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Kicking away the ladder at home and abroad: immigration, globalisation and neo-liberalism

The administrators of the British economy and UK plc have openly admitted that the recent large scale immigration into the UK has acted to depress wages, something they welcome as a positive development. Meanwhile, the middle class left condemns anyone who acknowledges the possibility that immigration may being used as a weapon of class warfare by business against the domestic working class as reactionary, racist and right-wing, a stance that benefits no-one except the BNP. What might be a progressive, pro-working class position on this most contentious of issues?

1) ‘The business case for quality and controlled immigration’

Back in April, the House of Lords Economic Affairs Committee published its report ‘The Economic Impact of Immigration’[1]. The report looked at the effects of the recent high levels of net immigration into the UK, described within the report as “reaching a scale unprecedented in our history” (over 300,000 in 2006). The report’s headline finding was that there was “no evidence for the argument, made by the Government, business and many others, that net immigration-immigration minus emigration-generates significant economic benefits for the existing UK population… immigration has very small impacts on GDP per capita, whether these impacts are positive or negative”.

However, while it seems that net immigration has had little or no effect on overall GDP per capita, the report found that it has had certain distributional effects: “In the short term, immigration creates winners and losers in economic terms. The biggest winners include immigrants and their employers in the UK. Consumers may also benefit from immigration through lower prices. The losers are likely to include those employed in low-paid jobs and directly competing with new immigrant workers. This group includes some ethnic minorities and a significant share of immigrants already working in the UK”. Specifically, the report finds that, with regard to wages, “immigration has had a small negative impact on the lowest-paid workers in the UK, and a small positive impact on the earnings of higher-paid workers”. On training and apprenticeship, the report noted that “there is a clear danger that immigration has some adverse impact on training opportunities and apprenticeships offered to British workers”.

None of this should come as a great surprise to the observant. In 2002, Richard Layard of the London School of Economics, also a Labour peer and economic adviser, and one of the authors of the Lords report, wrote in the Financial Times: “For European employers and skilled workers, unskilled immigration brings real advantages. It provides labour for their restaurants, building sites and car parks and helps to keep these services cheap by keeping down the wages of those who work there. But for unskilled Europeans it is a mixed blessing. It depresses their wages and may affect their job opportunities. Already unskilled workers are four times more likely to be unemployed than skilled workers and it is not surprising that they worry”[2].

Specifically with regard to the recent UK experience, the governor of the Bank of England, Mervyn King, stated in 2005: “The Home Office estimates that around 120,000 workers entered the UK from the new member countries of the European Union between May 2004 and March 2005. That is not far short of the average annual increase in the labour force over the past decade. Without this influx to fill the skill gaps in a tight labour market it is likely that earnings would have risen at a faster rate, putting upward pressure on the costs of employers and, ultimately, inflation… Private sector regular pay growth has been subdued, which is somewhat puzzling in the context of 30 year-high employment rates, and 30 year-low unemployment rates, which we would usually associate with a tight labour market. It is possible, indeed likely, that inflows of migrant labour have eased labour market pressure”[3].

In his testimony to the Lords committee, David Blanchflower of the Bank of England’s Monetary Policy Committee (the nine person committee that sets the UK’s official interest rate) submitted that: “The flow of workers from the A8 and the A2 [the ten Eastern European countries admitted to the EU since May 2004] appear to have increased the ‘fear’ of unemployment, which tends to have a downward impact on pay especially in the non-union sector. The ‘fear’ of unemployment refers to the probability of a worker losing their job, and may increase if the competition for jobs rises, for instance, through immigration or the threat of greater outsourcing to lower-cost economies. Both these channels can be used to explain an increase in the ‘fear’ of unemployment in the UK since the accession of the A8 nations in May 2004… Consistent with a rise in the ‘fear’ of unemployment, wage growth has been depressed in both the UK and Ireland since A8 accession. According to the UK Average Earnings Index (excluding bonuses), wage growth has fallen from 4.2% in 2004 to 3.9% in 2005, 3.8% in 2006 and 3.5% in 2007Q2. Average weekly earnings growth in Ireland has fallen from 5.0% in 2004 to 3.1% in 2006. Given the strong growth rates of both economies, many economists have struggled to find an explanation for this apparent weakness. I believe a rise in the ‘fear’ of unemployment is the only realistic candidate explanation”. It should be noted that Blanchflower, like Mervyn King, doesn’t see this as a bad thing: “An easing in wage growth has helped to offset inflationary pressures emanating in other areas of the economy, such as increases in the prices of energy and food. Immigration has therefore helped the Monetary Policy Committee to hit its inflation target”[4].

