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22 June 2012

Why Miliband is wrong to apologise over immigration

Eastern European migrants didn't "take jobs" and drive down wages.

By George Eaton

The contention at the heart of Ed Miliband’s speech on immigration, which he will deliver later this morning, is that it is a “class issue”. The Labour leader will argue that the influx of migrants from eastern European drove down wages and reduced employment opportunities for domestic workers. In a key passage, he will say:

Overall, immigration has benefits, but the thing we did not talk about was its relevance to class, and the issue of where the benefits and burdens lie. If you need a builder, it is good that there are more coming into the country and lowering the price of construction, but if you are a British builder it is less beneficial.

In view of this, Miliband will argue that Labour was wrong not to impose “transitional controls” on immigration from the 2004 EU accession states and will call on the government to do so when Croatia joins the EU next year.  In addition, he will promise stricter enforcement of the minimum wage and a doubling of fines to £10,000 for those that break the law (fewer than 7 employers have so far been fined).

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Miliband’s speech is well-intended and his aims are noble but he has perpetuated a claim for which there is almost no empirical evidence: that immigrants have undercut domestic wages and “taken jobs”. Jonathan Portes, the director of the National Institute for Social and Social Research, probed this argument last year, using data from three major studies, and reported: “[We] found no impacts on native unemployment, either overall, or specifically for the young or low-skilled. Nor did we find any significant impact on wages, although the data is less conclusive.” He noted, for instance, that there was no correlation between wage growth among the bottom 10 per cent and the arrival of migrants from new EU member states.

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The belief that migrants take jobs that would otherwise have gone to domestic workers is a precise illustration of the “lump of labour fallacy“: the notion that there is a finite amount of work available and that jobs must be shared out accordingly. In fact, the evidence we have suggests that immigration increases labour demand as well as labour supply, which leads to an increase in the number of jobs available. Had Labour imposed transitional controls on EU migration, the jobs that went to Polish workers wouldn’t have gone to British workers, they wouldn’t have existed at all. To suggest that we need to carefully weigh up “the benefits and burdens” of immigration is to ignore the evidence that it has overwhelmingly benefited the economy.

As I said earlier, Miliband’s speech is well-meant. He is seeking to act in the interests of social justice. But in doing so he has fallen victim to the pernicious myth that immigration is a zero-sum game in which the migrant normally wins and the Brit normally loses. It is not, and progressives should say so clearly.

Update: Challenged on this issue at the Q&A following his speech, Miliband made the reasonable point that “people don’t live their lives in the aggregate”.  But that’s still no excuse for reinforcing misperceptions, rather than rebutting them.