The problem with all this immigration

By Mary Dejevsky

That so many Poles, Czechs, Baits and others have flocked to Britain to find work following the expansion of the EU is, of course, something we should be proud of. Our buzzing economy clearly makes Britain an attractive proposition to "new" Europeans and the vast majority are now gainfully employed. This enormous westward movement of population has so far been accomplished with exemplary calmness and goodwill.

Amid all the satisfaction, it seems a pity to spoil the party. After all, the recent upward flick in the unemployment figures may be only a blip. As the number of people in jobs has also risen, there may be nothing to worry about at all. Yet I wonder whether what looks like the ideal solution to a problem that most other European countries would be delighted to have – a shortage of qualified labour – may turn out to be less than the unmitigated boon it seems.

There can be no doubt that the cost of some services has gone down. The skills shortage that made plumbers and electricians – to name but two – so expensive in the South-east is now less acute than it was. But it is surely fair to ask whether those of us in white-collar jobs would be quite so relaxed about the newcomers, if we were facing the same low-priced competition.

There are people – skilled, semi-skilled or no-skilled – who derive almost no benefit from the new migration beyond the enduring low rate of inflation. Many of them have suffered severe cuts in pay. Unlike the new arrivals, these are often people who are settled, with families and obli­gations, such as mortgages. The calculations on which their lives were built are now in shreds.

Some of them may be better off on benefits than continuing to work (a net cost to the Exchequer). Others would not be human if they did not resent the abrupt change in their fortunes (a potential danger for Lab our at the next general election). Anyone who has paid the prohibitive cost of an emergency plumber on a bank holiday may indulge a frisson of Schadenfreude, but no one can deny that there are losers here as well as winners.

And the losers are not all lavishly paid British tradesmen. They are also the countries from which the new migrants come. They are not losing only manual laborers who might be unemployed at home, but some of the brightest and best-educated of a generation – the very people they most need to advance the country's prosperity.

Many of these same highly qualified people are squandering their skills in Britain, where they are taking manual jobs for higher reward than their years of training would yield back home. It is all very well to shrug and say that this is just the market economy at work. But there is a moral question here, too. A lively international labour market is one way of looking at it; another might see the richer country as a parasite on the poorer.

The biggest drawback of the inflow of new labour, however, may be the long-term impact on our own economy. While the British middle classes, the new migrants and their employers are all winners now, the sums may not add up so positively in the future. It is true that some of the new arrivals are filling a genuine labour gap, but in many cases this new source of staff is also allowing employers to keep wages down for everyone, while skimping on training and enhanced productivity.

If, as is possible, many of the recent arrivals eventually decide to return home, there will be a greater gap in the British labour market than there is today. Worse, there will be a generation of low-skilled Britons, unprepared and ill-equipped to work. Whether they receive remedial training or benefits, they stand to become an expensive charge on the Treasury.

Even now, the balance sheet of the new migration may not be as unambiguously in the black as the Government suggests. In crude money terms, the biggest winners of all are the middlemen – the agencies and gang-masters – to whom many businesses delegate recruitment. The cost of services to consumers may have fallen, but the cost of wages in some trades has fallen farther. The balance accrues to these go-betweens.

Nor may the Treasury be quite such a beneficiary as it seems. Even if we allow that the majority of new arrivals work in the official economy, paying tax and national insurance, many live off air in order to remit as much as money as possible back home. Those who return home within the year also recoup much of the tax they have paid.

So even as migration seems to offer a perfect solution to today's problems, the positives may not outweigh the negatives forever. This is nothing to do with race, creed or culture; it is an elementary matter of economics. In 10 years' time the balance may look rather different from how it looks today.

The Independent

Friday, 25 August, 2006