Traditionally, one thinks of the right wing as being hostile to immigration and immigrants of every hue. However, as the above shows, in our era of unfettered, unchallenged, globalised neo-liberal capitalism, the recent large-scale net immigration into Britain has, in fact, been perfectly in keeping with the interests of UK plc, although perhaps not with those of the general population. As the Lords report puts it: “Although clearly benefiting employers, immigration that is in the best interest of individual employers is not always in the best interest of the economy as a whole. If, as [immigration minister] Liam Byrne MP says, the Government is “not actually running British immigration policy in the exclusive interests of the British business community”, it is important to examine the economic basis of the arguments that immigrants are needed to fill and reduce vacancies, and that immigrants have a superior work ethic, and thus are needed to do the jobs that British workers cannot or will not do”.

These ‘arguments’ were handily summarised by one of British capital’s most prominent spokesmen, Digby Jones, the former Director-General of the Confederation of British Industry and Gordon Brown’s personal appointee as current Trade Minister, in 2006.  Jones declared: “Stop immigration and you stop building houses, schools, hospitals, roads and offices in the UK. If “they” were to “go home”, you can forget this year’s harvest in our fields. In a tourism industry that contributes some 8 per cent of the nation’s wealth, 17 per cent of the workforce was not born in the UK… It’s about time we looked to our own failings in the world of work. You cannot blame a migrant for the fact that we don’t have sufficient numbers of skilled British-born people to do the jobs. Half the kids who took GCSEs last year did not get grade C or above in English and Maths. One in five of the adult population in this country cannot read and write to the standard required of an 11-year-old. You cannot blame a migrant for being prepared to work hard for the minimum wage. It is not the migrant’s fault that so many in western Europe have become lazy, complacent and picky. We live in a world where China wants your lunch and India wants your dinner – and either work is done at competitive rates here or it’s not done here at all. We have a tight labour market in the UK and yet wage inflation has not been a problem. Immigrants are doing the work for less”.

On this basis, Jones contends that: “Business must make the case for quality and controlled immigration. You will speak English, you will bring a skill, you will have a National Insurance number and participate in the transparent economy, pay tax and enjoy the protection of employment and health & safety legislation. The colour of your skin or the God you worship doesn’t matter. Play by these rules and this fair-minded country will welcome you. Come here, work hard, help create wealth – and show us up for what we are becoming: lazy, poorly skilled and complacent, often using “immigration is a bad thing” as an excuse for our own inadequacies” [5].

2) Creating the reserve army of labour

It’s a familiar refrain, and one heard as much on the middle class left as on the right: the domestic working class -including previous generations of immigrants- is ‘lazy, complacent, picky and poorly skilled’, in contrast to our East European counterparts who are willing to do the dirty work the pampered, soft-bellied and feckless British are not, and it is only this which is still keeping the country competitive in these lean, mean, hungry times.

Racist garbage, of course: Eastern Europeans are no more or less pre-disposed to hard graft than the British or anyone else, they are simply economically and politically weaker than the native population, and are thus more easily exploitable. As Jones himself pointed out in his statement (without commenting on the significance of it): “No migrant from the EU accession states can claim state benefits until they have been here for 12 months – they must work or go home”. It is not so much that migrant labour is more willing to accept the minimum wage than the domestic population, it is that they have less choice other than to accept it, whereas domestic workers are at least eligible for welfare, and can rely on family support for accommodation, for example (this is what Jones means by “lazy, complacent and picky”). It is also easier to force migrants -legal or illegal- to accept less than the minimum wage, as the Lords report finds: “some employers and agencies imposed various charges on immigrants’ salaries, thus reducing their pay below the minimum wage… Our concern is to avoid the development of a specific demand for immigrant workers that is based on immigrants’ lower expectations about wages and employment conditions or on a preference for labour whose freedom of employment in the UK is constrained by the worker’s immigration status”.

