European Affairs

Poles Help Bring Prosperity to Britain     Print Email
James Harding

James HardingMy friend Jez recently bought a home in Somerset and, when it came to redecorating the dilapidated farmhouse, he followed the new British tradition: he hired a couple of Polish immigrants to do the work. Since he had a little trouble with their names, he called them Hatcheck and Coat-check. They didn’t seem to mind the gentle teasing (or the long hours), perhaps because they were paid with weekly envelopes of cash with sterling soaring sky-high in currency markets.

So far, so stereotypical. But the contribution of immigrants to the British economy has run far deeper than making home improvement punctual and affordable. Immigration has kept down inflation, raised house prices and boosted growth, according to the Bank of England. These statistics point up how badly the immigration debate in this country, such as it is, typically misunderstands the indirect benefits deriving from this influx of willing workers: beyond the refitting of their kitchens, the overall impact for Britons has to be measured largely in terms of the advantages of an expanding labor market and job force brought by immigration.

(Incidentally, the Hat-check and Coat-check stereotype underestimates the level of education among some in the immigrant workforce who have not only expanded mainstream consumption but also started job-generating businesses. But that is another story, explained a little further in this article.) British business estimates that the pool of available labor in Britain has increased by about 770,000 people in the past couple of years, about two-thirds of them from Central and Eastern Europe. Nearly all of them (97 percent) are reported to be in full-time, tax-paying jobs. Importantly, they are mostly single, under 34 and on relatively low rates of pay: about three-quarters of them earn less than six pounds sterling per hour. (The hourly minimum wage in Britain is just over five pounds, i.e. roughly eight euro or nine U.S. dollars.)

The meaning of all this is that these immigrants have helped Britain enjoy a huge increase in its labor market, certainly in its flexibility, without making inflation boil up.

To be clear, the figures are all fuzzy. The Governor of the Bank of England, Mervyn King, has grumbled that it is hard to make productivity forecasts and monetary- policy decisions when the UK census data are so wildly inaccurate about the numbers of immigrants in the country. But what is certain is that immigrants have fuelled economic growth in this country while at the same time acting as a brake on inflation because of their willingness to work for relatively low wages. (This result comes mainly from immigrants’ declared employment: their work “in the black economy” multiplies the effect by providing even cheaper labor.)

The immigrant influx has also benefited homeowners. The rise in house prices in Britain this year, about nine percent, has been a major factor in economic confidence that has propelled the British economy. Of course, much of that growth has happened at the top of the market, but the fact that there are so many immigrants living in rented accommodation means that house-sellers at the bottom of the market have benefited, too, because the boom in prices fuelled growth in a special sector of real-estate investment: buy-to-rent. So we are all landlords now. But we couldn’t hope to be without the tenants from Gdansk.

The critics of immigration like to complain that the foreigners are taking British jobs. Obviously, this is often just a fig leaf for racism. But, taking the argument head on, the fact is that the labor market in Britain is not stagnant. So when one job goes to a Pole, a Briton does not suddenly become unemployed. It is worth looking at the numbers: as collated by the government, it seems that the impact of Central and Eastern European immigration is negligible on joblessness. A one percent increase in the numbers emigrating from countries in the former Eastern block seems to translate into a 0.01 percent increase in non-migrant unemployment.

If this all seems rather dry, that is because it is. The much greater, intangible contribution of immigration, not only from Eastern Europe but from across the world, has been cultural, social, intellectual. One of the really interesting findings of the Bank of England’s recent research into immigration is the level of comparatively high levels of education that immigrants bring to the UK labor market. Whereas 17 percent of UK-born Britons were educated to the age of 21, that figure rises to 36 percent among immigrants and to 45 percent among of recent immigrants.

Perhaps the most striking feature of the large-scale European immigration that has transformed the British economy in the past couple of years is the absence of a fiery argument accompanying it. Indeed, the waves of workers coming from Central and Eastern Europe have been met not by resentment nor resignation, but by enthusiasm. It should be no surprise: You need only to see the quality of work that Hat-check and Coat-check did on Jez’ house.

 

This article was published in European Affairs: Volume number 7, Issue number 3-4 in the Fall/Winter of 2006.