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Confirmed: Immigration is good and necessary

18 December 2006

The Bank of England has published the Bulletin Q4 2006, and it contains a very interesting article that we should rejoice, and not complain, that immigrants are coming over.

The whole article is really enjoyable, written with caution to avoid misleading readers in the wrong direction. And the conclusion leaves many things open to interpretation.

I already wrote about Immigration justifying it from the point of view of pure economics. But I was ending with some questions. One of them was that there is not enough work for immigrants. The Bank of England states clearly:

Immigrants are employed”

Another of the findings is that there are more immigrants than average both in high qualified jobs and low qualified. An explanation of this might be that the City is atracting brilliant minds, and the economic buzz is also attracting people who is poor at home and go to Britain to find a better life.

“Immigrants also tend to be younger, better educated, and work longer hours than those born in the United Kingdom”

Economically, this is perfect: young people that have not been educated at the expenses of the British public school. It is like suddenly, we have an army of people in the best age to be productive coming from nowhere. And they are willing to work as many hours as necessary to prove that they are good. Wouldn’t you be delighted if you were their bosses? This has a repercussion in the Economy of the country as it has more quality production at the same price. Well, not at the same price.

“The increasing share of “new” immigrants in low paid jobs appears to have led the emergence of a striking wage gap between “new” immigrants and UK-born workers”

Immigrants who come from poor countries tend to be willing to work at any price. And employers take good note of it. Hence, British workers ask for more money to do the same low skilled job. Is this good or bad for the Economy?

The article gives two explanations. Suppose that they are paid less because they work worse. In Leyman’s terms, they are not worth as much as the British. Then we will have worse productivity, as to create the same amount of product, we will need more people doing it, although the cost will be the same because they earn less.

The second view says that they “may have displaced similar or less productive workers”. In this case, they work as well as the British, or even better, but they earn less. Excellent for the economy as more product will be done with less cost.

The article does not indicate whether one view is more real than the other. But it keeps on saying that since immigrants work for less and in any job, unemployment has fallen and more importantly, wages are kept stable. This fact incredibly agrees with theory.

Let’s go back to pure Supply and Demand. If supply is greater than demand, prices will fall, won’t them? If there is more supply of work than workers seeking for a job, potential workers will ask for more salary. But if the gap between Supply of jobs and Demand narrows, the position of job seekers is weaker. Also workers trying to discuss a wage increase will have less power because others will be willing to do their jobs for less money, so insiders will have to accept lower wages.

“Immigration may also have increased the supply potential of the economy by lowering the natural rate of unemployment, either by reducing skills gaps in a tight labour market or by tempering the wage demands of domestic workers, or both.”

The Bank of England suggests that the last wave of immigrants is young, well educated, willing to do the same job as a British do, but for a lower pay, willing to work more hours, and on the top of it, they might even do the job better, displacing nationals that do their job worse, or who are not willing to work for that money, which is not a problem for them because they can live thanks to the subsidies of the Government.

The article hints that immigrants are good for productivity, and are definitely good to keep Inflation down, which at the same time will keep interest rates untouched and ease the fears of a national bankruptcy if the level of credit keeps on hiking and the interest rates increase suddenly.

So what about my questions about immigration. Will they make salaries drop? No, just keep them at the same level. Will they take British jobs? Only those that nobody wants, and those where the British worker is not willing to make an effort to stay. Will they enjoy the services we pay with our taxes? They also pay taxes (unless the employer breaches the law), and they are young and willing to work. They are not a burden to the NHS.

And for the Economy? They are a fabulous present.

One Comment leave one →
  1. jam permalink
    4 November 2011 3:59 am

    no use

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