There has been a huge discussion about the United Kingdom’s membership (UK) of the European Union (EU). A major dispute was raised regarding the Leave campaign whether Brexit would permit more control over the current flow of immigrants to the UK than is exercised from the rest of the EU. This has been an area of concern for the people as the high rate of immigration may affect their jobs, wages and quality of living. In the last 20 years there has been an increasing immigration growth, most of which was from the EU countries, especially after 2004 and the accession of the eight East European countries. The EU immigrants figure, living in the UK increased greatly and the share of the EU nationals also significantly. However, immigration resulted in higher GDP of UK has benefited the UK immigrants largely. However, the question arises whether it has been beneficial for UK born people. The following paragraphs will discuss the impact of Brexit and immigration in UK.
Between 1995 and 2015, the number of the EU immigrants to UK increased from 0.9 million to 3.3 million. In 2015, there was a total immigration of 172,000 people from EU, which was below the figure of 191,000 for non-EU immigrants. In 2004, when the East European A8 countries joined the EU, the immigration increased considerably, but there was a decline in the rate during the 2007 recession. As the economy recovered, the net inflows again accelerated considerably.
The labor Force Survey (LFS) is the best source of date for studying the impact of immigration. It is so because the LFS enables to determine the economic conditions of the UK nationals and balance them against the immigrants of EU and remaining countries. As stated earlier, in 2015 the immigrant population tripled from 0.9 to 3.3 million, and around 2.5 million of these immigrants belong to the age group of 16-64 and two million are in work. 35% of the people in UK comprise of the EU immigrants. In which 29% of EU nationals are polish, 12% are Irish. The other EU immigrants are equally spread across the other 25 countries in the EU. Most of the EU immigrants reside in London, compared to the remaining countries. Precisely, one third of the EU immigrants live in London as weigh against the 11% UK nationals.
According to 70% of the EU immigrants, the reason of their immigration is work related reasons. Since, immigration is likely to increase the total number of people in work it is likely to affect the UK workers, by increasing job competition. But, such immigration has not harmed the UK workers. It would have had harmed the UK workers, if the overall number of jobs were fixed or if there was opposition for a particular job. As the immigrants consume the local goods and services, it increases demand and increases the job opportunities for people who manufactures the goods and services. Although addition of immigrants increases the population, in the last 100 years there has been no increase in the unemployment rate, despite of the fact that the UK population arose by 50%.
Questions were raised on the fact that even though immigration did not harm the employment rate, it is possible that an enhancement in labor supply can force wages down at a point of time. But, it has been argued that alongside increased demand, which comes with an increased population, greater movement in labor also allow countries to focus in what they are best in, like amplified trade. This permits the firms to change the mix in their products with the help of the new available skills. In cases, where the immigrants are skilled, it boosts up the productivity and will lead to a increase in wages as well.
In the UK context, this argument can be proved by analyzing data and evidences available. There has been a significant study on the consequences of immigration on jobs and wages. The outcome of such research resulted in the UK was that immigration did not have adverse effect on the job opportunities and wages of the UK workers.
At one point of time, when the EU immigration started to rise after 2004, unemployment of the UK born workers began to rise, but again fell back while the EU immigration was on a rise. Despite the global break down, the increase in unemployment for UK born labors was comparatively much less than in the past recession when the EU immigration was much lesser. Although, the employment rate for UK workers fluctuates with the fiscal cycle, it has lately increased during the rise in EU immigration and regained the peak levels of the previous recoveries. Moreover, although, there was fall in the wages during the increasing EU immigration, UK workers have experienced big time gains in real wages at the time when the EU immigration was also rising. Therefore, this shows that it was the great recession and not immigration that resulted in the fall of wages.
Questions regarding the impact of immigration on certain types of workers were raised. The argument was whether immigration resulted in the sufferings of a certain group. It was raised as the EU immigrants were more educated than the UK workers. According to the data of 2015, one third of the EU nationals are unskilled, compared to 10% of the UK workers.
If the wages of the UK born workers across the pay distribution are tracked over time, it can be seen that the wages of the UK workers have increased. The sharp fall in wages due to the great recession affected everyone. The introduction of the minimum wages in 1999 gave a boost and contributed through to the late 2000s.
Again there was incline in the wage growth with the increasing EU immigration that was characterized by relative wage stability. Therefore, there are inadequate evidences to establish low wage for low paid UK workers, in particular, when there is an incline in the immigration rate.
There will be a reduction in the Public expenditure at some point of time as the UK taxpayers did not have to incur expenses on childhood schooling and healthcare expenses of immigrant adults as it would have been done in case of UK born children and adults. Comparatively, the EU immigrants especially the youths who have the willingness to work are less likely to be advantageous. On one hand, where UK immigrants like EU nationals, would not be qualified for causal related benefits, unless they have worked for two years on a full time basis, they could be entitled to the means-tested benefits if they apply. The immigrants made a positive monetary contribution as they paid more taxes than they actually received in the form of welfare payments. For example, the A8 immigrants paid a tax amount of $15 billion, which was more than the amount that they spent in public spending up to 2011.
There is no reason to think that the EU immigrants should swarm up the public service owing to their significant contributions. In fact, they are responsible for bringing additional resources, which could be used, for enhancing the health and education expenses for the UK born people. Therefore, it can be stated that if the EU immigration is reduced, it will lead to need for greater austerity. However, the immigrants cannot be blamed due to the fact the government has been saving expenses on public services and it is still important to find out whether immigration has led to poorer local services.
In the general context, immigrants receive better treatment while applying for social housing. However, it has been seen that while controlling for demographic, economic and regional circumstances, there are minimum chances that immigrant households will be in social housing, as compared to their UK born counterparts. The falling supply of the social housing is due to the lack of access to social housing.
UK has a terrible reputation for building inadequate houses and therefore the inhabitants’ pressure has created housing pressure due to the addition of immigrants. However, the failure to generate adequate housing supply shall be a concern even in the absence of EU immigration.
Another argument, in favor of Brexit was that the minimum wage (National living wage), which was designed over the next four years, would be responsible for drawing EU immigrants. However, it is unclear on the matter that how big a concern it will be, as it depends partly on the what other countries plan for their respective wages and standard of living in each country.
The focus on circumstances in local areas is a disadvantage as they miss the wide effects of immigration on economy. Immigration leads to specialization, which increases productivity and the national wages. Migration is more like trade as immigrants increase productivity and income of the country they migrate to. Moreover, immigrants fill the space of skilled workers in the national workforce. This helps in fostering specialization, increase productivity and enhancing wages of national labors with contemporary skills.
Conclusion
As to the impact of Brexit and immigration, it cannot be stated precisely about the extent of the losses, resulting from confined immigration. However, it can be said that the EU immigration did not have adverse impact on average employment opportunities, wages, public services neither it caused inequality at the local level for the UK nationals. It also cannot be said that the impact resulted in large positive effects. It can be stated that the biggest loss of the or adverse experience faced by the UK-born workers in relation to jobs and wages was not the immigration, but the biggest economic crash for a period exceeding 80 years. With regards to the national level, fall in the rate of EU immigration would lead to lower living standards. It is so because the immigrants help in reducing deficits as they are more inclined to work than to use public services because majority of EU immigrants include the youths and more educated people compared to the UK nationals. Another significant reason would be the immigrants have an optimistic impact on the productivity.
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