. Yet the French statistical agency published a report showing that for every 150,000 immigrants expelled only 13,000 French would fill their places. Similarly, Ronald Reagan launched a campaign to expel illegal immigrants to create jobs for the US unemployed with little effect on unemployment.
The fears and resentments which underlie the need to blame foreigners are real enough. Structural change damages some and benefits others. But in general, foreigners (in the form of imports or immigrants) are irrelevant to these processes-they are simply scapegoats.
Yes, aid is better than migration. But aid, in any realistic scenario, will never match the scale of actual or potential remittances. And it is not obviously superior. Having worked in aid for much of my life I believe that it is corrupting for donor and recipient. It is far better for workers in developing countries to have the opportunity to work in developed ones. Will they stay? I do not know where you get your 65 per cent figure for Britain. But we do know that Germany has received 23m immigrants since the war (excluding "ethnic Germans"), of whom 8m remain. That would imply that even with immigration controls forcing settlement as a condition of work, a majority prefer to return home in the end.
We return to the key issue. With an ageing population, who is to care for the aged? The problem for the aged poor is how to secure affordable caring services-home helps, live-in nursing, providers of meals on wheels, staff in homes for the elderly, convalescent centres and public health facilities. To supply the elderly poor with an adequate living standard will, without increased immigration, requires massive transfers from your salary to pensioners. Will you be happy about that?
Yours
Nigel
Dear Nigel
16th June 2002
I am dismayed at your implication that all those who oppose the current consensus are anti-foreigner. I am the son of an immigrant, I live with an immigrant and I have more foreign relatives than British ones. Darcus Howe, the black commentator, noted in the New Statesman last week that "There is an insatiable greed for migrant workers: they keep the wages down. It has always been so." For this reason many African Americans are anti-immigration.
Obviously xenophobia and racism do fuel much of the criticism of immigration policy, but a minority of extremists should not be allowed to set the parameters for debate on what is one of the most important issues facing us today. The accusation of racism stifles the honest debate we need and so provides the real racists with evidence of a conspiracy of silence. When Richard Layard wrote his letter to the FT making some of the points that I also make, he was sent letters accusing him of racism.
I agree that the most desirable world is one where everyone is free to move where they want-the historic step we have already taken within the EU. But there are presently too many imbalances in the world for us to do so the same globally.
Best wishes
Anthony
Dear Anthony
17th June 2002
I did not accuse you of being anti-foreigner. You are right to say that the debate must not be determined by the extreme right on such an important issue. But it is legitimate for me to indicate the political context in which the debate takes place.
A simple argument (and one that is both non-xenophobic and non-economic) can be mobilised for immigration control. I, or whoever, like Britain as it is. Any more people here, working or living, would change it disastrously. We should therefore meet the costs of keeping it as it is. The debate then shifts to what these costs might be-to tax levels and labour shortages, perhaps leading to vastly increased emigration of the most skilled (to dodge the higher taxation) and a flight of capital. The wish is a valid one-but, I fear, the execution impossible.
Yours
Nigel