On the assertion that “immigrants are needed to fill and reduce vacancies”, the Lords report instead explains that “because immigration expands the overall economy, it cannot be expected to be an effective policy tool for significantly reducing vacancies. Vacancies are, to a certain extent, a sign of a healthy labour market and economy. They cannot be a good reason for encouraging large-scale labour immigration”. Likewise, in his response to the report, the chief economics commentator of the Financial Times, Martin Wolf, wrote that it is “unambiguously untrue in the long run and for the economy as a whole” that “immigration lowers vacancies and relieves job and skill shortages… despite record immigration, there has been no change in the number of vacancies. In a flexible labour market, vacancies and the number of jobs adapt to the size of the labour force”[6].

People have always migrated, of course, and always will: it is part of human nature to travel, explore, mix and intermingle. However, current migration into the UK is of a somewhat different type from that of the pre-neo-liberal period. During the ‘Golden Age’ of capitalism between 1950 and 1973, unemployment in the UK was historically low, around 2%. During this period -particularly the early part of it- there was often a real labour shortage: due to unprecedented economic growth, there were genuinely not enough people to build the cars, lay the bricks, dig the roads, drive the buses and work in the hospitals, and so it was necessary to import people from Ireland, the Caribbean and south Asia. However, there is no labour shortage today: officially, current unemployment is 5.2%[7], which translates as 1.62 million people[8]. Unofficially, it is probably somewhat higher. Any skills shortage among the British workforce is therefore not due to any shortage of numbers or innate deficiency, but to the poverty of the training and education system. UK plc wants a certain level of “quality and controlled immigration”, not because it is benevolent or kind hearted, but because this dampens wages down and keeps the working class insecure through the creation of what can only be described as a reserve army of labour: immigration is being used as a weapon of class warfare. The importation of skilled labour from overseas also represents a free gift to capital: why spend time and money investing in British workers when you can simply steal much needed skilled labour from poorer countries instead?

3) Freedom for capital, not labour

Net migratory pressures are ultimately driven by the differential in wages between countries: for someone in Eastern Europe or beyond, even the minimum wage -or less- in the UK may be better than what can be earned at home (if the wage gap were the other way round, of course, British workers would be heading East). The greater the differential, the greater the incentive for labour to migrate. However, the signs are that the wage gap between the UK and Poland, at least, has closed, and thus, as was reported in February, “for the first time since they began arriving en masse four years ago, more UK-based Poles are returning to their homeland than are entering Britain”. As one Polish painter and decorator based in London explained: “Two years ago I could make five times the amount of money here than I could in Poland. Now the wages are about the same and the living costs in the UK are much higher. There is a lot of work in Poland, probably more than in the UK. It’s a good time to go back”[9]. If Polish workers are beginning to head home, this raises the question of where the UK, and the other wealthy EU countries, will find their next tranche of migrant labour. Further exploitation of the Baltic states is one option; the newly integrated EU states of Romania and Bulgaria are others; the further expansion of the EU (to include Ukraine, Belarus, the former Yugoslav states, Turkey and maybe even Russia) is another; looking outside the EU altogether is another option still. Similarly, the greater the differential in wages between rich and poor countries, the greater the incentive for capital to export manufacturing jobs, and even certain service sector jobs such as call centres, abroad to where labour costs are lower (“either work is done at competitive rates here or it is not done here at all”, as Digby Jones puts it). This has been a significant (although not the only) factor behind the decline of heavy industry in the UK.

Supposedly, this is all the natural, organic, inevitable outgrowth of economic development. However, this ignores perhaps the most significant feature of globalisation, at least as far as immigration is concerned: the global movement of labour is largely restrained and regulated, but the movement of capital is, by and large, completely unrestricted. Indeed, the term ‘neo-liberalism’ is perhaps best understood as ‘freedom for capital, not labour’. The political choice to remove state controls on capital movements -real and speculative investment funds- following the breakdown of the Bretton Woods system (beginning with the US in 1974, Chile in 1975 and the UK in 1979, with the rest of the developed world gradually following suit throughout the eighties and nineties)[10] is perhaps the most significant, and defining, feature of capital’s post-1973 triumph. Current immigration policy, like everything else, is now predicated solely on capital’s terms, and no longer on the terms of the 1945-1973 post-war settlement between capital and labour. The ‘business case for quality and controlled immigration’ dictates that labour is only permitted to move insofar as it benefits capital (one result of the EU expansion has been -and presumably will continue to be- the opening up a large supply of cheap labour to western European capital). Capital, on the other hand, is free to move around the world as it pleases, playing off not just international workforces but also states against each other, forcing them to compete to offer the most attractive environment for capitalist investment.

