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The coalition's latest immigration blunder

A guest worker programme would be bad for migrants and bad for the economy.

This week marks the fiftieth anniversary of Germany's notorious 'Guest worker' programme, in which millions of Turks were invited to come to Germany as temporary workers, discouraged from integrating and often vulnerable to exploitation. Decades later, the German government was forced to admit that the policy was a spectacular failure, as millions of Turkish migrants ended up staying permanently, and the country continued to suffer a legacy of poor integration. Now the UK government is proposing a similar approach to economic migrants from outside the EU.

'Guest Workers', a new IPPR report published today, analyses these proposals in detail, as well as looking at the history of temporary migration policies in Germany and elsewhere. With all the focus on David Cameron's pledge to cut net immigration to the 'tens of thousands', this element of the government's reforms has been somewhat neglected, but it is a very significant change, with implications for employers, and for integration and community cohesion, as well as for individual migrants.

Under the proposals, only around 1,000 of the 40,000 non-EU economic migrants granted settlement each year would be allowed to stay. A few exceptions would be invited to stay, in particular the very wealthy. The rest would have to leave after a maximum of five years - regardless of how well they are doing in their job, what contribution they have made, and what roots they have put down in the local community (other than marriage or partnership with someone already settled).

Today's report analyses these implications, and identifies the four questions the government has to answer before going ahead.

First, will these proposals actually work - will economic migrants leave when told to do so? Not just Germany but a range of countries which have tried a similar policy have found it almost impossible to enforce, The government may end up creating a rod for its own back, adding another category of migrants who have no permission to be here, but who there is no practical plan for removing.

Second, will the proposals have perverse effects - depriving Britain of some of our most economically valuable migrants, or discouraging them from coming here in the first place? If they are told to leave after five years, that will obviously create problems for employers down the line, and organisations like the CBI have already raised concerns. But there is a risk of a more immediate effect. The majority of economic migrants do not in fact stay permanently, but they value the option, and if Britain no longer offers it, the best may choose to go elsewhere.

The third question is whether the proposals will damage integration and cohesion. This is another respect in which the proposals seem to ignore the lessons of history. The evidence from other countries suggests that temporary workers are more likely to live parallel lives, or in parallel communities.

Finally, will the proposals enjoy public support? The government is in danger of ending up with that rare thing: a 'tough' immigration policy which isn't actually popular, as confirmed by a recent survey of public attitudes. People want to see overall immigration reduced, but are fairly positive about the categories of immigration where the government is making the big reductions - students and skilled workers - and people also tend to believe that migrants who work hard and play by the rules should be given the chance to stay.

There is nothing wrong in principle with trying to shift the balance towards temporary migration, but the current proposals are the wrong way to go about it. Ministers should pause, seek to learn from past experience, look at some of the alternative options outlined in the report, and then come up with a more evidence-based solution.

More fundamentally, they should confront the two flaws which are becoming increasingly clear in the government's approach to immigration, as I argued in response to David Cameron's recent speech: first, the over-emphasis on the net migration target; and second, an over-emphasis on how well off migrants and their families are. These are valid considerations, but they are crowding out other factors, and distorting policy in too many areas - as these proposals reaffirm. A temporary migration policy will obviously tend to reduce net migration, even if it is only partially successful, and the version the government has chosen is also heavily weighted towards wealthy migrants. Those earning over £150,000 a year or with £5 million to invest will have a fast-track to settlement, while the rest are treated as guest workers.

Of course migrants' incomes are relevant: many progressives have also argued for immigration based on its positive net fiscal impact, and this will be higher for wealthier migrants. But the government's approach takes things much further. Essentially if you are very wealthy, you can come to Britain, you can bring your family, and you can stay as long as you like; if you're not wealthy, it will get increasingly hard to bring even close family, and after five years you will be asked to leave. Ministers insist they still want to attract the 'brightest and best', but to define that by current income is narrow and unimaginative. You can't spot the next generation of entrepreneurs or Nobel laureates by looking at how much they are currently paid. The history of migration is one of talented, motivated people who start from humble beginnings, and spend years working hard and making sacrifices for themselves and their family. It can take many years to pay off, but when it does, it can do so spectacularly, for them and for the society which has offered them a home. If we stop doing that, we ourselves will be the biggest losers.

As well as recommending changes to make the current proposals less damaging, today's IPPR report also asks what a truly progressive approach would look like. Progressives need to respect democratic support for 'tougher' immigration policy. They also need to consider the trade-offs involved: temporary migration can represent a better balance between the rights of individual migrants and the interests of developing countries. But rather than turning economic migrants into guest workers, a progressive approach would go with the flow of migration patterns, which are becoming increasingly temporary anyway. This could involve, for example, incentives to return, funded through National Insurance Contributions, or more tailored forms of support for migrants to take up job opportunities in their home country - a policy which is being developed in Germany, which seems to have learned the lessons of its past. Such an approach would clearly be fairer than a guest worker policy, but also more workable - as well as better for our economy.

Matt Cavanagh is an Associate Director at IPPR. Follow him on Twitter @matt_cav_