The British Referendum of June 23rd 2016 is set to be a defining moment in British history. Whether to be reconsidered or not, whether to result in a stronger or diminished UK and EU,
Analysts pouring over the voting data have identified key trends in the UK around generation, locality, income and education. But in particular there appears a complete public misunderstanding of the economic importance of migrant workers to the modern UK[1]. Research shows that that the net contribution of migrants is nearly always positive, important given that the major challenge facing the ageing high income counties is one of growing skills shortages. For it is not just technology and globalisation which has encouraged the advanced economies to attract and facilitate the immigration of skilled overseas workers. Age-structural change – or population ageing - is also leading governments to consider migration as a solution to the demographic deficit and population decline. Migration has a potentially strong and long-lasting impact on population growth and structure through the interaction between the number of migrants, their relatively young age structure and their higher fertility. As a result, immigration has increasingly become perceived as a potential means to prevent population decline, maintain the size of the labour force and thus the support ratio, and slow down structural population ageing.
In terms of population size, while migration will not prevent the age-structural transition and demographic deficit of Europe, it will alleviate it. Indeed even with significant immigration, on average 800,000 per year, the population size in the EU is likely to be about the same level in 2050 as it is today. However, with no migration there would be immediate moderate decline followed by a steep decline after 2030, reaching 451 million by 2025, and 413 million by 2050, a fall of 40 million across the EU.
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Recent analysis of census material (CPC 2016) presents the facts around the UK migrant population:
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The European share of global working age population has fallen from around 25% in 1950 to 14% in 1995, and is projected to fall to 9% in 2025 and 6% by 2050. These projections assume a natural fall in the net flow of migrants to Europe as a whole. This was based on the assumption that the proportion of global migrants to North America and Developed Oceania increases from 50% to 80% by 2025, to the detriment of European flows. It is projected that if migration rates stay largely at their current levels, the working-age population in OECD countries will rise by 1.9% between 2010 and 2020, compared to the 8.6% growth seen between 2000 and 2010 (IOM, 2010). For almost half of OECD countries, the outgoing cohorts will be larger than the incoming ones from 2015. Indeed some projections indicate that without mass immigration into the EU of around 100 million there will be a need for a significant increase in labour force participation rates for all EU countries and a rise in retirement ages of 10 years by 2050 to compensate for the impact of demographic ageing on the work force.
The impact on innovation, economic growth, employment in general, and welfare is more complex. Migrant workers fill both the demand for highly skilled workers and the gap in unskilled employment. Indeed the role of migrants as carers in this care sector is becoming increasingly important nearly half the workers in the NHS for example, are oversees born. It is thus essential that Europe continues to attract key skills over the coming decades, and thus encourages enterprises that will attract such workers. Yet future projections also suggest that Europe’s ability to attract skilled migrants will decline as it competes with North America, Oceania and Asia. As recently reported while countries of the EU are the world’s leading destination for international students they have been unable to capitalise on this to build a solid bridge to labour migration for the graduates who are most needed (OECD, 2016).
Migration also has an impact on the sustainability gap of public finances. Firstly, the net tax contributions of migrants directly affect the governmental budget balance; if the net contribution of migrants is positive, the sustainability gap declines. Secondly, immigration increases the number of potential tax payers, on whom future tax increases can be levied. A key question is whether immigrants are more or less likely than natives to use the provision of the welfare state. Of particular importance is whether migrants return to their birth country. The OECD calculates that immigrants pay as much in taxes as they take in benefits (OECD, 2013), and that EU workers in the UK take less from the benefits system than native British people do, as they bring in education paid for by their native countries, and typically return before they require pension support (Dustmann and Frattini, 2013).
There is also evidence that immigration can improve competitiveness and productivity. For example, the growing social or ethnic diversity due to immigration encourages innovation and entrepreneurship through increasing creativity. Immigration also increases the size of the local economy, which can potentially lead to more competition and efficiency. In addition, international migration can indirectly affect regional competitiveness through the trade and international linkages that result from a country’s diasporas remaining in touch with their country and region of birth. Immigration also has a positive effect on trade between the source country of the immigrants and the host country as immigrants tend to have a preference for the products from their home countries.
