EU immigrant workers in the UK: five things we learned

The independent Migration Advisory Committee (MAC) today released a report into the impacts of EU immigrant workers on the UK economy, and recommendations for how immigration policy should change.

We’ve taken a look at five key things we learned about immigration from the report.

1. Recommendations in principle, not necessarily in practice

At the moment, EU free movement rules make it easier for EU citizens to come to the UK than non-EU citizens, who need visas.

A lot of outlets reported today that the MAC wants an end to preferential access for EU citizens to the UK after Brexit. This was part of their second recommendation, but isn’t a fair summary without the big caveat on the end:

The MAC’s work was made more awkward by the fact that the UK’s Brexit negotiations are ongoing, so we don’t know what kind of immigration system will exist or be negotiated for after we leave.

Its approach was to recommend the system it would choose if the UK was effectively starting from a ‘blank slate’ on immigration policy after Brexit, assuming the EU’s rules on free movement no longer apply to the UK. The Committee said that, under these conditions: “we recommend moving to a system in which all migration is managed with no preferential access to EU citizens”.

It added:

"most of our discussion focuses on what we think might be a desirable migration system for the UK if it was to be set in isolation. This should not be taken as a MAC recommendation that migration should be excluded from negotiations with the EU."

So while it’s fair to say the MAC recommends an immigration system shouldn’t give EU citizens preferential treatment in principle, it doesn’t seek to comment on what that should mean in practice in the context of the Brexit negotiations.

2. Encourage more high-skilled workers, tighter curbs for low-skilled workers

This is one of the key themes from the report:

“we believe the UK should focus on enabling higher-skilled migration coupled with a more restrictive policy on lower-skilled migration in the design of its post-Brexit system.”

The report argues that higher skilled workers earn more than low-skilled workers, so are more likely to pay higher taxes and make a bigger contribution to the public finances. It also says higher-skilled workers are also likely to boost productivity and innovation.

For low-skilled workers, meanwhile, there isn’t clear evidence whether low earners have been costly or broadly neutral for the public finances. It concludes tentatively: “It seems to us that the scale of low-skilled migration since [new member states joined the EU in 2004] has been larger than an evidence-based policy would have chosen in the absence of free movement.”

The MAC’s recommendations here are significant. At the moment there’s no low-skilled visa route for non-EEA workers to come to the UK, because those jobs are already being filled by EEA workers.

But if free movement comes to an end—so likely requiring EEA citizens to find work through a visa route—there shouldn’t be any new visa route created (excluding those for seasonal agricultural workers like fruit pickers), according to the MAC. Instead, the existing visa routes should open up to more “moderately skilled” workers.

“Undoubtedly some sectors will complain vociferously about being faced with an alleged cliff-edge in their supply of labour. However, even if there was no work route for low-skilled workers, the existing stock of low-skilled migrants would not change much immediately and there is likely to be a continued flow of lower skilled migrants through the family route. We are not convinced there needs to be a work route for low-skilled workers...”

3. There’s no evidence for a lot of things

One of the most common phrases you’ll find in today’s report is “no evidence”. The report lists several claims for which it’s found no evidence to support them. This doesn’t always mean the same thing in each case—for some the available evidence will contradict the claims, for others there may simply be not enough evidence available either way.

The “no evidence” list

• No evidence that migration has reduced the training of UK-born workers
• No evidence that migration has reduced the quality of healthcare
• No evidence that migration has reduced parental choice in schools or the educational attainment of UK-born children
• No evidence that migration has any effect on crime rates in England and Wales
• No evidence that migration has reduced the average level of subjective well-being in the UK
• No evidence that people are less satisfied with their neighbourhoods than in the past
• No evidence of higher or lower prosperity being associated with a higher or lower population
• No evidence that migrants are more likely to be working under a zero hours contract than the UK born, nor is there evidence that they more likely to switch industries between two given quarters
• No evidence of migrants having preferential access to social housing

In some of the evidence we do have, though, there remains a lot of uncertainty. Again, these will either mean there’s a gap in the existing evidence base, or the topics are inherently difficult to be certain about.

The “we don’t know” list

• What impact immigration has on productivity—most studies say there is a positive impact
• The impact immigration has on UK-born workers’ job opportunities—studies suggest there’s little to no overall impact, but possibly more negative for lower-skilled workers
• Exactly how much immigrants need to earn to be a net benefit to the public finances—studies suggest an EEA immigrant household needs to earn about £30,000.
• Exactly what wage impacts immigrants have on UK-born workers—studies suggest these are small but may be more negative for lower-skilled workers
• The economic impacts immigrants will have over their lifetimes
• The impacts of key government policies, including whether the government’s visa policies are bringing in the kinds of worker they intend to, and what non-EEA immigrants actually earn when they come to the UK. The report says there isn’t enough attention given to evaluating the impacts of policies.

4. Mind the cap

The UK caps the number of visas available to non-EEA citizens who have been offered a skilled job in the UK. This is called the Tier 2 (General) Visa and is currently set at 20,700 each year.

In the early parts of this year, the number of visa applications exceeded the monthly allowance of visas, largely because of demand from the NHS. The visas were criticised because they were restricting the number of junior doctors who could come to the UK. The government responded by taking doctors and nurses out of the cap altogether.

The MAC recommends removing the cap altogether, and widening the kinds of skills and occupations eligible—though not the minimum salary requirements.

It says the cap “creates uncertainty among employers and it makes little sense for a migrant to be perceived as of value one day and not the next which is what inevitably happens when the cap binds.”

The report also says the cap contradicts the spirit of the government’s much-touted industrial strategy, which suggests the UK needs more workers of the type that the cap restricts.

Finally, it says the “resident labour market test”, which is intended to make sure companies check to see if the local workforce can fill vacant posts before looking abroad, should also be scrapped because “We think it likely that the bureaucratic costs of the RLMT outweigh any economic benefit, but offer no opinion on its political benefit.”

5. The overall economic impacts are (still) small

“The small overall impacts mean that EEA migration as a whole has had neither the large negative effects claimed by some nor the clear benefits claimed by others.”

We’ve covered this topic in our briefings before, and this general conclusion isn’t new.

What is new is how succinctly the report summarises the evidence on the impacts of EEA workers on areas across the UK economy, as well as sections on crime and “life satisfaction”.

In most cases, the evidence follows a similar pattern. The economic impacts are considered positive, with caveats that these aren’t felt by everybody. There are also clear areas of uncertainty or evidence gaps throughout the research.

On unemployment, for instance, there’s no overall evidence that EEA immigration has reduced work opportunities for UK-born people. At the same time, it’s possible that some groups like younger people from the UK with fewer qualifications lose out, but the evidence on that is uncertain.

On wages, there’s a similar picture: on average, there’s no evidence that immigration reduces wages. Beyond the average, there’s some uncertain evidence it reduces earnings growth for the lower-paid and raised it for the higher-paid.

There’s evidence that EEA immigration has increased house prices by increasing the population, a topic we factchecked earlier this year. Government policy on house building affects the extent of that, which the report describes bluntly:

“Fail to build more houses and net migration may cause house prices to rise. Build more houses, possibly using migrant construction workers, and house prices might not change.”

The report is also clear that it’s not helpful for this debate to focus on nationality. Instead, the research points to clear themes which determine a great deal about economic impacts:

“a migrant’s economic impact depends on factors such as their skills, employment, age and use of public services, and not fundamentally on their nationality.”