Brexit: Why Immigrants Aren't Taking Britons' Jobs

This post was originally published on the Bruegel website.

Immigration is one of the hottest topics in the Brexit debate. Many native citizens argue that foreigners take jobs away from local people and push down wages. The education of immigrant children may cause crowded classrooms in schools. Waiting times in hospitals may lengthen and housing prices may go up due to increasing demand from immigrants.

There is a heated debate about the relevance of these and related factors that I do not wish to assess in detail in this post. Instead, I'd like to emphasize a key feature of immigration to the U.K., which has not received much attention: most foreign citizens arriving in the U.K. are 20-30 years old, and bring a few children and grandparents with them. While many immigrants are in work, unemployment in the U.K. is almost at its lowest level in the past four decades.

First, a few numbers. 3,379,442 foreign citizens immigrated to the U.K. from 2008-14, while 1,432,617 foreign citizens left. So net immigration of foreign citizens was 1,946,825 from 2008-14, which is 3.2 percent of the U.K.'s population at the beginning of 2008. These numbers are for the 7-year period of 2008-14: on average, the annual population increase due to migration of foreign citizens was 0.45 percent, slightly higher than in the preceding 7-year period of 2001-2007 (Table 1).

One can discuss whether a less than half percent of annual population growth due to immigration of foreign citizens is large or not (in my view it is not that large). But what is really striking is the age profile of the approximately 1.9 million net increase of foreign citizens in the U.K. in 2008-14 (Figure 1).

It is predominantly young people who have come to the U.K. They brought few children, as only about 72,000 foreign citizen immigrants were under 15 years old in 2008-14. Few older people have migrated, as the net increase in foreign citizens aged 65-84 was fewer than 18,000 (again, total for 2008-14).

This means that the costs of raising most of the immigrants were paid in foreign countries. Since most of them are of working age, they can immediately contribute to the U.K. labour market, while the taxes and social security contributions they pay support the U.K. budget and welfare systems. Immigrants send only a small amount of child benefits overseas, as my colleague Uuriintuya Batsaikhan has shown using House of Commons statistics.

The employment rate of first generation migrants aged 25-55 is pretty high at 76 percent in the U.K., even if it is somewhat lower than the employment rate of native U.K. citizens, which is 84 percent (Table 2). The employment rate of first generation migrants is higher in the U.K. than in many other countries, eg this rate is 72 percent in Austria, 63 percent in Belgium, 67 percent in France, 73 percent in Germany, 65 percent in Italy, 82 percent in Luxembourg, 60 percent in Spain and 73 percent in Sweden. This means that the UK is in a better position than many other countries concerning the employment rate of immigrants.

The U.K. unemployment rate in February 2016 was 4.9 percent overall, which is as low as the US level now. It is close to the level of 4.6 percent unemployment recorded in summer 2004, the lowest rate of U.K. unemployment in past four decades. So it is hard to see how immigrants have taken away the jobs of natives on a large scale.

The native population of the U.K. is aging, due to low fertility rates (1.81 in 2014) and increased life expectancy. The 2015 report for the U.K. Office of Budget Responsibility showed that migration is actually beneficial for the sustainability of public debt (see Chart 3.17 on page 93). Reduced immigration would force cuts to social spending and other government expenditures.

In my assessment, the U.K. has greatly benefitted from the arrival of a young immigrant workforce and stands to benefit in the future too. Even if the U.K. leaves the EU, I expect that despite current rhetoric, substantial immigration will be allowed again sooner or later.

Zsolt Darvas is a Senior Fellow at Bruegel.