100,000 lose out to migrants in hunt for work
By Robert Winnett,
Deputy Political Editor
Last Updated: 12:01am GMT 18/12/2007
More than 100,000 young Britons may have been pushed into unemployment by the new wave of Eastern European immigrants, an economic analysis on the impact of migration has revealed.
The study, by the influential Ernst & Young ITEM Club, found that although the recent influx has boosted Britain's economy and kept inflation low, it may have increased unemployment for younger Britons and reduced pay increases for all.
Since 1997, 1.5 million foreign workers have entered the British workplace, with many of these arriving from Eastern Europe in the past three years since the European Union expansion. This new group typically earns 40 per cent less than British workers.
Since 2004, the number of unemployed British 18 to 24 year olds has increased by 100,000, according to the study. “There is some evidence that the growth of immigrant employment seen in the last few years may have come at the expense of the domestic workforce,” the report concludes.
“Given the age and skill profile of many of the new immigrants, it is possible that 'native' youngsters may have been losing out in the battle for entry-level jobs.”
However, the report also reveals the wider economic benefits brought by the immigration boom.
The typical British family has saved thousands of pounds a year in mortgage repayments as interest rates are calculated to be up to 1.5 percentage points lower than they would have been without immigration. New immigrants have pushed down inflation, staving off Bank of England increases in interest rates.
Wage rises, however, are calculated to be up to 0.4 percentage points lower than they would have been, knocking hundreds of pounds off the typical wage rise this year.
The impact of immigration on the economy is now a key political battleground with Gordon Brown controversially pledging to create “British jobs for British workers”.
Yet figures showed the majority of new jobs created over the past decade have actually been taken by foreigners. The Conservatives have said they will cap immigration at a level recommended by a council of economic experts.
Peter Spencer, the chief economic adviser to the Ernst & Young ITEM Club, said: “We have seen big increases in industrial costs and food prices which have not led to significantly higher wages.
“One of the main reasons for this is that workers have been in a very weak position with overseas workers in a position to take their jobs.
“Immigration has been unequivocally good economically in terms of the benefits for lower inflation and interest rates. However, the fact is that wage increases have been held down.”
According to Ernst & Young's calculations, if immigration continues at the same rate as the past two years -190,000 net immigration a year – the economy will grow by about three per cent annually.
Without immigration this would fall to 2.2 per cent, knocking 10 billion off the growth in the economy.
The report said a large proportion of the most recent immigrants have been filling gaps at the bottom of the labour market. Mr Spencer said entire industries may have been saved by this.
“Most of these workers have gone into jobs that British people did not want to do,” he said. “By taking up dirty jobs, the new arrivals have allowed whole industries – like the Scottish fishing industry – to survive.”
Ministers will today announce plans to clamp down on visas for visitors.
The duration for tourist visas is to be cut from six to three months and families who sponsor visits by relatives may have to pay a “bond”.
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