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29 August 2006
Migrant workers in the UK have brought many
benefits
Since the European Union surged eastward and
embraced 10 new countries in May 2004, more than
400,000 citizens from the new member States have
arrived in the UK, sparking a fierce debate
about the benefits they bring. With Bulgaria and
Romania scheduled to join on 01 January 2007,
voices on both sides of the political spectrum
are saying it's time to raise the drawbridge.
Imaginary Polish plumbers, who struck fear
into the hearts of British workers prior to the
EU-25 expansion, have given way to a much more
vibrant, complex reality. According to the Home
Office, the most common occupation for the new
arrivals is not plumbing or bricklaying, but
'administration, business and management'. The
newcomers, many young and without dependants,
have spread across the country, transforming
communities which have rarely experienced
migration on this scale. Weighing the costs and
benefits these arrivals have brought has become
urgent, as Bulgaria and Romania, with GDP per
capita less than half that of Poland, queue to
make the European Union the EU-27 in a few short
months.
Britain, along with Ireland (whose
fast-growing economy has absorbed proportionally
far more accession country migrants than the UK)
and Sweden were the only three nations to extend
full working rights to citizens of the new
European countries in 2004. Now it must decide
whether to do the same for the new members.
For those with secure, well-paying jobs and a
mortgage, Czech waiters, Slovakian
fruit-pickers, Latvian construction workers and
all the rest have been a boon. A pool of
tax-paying workers, by nearly all accounts
diligent, keen to work and willing to take on
jobs for which they are over-qualified, has
helped to keep the lid on wages.
The Bank of England has suggested that the
new wave of migration has been one factor
preventing the rapid rise in oil prices from
unleashing a damaging surge of inflation. And
weaker inflation means interest rates can remain
lower than otherwise: a report by the Ernst and
Young Item Club suggested that borrowing costs
would be half a percentage point higher without
the migrants. That makes the cost of servicing a
mortgage cheaper and helps to cement economic
stability.
As well as hiring the accession country
workers, many businesses have seen lucrative
opportunities in their arrival. One explanation
offered for the strength of the buy-to-let
property market has been the demand for
accommodation from East European workers, while
such new businesses as Polish delicatessens,
internet cafes and money-transfer agencies have
sprung up to cater for new needs.
But for lower-skilled workers - and, as
former Labor minister Frank Field pointed out,
for students seeking holiday jobs in pubs and
restaurants - the influx of keen Eastern
Europeans looks very different. The government's
labor market figures have now shown unemployment
rising for more than a year, at the same time
that employment is also going up. Jobs are still
being created, but this suggests that some of
them are being soaked up by new workers instead
of going to the home-grown unemployed.
That may be because the arrivals have skills
local workers can't offer, but it may also be
for other reasons. There is anecdotal evidence
from employers that in some cases they prefer to
take on a young Pole or Slovak who has had the
gumption to leave home and travel hundreds of
miles in search of a job, rather than a
bumptious UK school-leaver with few skills and
little enthusiasm.
One worrying result of the new arrivals,
then, has been to expose some of the
shortcomings of the British workforce. Business
organizations have bemoaned the long 'tail' of
workers at the bottom of the pile, who still
leave school lacking even basic skills. It's
handy - and good for the economy in the short
term - for companies to be able to reach for a
migrant instead of training a local worker, but
it raises issues about how well the education
system is preparing students for the jobs that
are available in the real world. These long-term
structural problems can be temporarily solved
with the influx of a few thousands of incomers,
but some believe it will sap competitiveness in
the longer term if they are left untackled.
It is not just those out of work who are
affected, of course. The flipside of the new
workers' beneficial impact on inflation is that
wages are probably growing more slowly than they
would otherwise have done (although, this
assertion is still controversial among
economists).
Finally, when assessing the impact of
accession-country migration, as with most
things, the past is not always a reliable guide.
Workers have been sucked into the United Kingdom
by the rapid rate of job creation in the
economy; harder times could lead them to look
elsewhere.
Immigration has also been artificially
boosted by the barriers other EU members have
kept around their labor markets. Migrant workers
considering Britain as a destination will soon
have other options. Free movement of labor is a
fundamental pillar of the single market, and all
EU members are expected to open their doors by
2011, when the 'transitional arrangements'
blocking workers from entering Germany, Austria,
Italy and others are due to expire. France has
already said it will phase out its restrictions
over the next three years.
Looking at Britain's economy as a whole, with
high growth, low unemployment and low interest
rates, the arrival of Poles, Czechs and the rest
seems an unequivocal bonus, helping to fill
skills shortages, boosting productivity and
creating new taxpayers. For almost a million
workers who remain unemployed while Eastern
Europeans win new jobs, the analysis may look
rather different. But closing the doors to
Bulgarians and Romanians won't help, while
better training and education might.
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