We Need Much More Low Skilled Immigration

Immigration policy should be set by technocrats, not politicians

Good news! It looks as though the government has jettisoned its ridiculous plan to give the over 50s a tax break in order to entice them back to work. While this is encouraging, it is disappointing that they have ruled out one of the most effective ways of dealing with labour shortages: increasing immigration. 

There are many spurious economic arguments against increasing immigration such as that it depresses wages or takes jobs away from natives. However, there is no real evidence for this. For example, the Nobel Laureate David Card analysed the impact of a large influx of low skilled migrants into the Miami Labour Market. He found that such an increase had practically no impact on the wages or employment prospects of low skilled native workers. Numerous other studies have found the same thing: immigrants are not stealing jobs or depressing wages.

I have sympathy for people who, out of ignorance, believe that increasing immigration would lead to lower wages and fewer job opportunities for native workers. Intuitively it would seem likely (increasing the supply of something tends to reduce its price). However, this ignores the demand side of things. Increasing immigration does obviously increase the supply of workers but it also increases the demand for workers as well. As such, things tend to balance out. 

Another argument made against increasing immigration is that it allows businesses to rely on low-skilled workers. We would, they argue, be a much more productive country if businesses were cut off from the supply of cheap migrant labour and instead forced to train their workforce with ‘Skills’.

This is an attractive argument. Everyone is in favour of ‘Skills’ and a more productive and highly skilled population would obviously be a good thing. However, it ignores three important things.

First, although it is true that UK businesses are not doing a great job at training their staff, there is no evidence that they would do any better if we decreased immigration. It’s possible that they might, but that is just pure speculation. 

Second, there is strong evidence to suggest that immigration actually increases productivity. This is the case in the UK and is also true in many other advanced economies. Immigration has boosted productivity and therefore contributed to economic growth.

Third, it is actually misleading to counter calls for higher immigration by arguing we need to upskill the native workforce. This is because many of the labour shortages are in industries which require very few skills. These jobs can be done by practically anyone, but many Brits simply refuse to do them.

We currently have labour shortages in the UK and this looks set to get worse in the future as our population continues to age. Not only is this a disaster for economic growth, it also risks crippling public services and crashing the social security system. The NHS is dependent on cleaners and porters from around the world and the care system – already on the brink of collapse – is propped up by carers from other countries. We also need people working so that they can pay tax to fund things such as hospitals and the NHS. The tax burden on working people is already very high but it will have to increase even further if we don’t open up the borders to people from all over the world.

The economic case for more immigration, especially low skilled immigration, is overwhelming. Unfortunately, we are unlikely to see the necessary increase due to political pressures. This tweet from a former secretary of state and Treasury minister highlights this problem perfectly. He responds to the economic arguments put forward in favour of more immigration by a former chancellor by essentially saying it would be unpopular.

Many politicians are well aware of the benefits of immigration. However, they are reluctant to make the case for increasing it because people won’t like it. Now, while it’s important the politicians are accountable to the public and represent their interests, we should be mindful of Super Hans’ warning in Peep Show: ‘People like Coldplay and voted for the Nazis’. As such, ‘the public won’t like it’ is not a valid response to calls to increase immigration.

We should radically reform the immigration system and take the politics out of it. In an ideal world the Home Office would be abolished completely, but in the short term immigration policy should be moved away from the Home Secretary and other ministers and instead overseen by an independent body of experts with a remit to ensure that businesses have access to the workers they need. The body should still be accountable to Parliament but removing the politics should make the debate less toxic and ensure that economic growth isn’t hampered as a result.

Take monetary policy as an example. Both monetary and immigration policy are complex and not readily understood by the general public. Moreover, they can both be abused by politicians in order to boost their popularity. In the same way we no longer allow politicians to lower interest rates before an election, we should not allow them to make irresponsible pledges about reducing immigration. We need a system where immigration policy is set by technocrats whose only concern is the nation’s prosperity, not politicians who are concerned with getting re-elected.

The economy is crying out for more low-skilled immigration. The arguments against it are weak and the potential benefits are enormous. It’s time to take the politics out of immigration and reap the benefits.