Immigration Hits Young, Report Says

The Times October 26, 2006

Immigration hits young, reports says
By Gabriel Rozenberg, Economics Reporter

IMMIGRANTS from Eastern Europe have pushed young people out of work and have caused some wages to rise, despite hopes that they would dampen down inflation, Barclays Capital, the City investment bank claims.

In a report, Immigration and the UK economy, published yesterday by Barclays Capital, the banks analysis suggests that the Bank of England may have to tighten monetary policy more than previously thought, as it shows that any loosening in the labour market caused by the influx of about 600,000 migrants over the past two years has now faded away.

The report debunks some of the optimism around the decision to allow citizens of Poland and nine other new EU nations immediate rights to work in Britain. It finds that unemployment has risen by 2.7 percentage points, or some 124,000, among 18 to 24-year-olds over the past two years, a much sharper increase than in any other adult age group.

In every sector of the economy, the number of people classed as economically inactive has been declining. The report said: Given everything else we know about what has been happening to the economy over that period, and the labour market in particular, it seems reasonably safe to say that a 124,000 rise in unemployment for 18 to 24-year-olds has been the result of the inflow of 183,000 migrants of this age.

The report claims that wages have been driven up, not down, by migrant work. In agriculture, wage growth fell from 5 per cent a year to an annual fall of 2 per cent when the first immigrants from Eastern Europe arrived. But since then the process has been reversed, and farm wages are now rising by an average of 7 per cent a year.