Capping benefits for migrants could serve to drive down wages for all

Forcing migrants into whatever work's going will render exploitation a breeze.

From an economic point of view, it's difficult to assess David Cameron's proposal to limit the amount of social support migrants from the EU can receive. Migration is a nearly unqualified positive to a nation's economy, but those positives generally rely on the point that migrants are likely to be in work and a net contributor to the public purse – more likely, in fact, than native Britons. But the premise of the new policy is that it doesn't affect those "good" migrants. So what to think of it?

Firstly, the background. Immigration is a boon to society, and immigration from the EU is no different. A study by UCL's Centre for Research and Analysis of Migration finds that in 2008/9, workers from Eastern Europe contributed £1.37 in taxes for every £1 of services they used, while native Britons contributed 80p to the pound. Migrants represent about 13 per cent of all workers but only 7 per cent of all benefit claimants. Liberalising immigration worldwide could result in a 116 per cent increase in wages overnight.

But arguments in favour of Britain alone opening its borders tend to focus on one very specific benefit of migration. Almost by definition, the foreigners who arrive on our shores seeking work are among the most motivated, richest, and capable members of their nations; as a result, they tend to be a net bonus to the British economy. (Even if you control for characteristics like age, education, children and disability, the UCL study still found that Eastern European migrants were less likely to claim benefits).

But David Cameron's plan is to ban EU nationals "from claiming most benefits after six months in the UK unless they can prove they have been continuously looking for work over that period", according to the Guardian's Patrick Wintour. Since the vast majority of migrants don't claim benefits, and the advantage of migration is frequently attributed to the fact that migrants are more frequently in work, how could this backfire?

On the face of it, it couldn't, because it's largely an empty policy. Cracking down on issues which have a disproportionate public profile is the bread-and-butter of immigration politics. In this way, Cameron's idea follows in the tradition of Ed Miliband's requirement that public sector workers speak English (they overwhelmingly do, as do 99.73 per cent of people living in England and Wales) and Gordon Brown's decision to "suspend" low skilled migration in 2008 despite the fact that it had been practically suspended since 2004. A lot of fuss over something which "fixes" problems which people think they have about immigration.

But there will be effects nonetheless. Because while few migrants claim state aid, the social safety net has an effect on people in work as well. The harsher life is for an unemployed person, the more power employers have over employees. A crucial part of economic life is the ability to tell your employer to go shove it if they treat you badly, and go and find a better job. That keeps the employer/employee relationship more equitable than it might otherwise be, and ensures better treatment for all – even those who would never have the courage to walk out themselves.

There is some evidence that, at the lower levels of pay, migration does drive wages down. The best response to that is through redistribution, rather than a cap; if migration grows the economy by more than it drives wages down, then a redistributionist state can make everyone better off. But Cameron's cap will serve, at the margin, to drive wages for migrants lower still, by forcing them to take jobs at conditions that native workers, without the pressure of starvation after six months, might not do. And since everyone is competing for the same jobs, that will push wages for native workers lower too.

The macroeconomy of that policy might still end up being a positive, because exploitation of labourers is good for the bottom line. But it doesn't seem like the sort of economy which Cameron wants to run.

Photograph: Getty Images

Alex Hern is a technology reporter for the Guardian. He was formerly staff writer at the New Statesman. You should follow Alex on Twitter.

Photo: Getty
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Jeremy Corbyn secures big victory on Labour's national executive committee

The NEC has approved rule changes which all-but-guarantee the presence of a Corbynite candidate on the ballot. 

Jeremy Corbyn has secured a major victory after Labour’s ruling executive voted approve a series of rule changes, including lowering the parliamentary threshold for nominating a leader of the Labour party from 15 per cent to 10 per cent. That means that in the event of a leadership election occurring before March 2019, the number of MPs and MEPs required to support a candidate’s bid would drop to 28. After March 2019, there will no longer be any Labour MEPs and the threshold would therefore drop to 26.

As far as the balance of power within the Labour Party goes, it is a further example of Corbyn’s transformed position after the electoral advance of June 2017. In practice, the 28 MP and MEP threshold is marginally easier to clear for the left than the lower threshold post-March 2019, as the party’s European contingent is slightly to the left of its Westminster counterpart. However, either number should be easily within the grasp of a Corbynite successor.

In addition, a review of the party’s democratic structures, likely to recommend a sweeping increase in the power of Labour activists, has been approved by the NEC, and both trade unions and ordinary members will be granted additional seats on the committee. Although the plans face ratification at conference, it is highly likely they will pass.

Participants described the meeting as a largely low-key affair, though Peter Willsman, a Corbynite, turned heads by saying that some of the party’s MPs “deserve to be attacked”. Willsman, a longtime representative of the membership, is usually a combative presence on the party’s executive, with one fellow Corbynite referring to him as an “embarrassment and a bore”. 

Stephen Bush is special correspondent at the New Statesman. His daily briefing, Morning Call, provides a quick and essential guide to domestic and global politics.