For instance, amid the recent furore over Labour’s 10p tax hike, it went largely unremarked that Gordon Brown’s 2007 budget also cut corporation tax from 30p to 28p. This was done in response to falling corporation tax rates overseas, to where British-based businesses (mostly services and finance) were beginning to relocate their HQs and submit their tax receipts. In a survey of more than 80 countries, the auditors KPMG found that since 1997 average corporation tax rates have fallen from 33.2% to 27.1%; and from 35.5% to 25.8% within the EU. In the same time period, corporation tax in the UK has fallen from 33% to 28%, while capital gains tax has fallen from 40% to 18%. As Richard Lambert of the CBI commented: “The chancellor has ack­now­ledged the need for the UK to compete with the tax regimes in other developed countries… The challenge for government now is to get a grip on public spending so as to create the headroom that will be needed for further tax cuts in the years ahead”. In this case, one of the ways the Treasury clawed back some of this lost tax revenue was to raise tax on smaller companies and cutting capital allowances for firms that invest in equipment and buildings (that is, manufacturers)[11]. The tax burden is relaxed on those who can easily move to where the tax structure is more amenable, and increased on those less mobile (small business and manufacturers in this particular instance). At about the same time, the clothing company Burberry shut down its (profitable) factory in south Wales, at the cost of 300 jobs, and relocated production to China where production costs for their £55 shirts are £4 per item as opposed to £11. The move has saved Burberry £2m in the first year[12]. On the bad publicity that Burberry attracted for this, their PR adviser, former Sun editor and Harvard Business School graduate David Yelland, said: “Who’s going to invest there [Wales] now? They’ll look at the headlines and go to Ireland instead. I can tell you now that I know of more than one company that has already made that decision”[13].

The current frustration regarding fuel and vehicle taxes (which are not just restricted to the sectional interests of haulage companies, although they tend to be the most vocal) are similarly rooted in the burden of taxation being shifted away from the wealthiest to those on low and middle incomes who cannot ‘regime shop’. Such is Labour’s eagerness to offer capital a welcoming home that in 2007 the IMF included the UK in its list of ‘offshore financial centres’ -tax havens- alongside such luminaries as Bermuda, the Cayman Islands, Jersey, Panama and Vanuatu[14]; HM Revenue and Customs estimate that tax avoidance is now somewhere between £11 and £41 billion a year[15]; and the Health and Safety Commission has had its staff levels cut by 1,000 over the last five years, resulting, predictably, in a five year high in the number of people killed at work[16]. Meanwhile: “Workers in the UK have the lowest sense of job security out of employees in 18 of the world’s leading economies, a bi-annual survey has found. Some 24.2% of British workers think it is very probable or somewhat probable that they will lose their job over the next 12 months”[17]; “Ernst & Young’s annual discretionary income study showed that after tax contributions and monthly household bills, the average family has just under 20% of its gross income left over, compared with 28% in 2003. The average household now has £772.79 to spend each month after total fixed monthly outgoings, compared with £909.84 in 2003/04″[18], and inequality is at its highest level since records began in 1961[19]. For the British working class, the pressures of neo-liberal globalisation have produced insecurity, depressed wages and lost jobs; whereas for capital, these self-same pressures have driven taxes and regulation down.

In addition, the creation of a reserve army of labour in the UK through immigration is also placing an increased burden upon an already underfunded and neglected infrastructure. For instance, the Lords report points out that “Immigration is one of many factors contributing to more demand for housing and higher house prices. We note the forecasts that, if current rates of net immigration persist, 20 years hence house prices would be over 10% higher than what they would be if there were zero net immigration”. This, inevitably, can lead to tension and conflict between the pre-existing and migrant communities (the recent violence in South Africa being an extreme example of this). However, it is not Digby Jones’ and Richard Lambert’s constituency that suffers in any fight among the lower orders for ever more scarce resources. The failure of the left to fully tease out and expose the relationship between neo-liberalism, the globalisation of capital and current immigration policy; to recognise the legitimate concerns of the domestic working class, and acknowledge how net immigration is being used as a weapon of class warfare against them (not to mention the tendency to denounce as racist anyone who points this out) plays perfectly into the hands of Digby Jones and his constituency.