Prior to Brexit, it was estimated that Britain should expect 140,000 net immigrants a year for the next 50 years. In 2013 the Office for Budget Responsibility, calculated that increasing this to 300,000 annually would reduce UK government debt by almost a third – while stopping immigration would increase the debt by almost 50 % (Office for Budget Responsibility 2013).
As Fukyama’s (1992; 2014) insightful analysis has long pointed out the transition from ‘place –based’ industrial work to mobile service work would threaten democratic regimes. The educated population required to capitalise on technological advances, would use their education to question current systems of governance. In addition, lower transportation and communications costs would enable hundreds of millions of low skilled workers to enter the global labour market, driving down the wages and potential living standards of those workers in developed countries. While the place -based working class might be organised as a political force, in particular through workers organisation such as trade unions, the mobile workforce – increasingly in the informal sector – were hard to politicise. In addition is the destruction of local community. In a capitalist globalised world, traditional communities based on locality are threatened by the growing numbers of educated mobile people who live in communities where they did not grow up or where their families lived before them.
This thesis is clear to see here in England 2016. A country in transition still retaining large numbers of place based individuals in towns and rural areas – generally less well educated and travelled due to the constraints of age and socio-economic background. With a growing section of the English population who had acquired the skills and education to live and compete economically in the more affluent southern parts of the country. These highly educated, overseas travelled UK citizens were more likely to vote to remain, those without further education, and not holding a passport, were more likely to vote to leave. Most strikingly, the 2016 UK post-referendum data found that of the 30 areas with the lowest number of graduates, 28 voted to leave.
As the 2016 Referendum has also shown, globalisation with its inevitable mass movement of peoples across the globe has significant economic and social impacts on local communities, often not taken seriously by national governments. However, those communities experiencing high levels of immigration voted to remain, while communities with low levels of migrants generally voted to leave. While the evidence supports this - new EU migrants do displace earlier EU migrants in the UK labour market, but are not associated with the displacement of UK born workers (UK Migration Committee 2012) - the perception was different – reflecting not competition for jobs but competition for the cultural values of traditional England. Migration data is complex, however the national benefit to the economy and society are often clouded by local concerns, including those based on perception rather than experience.
Ironically, following the referendum - “the Brexit may push certain EU migrants to apply for citizenship who would otherwise not contemplate applying. This, contrary to the expectation that a Brexit would limit the number of EU migrants in Britain, is likely to increase the number of British citizens possessing a broader set of political and social rights” (People and Policy Compact, 2016).
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References
CPC 2016, Who are the EU migrants in England and Wales, CPC Briefing 33
Dustmann C and Frattini T, (2013) Fiscal Effects of Immigration to the UK, Centre for Research and Analysis of Migration Working Paper 2013
Fukuyama, F (1992) The End of History and the Last Man, The Free Press
Fukuyama, F (2014) Political Order and Political Decay Profile Books
Harper, S. (2012). Environment, migration and the European demographic deficit. Environmental Research Letters, 7(1).
Harper, S. (2013) Population–Environment Interactions: European Migration, Population Composition and Climate Change. Environmental and Resource Economics, 55(4), 525-541;
Harper, S (2016) The important role of migration for an ageing nation, Journal of Population Ageing, 10 (3)
IOM (2010) World Migration Report 2010.
OECD (2013) International Migration Outlook 2013.
OECD (2016) Recruiting immigrant workers: Europe. OECD/EU, 2016
Office for Budget Responsibility, 2103 Fiscal Sustainability Report, July 2013
People and Policy Compact, (2016) Brief No 12.
[1] This post draws Harper, S. (2012; 2013; 2016).
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About the Author
Sarah Harper is Professor of Gerontology at the University of Oxford, Director of the Oxford Institute of Population Ageing and Senior Research Fellow at Nuffield College.
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