What Can Be Done About High Levels Of Immigration From The Eu?

The latest figures from the Office of National Statistics show that over the year to June 2014 the annual increase in the number of people from Eastern European countries in employment in the UK has reached record levels, surpassing even the previous peak annual increase in the year to June 2007.

This has raised the number of Eastern Europeans with jobs in the UK to new record levels too, with the most recent increases pushing the total to over a million jobs for the first time.

So what underlines this continuing movement of workers from Eastern Europe to Britain? The principal reasons are the UK’s economic prosperity, its high average income levels, relatively low unemployment and its generous, easily accessible welfare system.

Though there has been very little quantitative research into why Europeans choose to move to the UK, many of the incentives are obvious, especially for the poorer member states of Romania, Bulgaria and the A8. The UK’s minimum wage is often several times higher than even the average wage of many of these countries. The average income in Poland, the largest source of A8 migration to the UK, is just a third of that in the UK. The income disparity between the UK and most of the other A8 countries is similar. The ability to earn far higher wages in the UK is an obvious pull factor and is an even bigger incentive for migrants from Romania and Bulgaria. In 2013, according to the World Bank, the UK’s GDP per Capita was four times higher than Romania’s and almost five times higher than Bulgaria’s. Even when the cost of living is factored in the average income in both countries is only a sixth of that in the UK. The same is true of the minimum wage which is the equivalent of just £1 an hour in both states, compared to £6.31 in the UK.

One of the other biggest draws to the UK is its relatively low rate of unemployment compared to many EU states. The results of the Labour Force Survey yesterday showed that unemployment in the UK continues to fall and has now dropped to its lowest level in over six years. Many Mediterranean countries, for example, have been particularly badly hit by the recent recession and have seen their unemployment rates skyrocket. The UK’s rate of unemployment stands at 6.4%. In Spain and Greece for example, the unemployment rate is over 25%, while in Portugal it is 17% and in Italy 13%. Immigration from all these countries to the UK has spiked upwards dramatically in the past few years. Meanwhile, Poland’s unemployment rate is over 10% and Slovakia’s is 14%,.

The other big pull is the UK’s remarkably open benefits system. Because the UK’s welfare state is not based on contributions and because it is illegal to discriminate against EU citizens, EU nationals are able to access the welfare state almost immediately. In work benefits can be obtained as soon as an EU citizen starts working. A family of four in which one adult works at half the average wage, for example, is able to almost double its take home pay through housing benefits, family benefits (child tax credits and child benefit) and in-work benefits such as the working tax credit. Only three other EU states offer more generous benefits to equivalently sized families (Denmark, Ireland and Luxembourg.) While out of work benefits seem to be a much smaller incentive for EU migrants, they are also very easy to access. All that EU citizens have to do to obtain them is to prove that they are  “habitually resident” to claim unemployment benefit which, while less generous than in other EU countries, comes with virtually no conditions, unlike other member states where contributions are a key determinant of access. In a similar fashion, EU citizens cannot be treated any differently to British nationals when it comes to the provision of social housing and, of course, the health service is also immediately accessible. 

So, what can be done about the continuing high level of immigration from the European Union? People have been predicting for years that the longer the A8 countries were in the EU the more their economies would catch up with Western Europe and thus EU migration to the UKwould come into balance. This has simply failed to happen and has been coupled with the worsening economic situation of many southern European countries. A solution must now be found. The Government has taken some action in restricting out of work benefits in order to de-incentivise EU migration. While their actions- such as restricting out of work benefits to three, rather than six months and denying out of work benefits for the first three months of residence- are a step in the right direction, they will not be sufficient. Most EU migrants come to the UK to work, not to claim out of work benefits. There is very little evidence to suggest that such restrictions will have any impact on the numbers coming.

In work benefits are far more generous and are likely to act as a much stronger incentive but, as yet, the government has not proposed any restrictions on them. It would make much more sense to only allow EU citizens access after making a proper contribution –this, would bring our benefits system into line with those of other EU countries which are based on contributions. It is our belief that a period of five years living and working in the UK before gaining access to the welfare state would be appropriate. However, there is still no guarantee that such a restriction would bring down numbers because of the other powerful ‘pull factors’ that exist, such as the UK’s lower rates of unemployment and higher average wages.

Instead, the most effective solution would be to require skilled EU migrants to apply for Work Permits whose number would not be limited.  The number of low skilled EU migrants permitted to enter the UK each year would be subject to an annual quota for a period of years until internal EU migration flows settled down. Critics of this idea will say that it is impossible because of the EU’s sacred principle of the freedom of movement.  However, if the choice became one between a temporary quota for unskilled EU workers or risking the loss of a referendum on EU membership, other member states might be prepared to compromise.  The Prime Minister has repeatedly stated his desire for a re-negotiation of Britain’s membership with the EU and has spoken of ‘redlines’ that must not be crossed. If such a re-negotiation takes place, adjusting the freedom of movement in this way should be such a ‘redline’.




14th August 2014 - Economics, European Union

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