Sunday, 2 November 2014

Simon Danczuk has a point about immigration and wages - just not a very good one


Simon Danczuk, the Labour MP for Rochdale and a rare working-class voice in the Labour Party has written a passionate - almost emotional - piece about the effect of immigration on working-class communities:

That many of these job opportunities have all but disappeared to some working class Britons in parts of the country worries me greatly. As a Labour MP, I strongly believe my party should be forever beating a loud drum about the value of work, about instilling a strong work ethic into people and about how character and achievement comes from hard work. My fear is that an increased reliance on cheap migrant labour to drive some sectors in our economy is chipping away at a bedrock of working class pride, allowing a once strong work ethic to drain away and it’s being done with a comfortable and badly misinformed political consensus. 

I understand this - I've asked on many occasions why all of the 400+ jobs killing chickens in my ward are held by immigrants when the rates of unemployment in Bradford remain stubbornly high. How is it that someone will come all the way from Slovakia or Romania to do a minimum wage job in Bradford but that city's home grown unemployed can't or won't take those jobs?

But we do need to recognise the fact that, across the whole economy, immigration has a positive effect on wage levels:

The research looks at the period from 1997 to 2005 and finds evidence of an overall positive impact of immigration on the wages of native born workers, although the magnitude of the effect is modest. Immigration during these years contributed about one twentieth of the average three percent annual growth in real wages.

So we get economic benefit from immigration - every study finds this to be true - but, as with every aspect of economic development, while the economy may benefit there are some losers within that economy:

“Economic theory shows us that immigration can provide a net boost to wages if there is a difference in the skills offered by native and immigrant workers. However, across the whole spectrum of wages it is impossible for everybody to benefit. Some workers will see a gain, others a loss.” 

Danczuk recognises this fact when he comments on the electricians and bar managers undercut by competition from immigrant. And it's important that we recognise how this can effect those working-class communities Danczuk is writing about. However, we have to ask some tricky questions here, with the biggest question being whether we want to forgo the positive economic benefits of immigration for the whole economy because there are some losers? We might also consider those broader societal issues of cohesion and social capital in answering these questions.

We could introduce an essentially protectionist policy - keeping out immigrants that compete with those working-class folk. I say protectionist because it's not really any different from excluding the goods that the cheap labour could make if it stayed in Romania or India. But protectionism produces losers too - we just replace one set for another.

Or we could find a way - some of that much vaunted redistribution - to ensure that the working-class communities in places like Rochdale don't suffer lower wages because of immigration. Partly this is about the level of minimum wages but it's also about taxation and about creating new opportunities for work that lift those communities out from low skill, low wage work.

Simon Danczuk's complaint also reflects a changing world. Those traditional working-class communities get fewer and smaller with each generation, the new jobs aren't unskilled labouring but a service sector jobs. For sure, working in a call centre is probably a pretty soul-destroying job but is it really any different from the dangerous, dirty drudgery that typified the work of past generations? The truth is that native-born folk don't take those bar jobs, labouring jobs and jobs killing chickens because they don't have to. This isn't the demise of the work ethic but simply that there are jobs that pay just as well in warm offices and shops. The decline of traditional working-class jobs can't be laid at the door of the immigrant.

Finally the work ethic (not a concept I'm a special fan of) isn't defined by a litany of pain or suffering but by that thing Danczuk has proved - if you put the effort in, learn and take the opportunities life throws at you, you've more chance of succeeding economically. And that's what that twenty-something Slovakia shows by being prepared to cross a continent to get a shot at a better future.


1 comment:

Mick Anderson said...

protectionist because it's not really any different from excluding the goods that the cheap labour could make if it stayed in Romania or India

The difference is that I have a choice whether to buy cheaper or more expensive goods, or even not to buy either. I am obliged to pay for the unused British "workers" through my taxes via inflated welfare costs.

Immigrants can be a good thing (my in-laws came over in 1948), but you can't have unfettered immigration and unlimited welfare payments. It is a false choice to say we must have either, but especially foolish for the political classes to demand that we have both.