The UK debate on immigration has taken a surprising new turn over the past few weeks. Commentators from the centre-left – including senior figures in the Labour Party and the Guardian’s Polly Toynbee – have started to articulate concerns about the negative impact of low-skilled immigration on native workers. The argument runs as follows: in a number of low-skilled sectors, British workers are being displaced by foreign workers who are willing to accept salaries below the living wage, or, in the case of posted workers, at rates below the minimum wage.
A bit of context is in order here. Arguments about immigrants competing with or undercutting native workers are far from new in European countries: indeed, trade unions and social democratic or socialist parties have been making these sorts of arguments against low-skilled labour for decades. As Gary Freeman has argued, the UK has been somewhat of an exception in this respect. The TUC was largely supportive of immigration from Commonwealth countries in the 1950s and 1960s, largely on moral grounds. Most anti-immigration arguments over this period revolved around concerns about the socio-cultural impacts of immigration, rather than competition with native low-skilled workers.
In fact, the UK was a latecomer to debates on the economic impacts of immigration. It was not until the late 1990s that the New Labour government began to advance a more ‘technocratic’ argument about the economic benefits of labour migration. The era of this economically driven policy on labour migration was, of course, short-lived. In the late 2000s there was a backlash, and both Labour and the Conservatives adopted a restrictive line, mainly based on concerns about the social impacts of immigration. But there have also been increasing concerns that the acknowledged economic benefits of labour migration are not distributed equally. Workers in sectors where low-skilled immigrants are most concentrated – such as food processing, catering and hospitality, construction, domestic care and health – may be adversely affected through displacement (i.e. losing jobs to foreign immigrants) or a depreciation of their salary caused by an influx of new labour into the sector.
It is this latter argument that the Labour Party have been focusing on recently, calling for measures to prevent or discourage employers from paying wages at such low rates that native workers will not want to take up such jobs. Labour economists term this problem – somewhat euphemistically – ‘preference mismatch’. Native workers do not fill vanancies because their preferences (decent wages, or working conditions) do not ‘match’ those on offer by employers. The answer is either to incentivise workers to adjust their ‘preferences’, for example through reducing unemployment benefits (the Conservative approach); or to make employers to adjust their incentives, most obviously through offering higher wages (the proposed Labour approach).
But what does this have to do with immigration policy? The Labour argument, presumably, is that by cutting off the supply of foreign workers, employers will be forced to offer higher wages to attract native workers. As usual, though, the matter is not this simple. I won’t dwell on the possibly insurmountable problem of trying to cap intra-EU mobility, but focus here on labour market aspects.
For a start, preference mismatch is only one of the causes of labour shortages and demand for foreign labour. Such demand is just as likely to be a function of either skills mismatch, or regional mismatch. In the case of skills mismatch, native workers simply do not have the skills, experience or qualifications necessary to do the required work – think of how many foreign doctors and workers have been recruited to fill NHS vacancies. In the case of geographical mismatch, native workers are unwilling or unable to relocate to the places where vacancies exist – think fish-processing in Northeastern Scotland. So cutting off a supply of low-skilled migration would also affect employers’ ability to fill these sorts of vacancies.
Secondly, low skilled immigration has underpinned massive upward mobility of the native population in immigration receiving countries since the 1950s. The idea that immigrants often take low-skilled, low-status work is far from new – see Piore’s classic 1980 book on immigration and segmented labour markets. This mobility effect has been welcomed in most European countries. This is not to justify it on ethical grounds, simply to point out that it has been occuring for decades in a way that has hugely benefited large parts of society, including many second generation immigrants. So it’s not a new phenomenon, and its effects are not unconditionally bad.
Thirdly, we need to ask what the alternative to low-skilled immigration would be. The scenario envisaged by its proponents is that once foreign labour supply is cut off, firms will begin to pay their workers higher wages. But cutting off a supply of cheap labour might also produce two less desirable outcomes. First, it might lead to the outsourcing of low-skilled, labour intensive production to other countries with lower labour costs. That may be a price worth paying; but it would hardly be a means of creating more jobs for native workers. Second, increasing wages might create a reliance on irregular labour in certain sectors. This has been the case in southern European countries such as Italy and Spain, where many labour intensive businesses are sustained by their reliance on undocumented (native and foreign) labour. The obvious way of dealing with irregular migration is to get much tougher on enforcement of employer sanctions – but that, as I’ve discussed elsewhere with Thomas Straubhaar, opens a whole other can of worms.
My intention isn’t to come down on any one side in this debate. Simply to flag up some of the complexities of the issue. In particular, a UK government would need to think carefully about the possible unintended consequences of reducing flows of low-skilled immigration. Is it preferable to outsource low-skilled work to countries with cheaper labour? And/or countenance increased level of irregular immigration and illegal employment?