4) Kicking away the ladder at home and abroad

No-one should be compelled to leave their home in order to make a decent living: a decent living should be available to everyone, everywhere. As pointed out above, it is inequality between nations -the wage gap- that drives migratory pressures, whether legal or otherwise, and naturally capital manipulates and regulates these pressures to produce outcomes favourable to them (what else would you expect capital to do?). During the ‘Golden Age’, the UK -typically among the developed nations- became markedly more egalitarian, and the insecurity faced by workers today was far less prevalent. The late Oxford economist Andrew Glyn has written of the 1960s and ‘70s: “the level of unemployment benefits rose substantially compared to pay, and eligibility for benefit became more relaxed. Unemployment, as well as being less likely, was also less costly financially to those affected, thus reducing the pressure to take the first job that became available regardless of conditions. Employment protection legislation, against arbitrary dismissal and generally limiting employer prerogatives over hiring and firing, was also extended in this period… Another very significant gain for workers was a sharp fall in average hours worked from around 2000 per year in 1950 to 1750 in 1973 – the equivalent of more than half a day less work per week”[20].

This increase in equality within the developed nations did not occur in isolation: the world as a whole became more egalitarian during the period 1950-1973, perhaps for the first time in recorded history, as the gap between the richest and poorest nations shrank: “Within the capitalist epoch, one can distinguish five distinct phases of development. The ‘golden age’, 1950-73, was by far the best in terms of growth performance. Our age, from 1973 onwards (henceforth characterised as the ‘neoliberal order’) has been second best… Although our age is second best, and international economic relationships have been intensified through continuing liberalisation, the overall momentum of growth has decelerated abruptly, and the divergence in performance in different parts of the world has been sharply disequalising. In the golden age the gap in per capita income between the poorest and the richest regions fell from 15:1 to 13:1. Since then it has risen to 19:1″[21]. These gains in equality within and between nations -and the concomitant increased strength and security of the working class that came with it- both went into reverse at the same time, beginning in the mid-to-late 1970s, with the political triumph of capital, neo-liberalism and Chicago school economics. The Observer’s Will Hutton has noted: “There has not been a gap between the rich and poor on the current scale ever in history… It is unstable. Sooner or later, there will be popular outrage and a political response”[22]. As inequality increases, migratory pressures -and insecurity- will only increase too. Those who have a little will fight ever harder to keep it; those who have nothing will fight ever harder to get it; those who have everything will continue to accumulate ever more.

The Cambridge economist Ha-Joon Chang has in recent years revived the “kicking away the ladder” hypothesis of the 19th century German economist Friedrich List. The hypothesis has it that the developed nations, by and large, became developed in the first place not through the ‘free market’ but via state activism such as protection of fledgling industries through tariffs and subsidy (from the protection offered to British wool by Henry VII, to the stewarding of the US economy by Alexander Hamilton, to the growth of the Asian Tiger economies post-World War II, right up to the development of the internet and the bale-outs of Northern Rock, Bear Stearns and the US mortgage industry). However, once development is obtained, the dominant countries would “kick away the ladder” of state-led development and protectionism from the developing countries, imposing free trade and open economies upon them instead, keeping them in their place as sources of cheap raw materials, cheap labour, and captive markets. For Chang, the modern day manifestation of this is loans and debt relief to the developing world from the World Bank which are conditional on the implementation of neo-liberal IMF policies such as privatisation, deregulation, the removal of protectionist tariffs and the opening up of their economies to foreign capital (the ‘Washington Consensus’ policies). This stands in contrast to the models of independent national development that were prevalent in the developing world during the ‘Golden Age’. The consequence of forcing neo-liberalism on the developing world has been that “average per capita growth rate among developing countries has fallen from around three per cent p.a. during the period 1960-1980 to 1.5 per cent p.a. for 1980-1999″[23]. During the period 1960-1980, average per capita growth in Latin America was 3.1%, while it was 1% for sub-Saharan Africa; during the period 1980-1999 these figures fell to 0.6% and minus 0.7% respectively[24] (Chang also notes that the two coming powers, India and China, have been strong enough to avoid the diktats of the IMF and World Bank, and develop and liberalise their economies on their own terms). As Chang explains: “the plain fact is that the neo-liberal ‘policy reforms’ have not been able to deliver their central promise – namely, economic growth. When they were implemented, we were told that, while these ‘reforms’ might increase inequality in the short term and possibly in the long run as well, they would generate faster growth and eventually lift everyone up more effectively than the interventionist policies of the early postwar years had done. The records of the last two decades show that only the negative part of this prediction has been met. Income inequality did increase as predicted, but the acceleration in growth that had been promised never arrived… So we have an apparent ‘paradox’ here – at least if you are a neo-liberal economist. All countries, but especially developing countries, grew much faster when they used ‘bad’ policies during the 1960-1980 period than when they used ‘good’ ones during the following two decades”[25].

