When Eastern European countries joined the EU in 2004 and 2007, concerns were raised about a possible flood of migration to the UK, a country already experiencing record immigration levels. According to some media reports, not only would the British labor market be overrun by low-skilled East European workers but the widening of the EU boundaries would also result in a surge of illegal migrants who would easily slip in through countries with weaker immigration controls. It was argued that these developments would have adverse impacts on the British economy since the East European immigrants would accept low-paid work, reducing wage costs and increasing unemployment levels among native workers and thus suppressing prices and economic growth.
Many other EU countries decided to protect their labor forces from East European migration by exercising the right to impose a seven-year ban on working for the new EU citizens. Great Britain allowed most new EU nationals to take up employment in the UK immediately, subject to registration with the government. In the face of rising public concerns about immigration, it did, however, impose temporary restrictions on the numbers of Romanian and Bulgarian nationals allowed to work in the UK after these two countries were admitted to the EU in January 2007.
What is known about the impacts of East European migration on the British economy to date? Any findings will have considerable significance for the debate about immigration and the economy, which has long occupied the minds of academics and policymakers on both sides of the Atlantic.
Crying Flood
First, actual levels of East European migration to Great Britain have been much lower than some observers had feared. Data from the British Government’s Worker Registration Scheme indicate that around 800,000 East European migrants joined the British labor force between May 2004 and the end of December 2007; by 2008 it was being reported that applications for employment had dropped to their lowest levels since 2005. Moreover, the available data suggests that up to half of all East European migrants have returned home after a period of working in the UK.
Synthesizing the findings of a range of studies, a House of Lords report published in April reported that immigration results in clear “winners and losers in economic terms.” The winners in this economic contest include the immigrants who land jobs as well as the employers who are able to fill their vacancies at relatively low wage rates, while the losers include those directly competing for low-skilled or low-paid jobs, including many immigrants already in the country as well as young entrants to the labor market. For the economy as a whole, the House of Lords report concluded, immigration may not be beneficial due to its suppressing effects on labor costs and thus on the price of goods and services.
However, academic research for the British Government published more recently in June, The Impact of Migration from the New EU Member States on Native Workers, claims to provide data showing that East European migration has had no adverse impact on unemployment or wage levels among the existing British population and has increased annual levels of economic growth by 0.15% per capita.
The Extremities of the Population
Globally, researchers have not been able to reach a consensus about whether immigration in general has a positive or negative impact on a country’s economy – some argue that the costs and benefits cancel each other out so the overall effect is in any case minimal. The lack of conclusive findings may be explained by the results of a UK study, Migration: an economic and social analysis, which concluded that immigrant characteristics are more polarized than those of the general population, often including extremes of wealth and poverty, concentrations of high-skilled and low-skilled workers and of employed and unemployed (or economically inactive) people.
The overall impact on a country’s economy will clearly depend, therefore, on the profile of its immigrant population as well as prevailing labor market conditions and the need for particular types of workers. Moreover, the social effects of immigration and their indirect economic impacts must also be included in the equation: the UK Border Agency recently reported that in the majority of English regions, recent migration has resulted in pressures on housing and education and in crime problems.
See Also
Blanchflower, D., Salaheen, J. & Shadforth, C. (2007). The impact of the recent migration from Eastern Europe on the UK economy. Discussion Papers 17. Monetary Policy Committee Unit, Bank of England.
Glover, S. Gott, C., Loizillon, A., Portes, J., Price, R., Spencer, S., Srinivasan. V. & Willis, C. (2001). Migration: an economic and social analysis. RDS Occasional Paper No 67. London: The Home Office.
Home Office. UK Border Agency (2008, May 20). Eastern European migration falls (http://www.ukba.homeoffice.gov.uk/sitecontent/newsarticles/migrationfalls).
Home Office (2008). Evidence from our regional consultation on the impacts of migration (draft) (http://news.bbc.co.uk/2/shared/bsp/hi/pdfs/17_10_07_migration.pdf).
House of Lords Select Committee on Economic Affairs (2008). 1st Report of Session 2007–08: The Economic Impact of Immigration Volume I.
Lemos, S. & Portes, J. (2008). The Impact of Migration from the New EU Member States on Native Workers. London: Department for Work and Pensions.
Rowthorn, R. (2004). The Economic Impact of Immigration. Civitas Online Report. (http://www.civitas.org.uk/pdf/Rowthorn_Immigration.pdf).
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