Skilled immigrants are key to future success

UK’s booming jobs market is attracting record numbers of immigrants. Net inward
migration (immigrants minus emigrants) reached 153,000 in 2002, and immigration
will add 130,000 to the total population each year for the next decade.

is good news for employers struggling to fill job vacancies and for consumers
hoping to avoid higher prices. As home secretary David Blunkett rightly states:
“No modern, successful country can afford to adopt an anti-immigration policy.
It is in all our interests to harness the innovation, skills and productivity
that new migrants can bring.” However, it is equally important to carefully
manage immigration, because there are costs as well as benefits.

benefit is greatest if immigrants have skills that are in short supply. Skilled
immigrants help raise productivity and, by easing the inflationary pressures
caused by skill shortages, enable the economy to grow at a faster pace. And
skilled immigrants help to offset the annual ‘brain drain’ of managerial and
professional staff moving abroad (1.1 million of whom left the UK between 1993
and 2002).

merit of un-skilled immigration is less clear cut. The economic contribution of
unskilled immigrants is rarely sufficient to outweigh the cost of increased
pressure on housing, transport, schools, hospitals and the environment. In
addition, an influx of unskilled migrants – or migrants who have skills but are
prepared to take low-skilled jobs – reduces the prospects of other unskilled
people. This is the conclusion of UK economist and Labour peer Lord Richard
Layard, who says: “There is a huge amount of evidence that any rise in the
number of unskilled staff lowers unskilled wages and increases the unskilled
unemployment rate.”

who dispute Layard’s observation argue that there aren’t enough people in the
UK to do all the unskilled jobs on offer. Yet the great irony of the
immigration debate is that it often ignores the fact that the UK has an
untapped reserve of 7.7 million economically inactive people of working age –
ie, without jobs and not in the labour market – over and above the 1.4 million
people officially counted as unemployed.

Government is engaged in wholesale reform of the tax and benefits system in a
drive to help the UK’s multitude of jobless people into work. Higher unskilled
immigration hampers such reform and, ironically, given that race features so
prominently in the immigration debate, it worsens the position of people from
the UK’s ethnic minority population who are already more likely to be at the
back of the jobs queue.   

balanced assessment of the economic costs and benefits of immigration thus
suggests that a sensible public policy of managed migration should be strongly,
if not fully, weighted toward skilled immigrants.

Philpott, Chief economist, Chartered Institute of Personnel and Development

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