The distribution of wealth is an indicator of the balance of political power. The redistribution of wealth towards the top that has taken place across the world over the last thirty years is a product of capital’s triumph, and is also a wedge capital uses to further strengthen its position: increased global inequality creates and increases the gains to be had in moving jobs from the developed to the low-wage countries; causes the movement of labour from poor to rich countries, depriving developing nations of skilled labour while creating an excess of labour in the developed world; and produces increased latitude for playing international workforces off against each other. Neo-liberal globalisation has succeeded in kicking away the ladder at home and abroad: at home the working class is weak, defeated and divided, our wages undercut, our jobs moved overseas; abroad, the once strong Third World movements that contributed so much to the increasing equality of the immediate post-war era are similarly beaten; all are increasingly helpless against the power of unrestrained global capital, and keeping the developing world poor and insecure goes hand-in-hand with keeping the working class in the developed world weak and insecure. Ethnic and identity politics are increasingly filling the vacuum where there once existed strong working class and national independence movements.

There are those who argue for a ‘no borders’ position, for no immigration restrictions at all. This is an admirable ideal, but at present it is not only politically infeasible, it completely neglects the crucial political points, namely that of who controls capital. So long as control over the economy remains concentrated in private hands – and there remains no worthwhile opposition – capital will simply manipulate and regulate net migratory pressures (which ultimately derive from inequality between nations) according to its own requirements. The ‘no borders’ position is simply the liberal flipside to the BNP position of closed borders, and is no more a pro-working class position than ‘send the bastards back’ is necessarily a pro-capital one. Likewise, it is impossible to see how ‘no borders’ would benefit the poorer nations: far from reducing inequality, such a policy would actually make it easier for wealthier nations to steal their skilled labour from them. No matter how superficially liberal the ‘no borders’ approach might appear to be, it has no practical application at best, and at worst stigmatises those who might express genuine concerns about the impact of large scale immigration as xenophobic and racist. A policy that serves as a recruiting sergeant for the BNP as well as allowing capital a free hand can hardly pretend to be progressive or pro-working class. Withdrawal from the EU may reduce the democratic deficit and allow greater domestic and democratic control over immigration policy, rendering capital less able to import workers from overseas and hurt the domestic working class through the creation of a reserve army of labour.

But ultimately, there is only one pro-working class resolution to the problems outlined above: democratic control of the economy. This is the only way of producing a migratory framework -indeed, an economic framework- that is geared toward human needs (of the domestic population as well as of migrants), not just the sectional needs of capital. However, the very idea of economic democracy has, to the left’s eternal and deserved shame, been off the ideological menu for decades, during which time the left has allowed the debate to become fossilised into a stale ‘neo-liberalism vs. state control’ false choice. Recent developments in Latin America have shown that a progressive, popular opposition to neo-liberalism can be built (although one must be wary of the possible development of autocracy and authoritarianism, as has been so often the case before with the left). As yet there is no indication of any counterpart materialising in the developed world.

Appendix

The government responded to the Lords report on the 11th of June, publishing separate reports by Liam Byrne’s department, the Home Office, and the Department of Work and Pensions. The Home Office report claimed that, in contrast to the findings of the Lords report, “we estimate that recent immigration has raised the GDP per head of the non-migrant population by about 0.15 per cent per annum in real terms (over the ten years to the end of 2006)”[26]. The press reported that this translated as £1,650 per capita over the ten years, and £300 per capita over the previous year alone[27] (the £300 per capita figure is a longstanding assertion of Byrne’s[28]). This is the government’s stock position: that recent immigration, far from being used to dampen down the wages of domestic workers, has actually increased their incomes. The Socialist Workers Party support this stance, praising the joint evidence submitted by the Home Office and the DWP to the Lords committee in October 2007 as a “blow” to the “right wing consensus that immigration leads to job losses and lower wages”[29].

