European Affairs
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Tel: (202) 895-1670
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info@europeanaffairs.org
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My friend Jez recently bought a
home in Somerset and, when it came to
redecorating the dilapidated farmhouse,
he followed the new British tradition: he
hired a couple of Polish immigrants to
do the work. Since he had a little trouble
with their names, he called them Hatcheck
and Coat-check. They didn’t seem
to mind the gentle teasing (or the long
hours), perhaps because they were paid
with weekly envelopes of cash with sterling
soaring sky-high in currency markets.
So far, so stereotypical. But the contribution
of immigrants to the British
economy has run far deeper than making
home improvement punctual and affordable.
Immigration has kept down inflation,
raised house prices and boosted
growth, according to the Bank of England.
These statistics point up how badly
the immigration debate in this country,
such as it is, typically misunderstands the
indirect benefits deriving from this influx
of willing workers: beyond the refitting of
their kitchens, the overall impact for
Britons has to be measured largely in
terms of the advantages of an expanding
labor market and job force brought by
immigration. (Incidentally, the Hat-check
and Coat-check stereotype underestimates
the level of education among some
in the immigrant workforce who have not
only expanded mainstream consumption
but also started job-generating businesses.
But that is another story, explained a little
further in this article.) British business estimates
that the pool of available labor in
Britain has increased by about 770,000
people in the past couple of years, about
two-thirds of them from Central and
Eastern Europe. Nearly all of them (97
percent) are reported to be in full-time,
tax-paying jobs. Importantly, they are
mostly single, under 34 and on relatively
low rates of pay: about three-quarters of
them earn less than six pounds sterling
per hour. (The hourly minimum wage in
Britain is just over five pounds, i.e.
roughly eight euro or nine U.S. dollars.)
The meaning of all this is that these
immigrants have helped Britain enjoy a
huge increase in its labor market, certainly
in its flexibility, without making
inflation boil up.
To be clear, the figures are all fuzzy.
The Governor of the Bank of England,
Mervyn King, has grumbled that it is hard
to make productivity forecasts and monetary-
policy decisions when the UK census
data are so wildly inaccurate about the
numbers of immigrants in the country.
But what is certain is that immigrants
have fuelled economic growth in this
country while at the same time acting as a
brake on inflation because of their willingness
to work for relatively low wages.
(This result comes mainly from immigrants’
declared employment: their work
“in the black economy” multiplies the effect
by providing even cheaper labor.)
The immigrant influx has also benefited homeowners. The rise in house
prices in Britain this year, about nine
percent, has been a major factor in economic
confidence that has propelled the
British economy. Of course, much of that
growth has happened at the top of the
market, but the fact that there are so
many immigrants living in rented accommodation
means that house-sellers
at the bottom of the market have benefited, too, because the boom in prices fuelled
growth in a special sector of real-estate
investment: buy-to-rent. So we are
all landlords now. But we couldn’t hope
to be without the tenants from Gdansk.
The critics of immigration like to
complain that the foreigners are taking
British jobs. Obviously, this is often just
a fig leaf for racism. But, taking the argument
head on, the fact is that the labor
market in Britain is not stagnant. So
when one job goes to a Pole, a Briton
does not suddenly become unemployed.
It is worth looking at the numbers: as
collated by the government, it seems that
the impact of Central and Eastern European
immigration is negligible on joblessness.
A one percent increase in the
numbers emigrating from countries in
the former Eastern block seems to translate
into a 0.01 percent increase in non-migrant
unemployment.
If this all seems rather dry, that is because
it is. The much greater, intangible
contribution of immigration, not only
from Eastern Europe but from across the
world, has been cultural, social, intellectual.
One of the really interesting findings
of the Bank of England’s recent research
into immigration is the level of
comparatively high levels of education
that immigrants bring to the UK labor
market. Whereas 17 percent of UK-born
Britons were educated to the age of 21,
that figure rises to 36 percent among immigrants
and to 45 percent among of recent
immigrants.
Perhaps the most striking feature of
the large-scale European immigration
that has transformed the British economy
in the past couple of years is the absence
of a fiery argument accompanying
it. Indeed, the waves of workers coming
from Central and Eastern Europe have
been met not by resentment nor resignation,
but by enthusiasm. It should be no
surprise: You need only to see the quality
of work that Hat-check and Coat-check
did on Jez’ house.
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