Employment and Welfare | Key Topics

  • There is wide variation between migrants from different countries. Some groups do better than the UK born and others do worse
  • There is some evidence of negative impact on jobs for the UK born.
  • Some researchers have observed that some employers seem to prefer migrants for low-skilled roles over young British people.
  • Other research points to some negative impact on the wages of the lower paid.
  • Immigration into low paid employment adds to the pressures on public services without any significant net contribution to the Exchequer.

Economic characteristics

1. In July 2015 Migration Watch produced a paper on the economic characteristics of migrants in the UK in 2014 (see here) This showed wide divergences between people from different countries even from similar parts of the world. For example migrants from Western European countries had higher wages and lower rates of claim to key benefits than the UK-born population, whereas those from Eastern European countries had lower wages and higher rates of claim. Similarly, migrants from India had higher employment and lower rates of claim to key benefits than the UK-born population, whereas those from Pakistan and Bangladesh had lower employment and higher rates of claim. Our findings have been confirmed by other researchers including the European Commission-sponsored Eurofound.

Impact on employment

2. It is difficult to disentangle the impact of immigration from the impact of wider economic factors, particularly over the period leading up to and following the recession. However, evidence of displacement of UK-born workers has been found by the Migration Advisory Committee (MAC). They reported that for every 100 non-EU migrants employed 23 UK born workers would have been displaced. (See here)

3. The MAC also observed that some employers preferred to employ migrants in low-skilled roles over young British people. The IPPR also noted this phenomenon in a 2012 report ‘Learning to Earning’, reporting that:

Employers have also become increasingly reluctant to hire teenagers, particularly in London. Only 6 per cent of UK employers, and just 3 per cent of employers in the capital, recruit straight from school. As a result, school-leavers compete with more experienced workers for the same jobs, in addition to competing with more highly qualified young people. Despite the vibrancy of London’s economy, the inward flow of migration from other regions and abroad has resulted in a highly competitive environment at the lower end of the labour market. Many of these relatively well-skilled new residents take on low paid jobs while they finish their studies or look for something better, leaving those with the weakest skills and experience more likely to be ‘squeezed out’.

(See here).

4. An increasing proportion of employment growth in recent years has been due to jobs being filled by migrants. In fact, 60% the growth in employment in the UK since 2010 resulted from an increase in the number of foreign-born workers.

The Impact on wages

5. It is uncontested that, in theory, increases in the supply of workers are likely to bear down on wages. Indeed, academic research has found some negative impact on the wages of lower-paid workers. (See here) However, some claims that there is no real evidence that immigration had a negative effect on wages overall and that, if there were any negative impact, it was on the wages of previous migrant workers or was concentrated at lower pay levels and outweighed by a positive impact elsewhere.

6. A 2015 study conducted by the Bank of England found that migration caused a downward pressure on average wages. The largest effect was observed in the semi/unskilled services sector including hotels, and social care where a 10 percentage point rise in the proportion of immigrants was associated with a 2 percent reduction in pay. Thus immigration reduces the wages of those already in low wage jobs.

7. The Institute of Education at UCL found that, where companies employ 10% of their workforce from the EEA, average wages were 0.75% less than a similar employer with no workers from the EEA. Where employers employ 10% of their workforce from outside the EEA the negative impact on average wages was larger - 1.9% lower than a similar employer with no non-EEA workers. (See here).

Welfare Claims

8. There have been press reports to the effect that immigrants pay more in tax than they claim in benefits. But this is to ignore the wider costs such as health, education and the additional infrastructure required such as housing stock, roads etc. Including these elements gives the overall fiscal contribution of migrants. In 2014 the net fiscal cost of all migrants in the UK was £17 billion (For more on this see our Economics overview here).

9. Large amounts are paid out in benefits. In 2013/14 a total of £4.14 billion was paid in working age benefits to EEA and Swiss nationals (excluding families with any UK nationals). Breaking this down, £2.273 billion was paid in tax credits and housing benefit to in-work claimants and £1.157 billion was paid to out-of-work claimants. An additional £714 million was paid in child benefit to EEA nationals.

10. Of course, there is a wide variation across different groups with East Europeans more likely and West Europeans less likely than the UK born to claim benefits.

Updated November 2016

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