The 0.15% per annum estimate (and it does appear to be just an estimate, no further justification for the figure is given) in the Home Office report is attributed to a 2007 study by the Low Pay Commission (paragraph 2.5). This very same study actually finds that “although the overall effect of migration on wages is positive, wages at the low end of the wage distribution are held back, while wages in the middle of the distribution increase”[30], which would appear to back up the conclusions of the Lords report, rather than debunk them. Also, given that the day before the Home Office and DWP reports were published, communities secretary Hazel Blears admitted that the government was unaware of the number of immigrants living in the UK[31], and that in May a Treasury sub-committee found the government’s migration figures were “not fit for purpose” and was “stunned to learn that there was simply no reliable source of information”[32], it is hard to understand how the government could credibly come up with such a precise figure on how much recent immigration has supposedly benefited the native population per capita.

The more sophisticated DWP report[33] found “no statistically significant impact of A8 migration on claimant unemployment, either overall or for any identifiable subgroup. In particular we find no adverse impacts on the young or low-skilled. Nor do we find a statistically significant impact on wages, either on average or at any point in the wage distribution, although the evidence here is less complete”. But again there are problems with this paper’s statistical base. It uses the Worker Registration Scheme as the data source for the level of immigration, while acknowledging that “anecdotal evidence of non-registration amongst some A8 migrants has been reported” and that “self-employed workers are not required to register”, which includes many of the skilled tradesmen who make up a significant proportion of Eastern European immigrants. The WRS also fails to pick up at all on illegal immigration. The authors state that “we see no reason why such omissions should be systematic and they should therefore not bias the results”. Is this credible? Another difficulty is the income data used. Like David Blanchfower, they take their income data from the Average Earnings Index, but unlike Blanchflower they don’t exclude bonuses, which are disproportionately earned by the wealthiest, and thus inflate the income figures for all workers upward. With better information, how would the analysis work out? The authors themselves state that “Our estimates of the average impact on wages are not inconsistent with those found in Dustmann [the Low Pay Commission paper], although they are somewhat smaller” (i.e., statistically insignificant), and also acknowledge that they do not know the ‘counterfactual’ – what would have happened to employment and wages of natives if migrants had not arrived.

But despite these deficiencies, the Independent seized upon these government reports as definitive proof that the findings of the Lords committee were “spurious” and no more than a sop to the “blinkered tenacity of the anti-immigration lobby”[34]. The DWP paper also stated that “the generally poor labour market outcomes of low-skilled natives in the UK do not reflect either a lack of available jobs, structural factors in the labour market, or a lack of formal qualifications -since A8 migrants find it relatively easy to find employment- but rather issues around basic employability skills, incentives and motivation”. This is simply a more polite expression of Digby Jones’ opinion of British workers as “lazy, poorly skilled and complacent”, and the Independent enthusiastically endorsed this statement too, stating that “we should not seek to shift the blame for our own social shortcomings on to hard-working migrants” (something that none of the material cited above does). Likewise, the first sentence of the Home Office report declares that “The Government is clear that carefully controlled economic migration [emphasis added] benefits both our economy and our exchequer”, before stating that “The Committee notes – and we agree – that migration can keep down inflationary pressure in the labour market”, again both sentiments that Digby Jones would wholeheartedly endorse. Here, the Labour party and the Independent reveal themselves as being fully in tune with the neo-liberal agenda.

So, among those to concur with the Lords report (whose authors included two former Tory Chancellors, Richard Layard, former Thatcherite frontbenchers John Wakeham and John MacGregor, former chief executive of BT and current Lib Dem trade and industry spokesman Iain Vallance and former head of the CBI Adair Turner, among others) that current immigration policy is beneficial for capital but not necessarily for the domestic working class are the Bank of England, the Financial Times, Digby Jones and the Low Pay Commission. Those who insist otherwise are the Labour government (using a flawed statistical base), the Work Foundation[35], the Independent and the Socialist Workers Party. The Centre for Economic Performance at the London School of Economics found that “The evidence so far suggests that, overall, immigration has had few adverse effects on the labour market performance of the UK-born workforce, though this average may disguise some negative effects in the low wage market and positive effects in the higher wage labour markets”[36]. It seems that the masters of the British economy are quite open about who gains and who loses from current immigration policy (something they generally approve of), while the middle class ‘left’ either denies or seeks to obfuscate the issue. The reader is invited to make up his or her own mind.

