The voice of Ed Balls is the latest addition to an ever-growing chorus within Labour commenting on the impact of immigration on the party’s electoral fortunes. The emerging conclusion is Labour went too far with immigration.
Balls wrote an article for the Observer titled “We were wrong to allow so many eastern Europeans into Britain”. The piece concludes:
There have been real economic gains from the arrival of young, hard-working migrants from eastern Europe over the past six years. But there has also been a direct impact on the wages, terms and conditions of too many people — in communities ill-prepared to deal with the reality of globalisation, including the one I represent.
The result was, as many of us found in the election, our arguments on immigration were not good enough . . . In retrospect, Britain should not have rejected transitional controls on migration from the first wave of new EU member states in 2004, which we were legally entitled to impose.
Balls is right that Labour was wrong — but the fault lies not with the decision to open our labour markets to the accession states. It is instead pretty much everything else preceding and following that decision which was wrong, including much of the subsequent analysis.
It’s worth noting that, according to recent statistics, eastern Europeans account for roughly 1.5 per cent of the working-age population. The proposition that this tiny minority of the population had such a significant impact on the wages, terms and conditions of “too many people” just doesn’t stand up.
Of course, immigration could, in theory, reduce wages and conditions by increasing the supply of labour. But the economy in reality has responded to immigration by increasing the demand for labour.
The question of the impact of immigration on wages has been thoroughly researched. Though conclusions differ, the overall view can be summed up in the following terms: overall, immigration has not had statistically significant effects on wages or unemployment either one way or the other.
Factors such as education, trade, outsourcing, demographic change and outsourcing all affect wages and employment much more than immigration.
Where negative effects on wages have occurred, they tend to have been experienced by previous immigrants, especially those with limited English language skills; manual workers in jobs that do not require proficiency in English; individuals on benefits or those otherwise marginalised in the labour force.
However, these studies do not take into account that these very same workers have also benefited from low prices and low inflation. They have also gained employment through the relocation of companies on account of the easing of immigration restrictions more generally.
Consider, for example, the evidence from the Migration Advisory Committee that Japanese companies such as Hitachi, Honda and Mitsubishi would have had to scale back their operations significantly if they had been prevented from recruiting Japanese workers. On average, for every one Japanese national, these companies employ 73 UK residents.
This being the case, it seems clear that the imposition of transitional measures on movement by the first wave of EU member states would not have dealt with the problems encountered by the constituents to whom Balls alludes.
Nor, it seems, would a further extension of the current restrictions on Bulgarian and Romanian nationals.
On the other hand, however, better training and education, better provision of English language teaching, reforming the benefits system, enhancing and enforcing labour standards for all workers, and eliminating labour-market discrimination would.
So, why the antagonistic electorate? It is correct that globalisation and rising immigration result in transformation of communities, and indeed challenge their very identity. It would also be fair to say that the arrival of eastern Europeans in numbers that by recent UK standards are large did generate these sorts of feelings among some parts of the electorate.
The job of government, however, is not to sit back and simply point out that this is a regrettable fact of life — as Labour did — but rather to prepare societies for these sorts of transitions.
In this respect, Labour’s performance was no more than an abject failure. At no point did it engage the electorate on the issue. It never explained the kinds of transformations that could be expected to take place in communities up and down the UK. It did not address the national impacts. Nor did it ever in advance speak meaningfully about the numbers of people who might be involved.
Labour also failed to put in place effectively the necessary social infrastructure, or a contingency plan for one in the event that its predictions of the numbers involved were exceeded (as turned out to be the case).
Migrants are not simply units of production, but human beings with human needs — including needs for public services. Given that immigration is a proxy in particular for issues such as public services, Labour’s failure to invest here, particularly with regard to affordable housing, was entirely unhelpful.
Of course, the party’s failure to communicate the multiple benefits that migration has brought the UK also represents a great failing. Where were the speeches about increased investment and trade, reduced inflation, benign fiscal benefits, plugging skills shortages and increases in GDP per capita?
This was coupled by Labour’s failure more generally to explain coherently its system for immigration control and the various mechanisms that existed to prioritise the interests of nationals: for instance, the resident labour-market test, applicable to non-EU nationals, and limitations on access to the welfare state and public housing by non-nationals more generally.
Its token acknowledgement here and there of the benefits of migration was insufficient, drowned out by its rather louder tough talk about immigrants.
The void arising from this was rapidly filled by groups such as MigrationWatch and the right-wing press. These groups have been remarkably successful in grossly exaggerating the scale of immigration and downplaying the multiple positives of immigration while focusing purely on its negatives.
The result was the manufacturing of perceptions by the electorate about issues such as wages, employment and public services which are simply at variance with the evidence.
The true failing in all of this is not the decision to expand certain types of immigration to the UK, but rather the cack-handed way in which our politicians dealt with it. The Labour leadership contenders and the current government would do well to take note.