 


 

[1] Available in full at http://www.publications.parliament.uk/pa/ld200708/ldselect/ldeconaf/82/8202.htm

[2] Letter to the Financial Times, 15 May 2002, (link).

[3] Mervyn King, speech at Salts Mill, Bradford, 13 June 2005, http://www.bankofengland.co.uk/publications/speeches/2005/speech248.pdf.

[4] Blanchflower’s testimony is available at http://www.parliament.uk/documents/upload/EA218%20Blanchflower.doc

[5] Digby Jones, ‘Pride and prejudice about immigration’, Daily Telegraph, 19 August 2006, http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2006/08/20/ccimmi20.xml

[6] Martin Wolf, ‘Four Falsehoods on UK immigration’, Financial Times, 3 April 2008, http://www.ft.com/cms/s/0/a008241a-0189-11dd-a323-000077b07658.html?nclick_check=1.

[7] Office of National Statistics, http://www.statistics.gov.uk/instantfigures.asp

[8] ‘UK jobless level increases again’, BBC News, 16 July 2008, http://news.bbc.co.uk/1/hi/business/7508816.stm.

[9] Alexi Mostrous and Christine Seib, ‘Tide turns as Poles end great migration’, The Times, 16th February 2008, http://www.timesonline.co.uk/tol/news/uk/article3378877.ece.

[10] Age Bakker and Bryan Chapple (2002), Advanced Country Experiences with Capital Account Liberalization, IMF Occasional Paper No. 214 (Washington: International Monetary Fund).

[11] John Willman, ‘City and services are big winners’, Financial Times, 21 March 2007 (link); and John Willman, ‘Business relieved its voice heard at last’, Financial Times, 22 March 2007 (link).

[12] Lucy Killgren, ‘Enthusiastic US lifts Burberry’, Financial Times, 29 May 2008, (link).

[13] Carole Cadwalladr, ‘Squaring up to Burberry’, The Guardian, 25 March 2007, http://lifeandhealth.guardian.co.uk/fashion/story/0,,2040157,00.html.

[14] Ahmed Zorome (2007), ‘Concept of Offshore Financial Centres: in search of an operational direction’, IMF Working Paper WP/07/87, http://www.imf.org/external/pubs/ft/wp/2007/wp0787.pdf.

[15] Vanessa Houlden, ‘’Tax gap’ estimated at £11-£41bn’, Financial Times, 13 March 2008, http://www.ft.com/cms/s/0/a44427b6-f13c-11dc-a91a-0000779fd2ac.html.

[16] David Hencke, ‘Number of deaths at work rises to five year high’, The Guardian, 26 July 2007, http://www.guardian.co.uk/politics/2007/jul/26/immigrationpolicy.

[17] ‘UK staff top job insecurity table’, BBC News, 16 November 2005, http://news.bbc.co.uk/1/hi/business/4443406.stm.

[18] Kathryn Hopkins, ‘Disposable income hit hard by rising mortgages and energy bills’, The Guardian, 4 July 2008, http://www.guardian.co.uk/business/2008/jul/04/consumerspending.mortgages.

[19] Mike Brewer, Alistair Muriel, David Phillips, Luke Sibieta (2008), ‘Poverty and Inequality in the UK: 2008′ (London: Institute of Fiscal Studies), http://www.ifs.org.uk/comms/comm105.pdf, p1.

[20] Andrew Glyn (2006), Capitalism Unleashed: finance, globalization and welfare (Oxford: Oxford University Press), p4-5.

[21] Angus Maddison (2001), The World Economy: a millennial perspective (Paris: OECD), p125, 126.

[22] Will Hutton, ‘Feeble government lets the superclass soar over the rest of us’, The Observer, 4 May 2008, http://www.guardian.co.uk/commentisfree/2008/may/04/globaleconomy.economy.

[23] Ha-Joon Chang (2003), Kicking Away the Ladder: development strategy in historical perspective (London: Anthem), p133. A précis of the book is available at http://www.paecon.net/PAEtexts/Chang1.htm. An hour long lecture by Chang is available to view at http://www.youtube.com/watch?v=T5-ojv5-b3U.

[24] Ibid., p132, 134.

[25] Ibid., p128, 129.

[26] Home Office, ‘The Economic Impact of Immigration’, June 2008, available at http://www.bia.homeoffice.gov.uk/sitecontent/newsarticles/economicimpactmigration.

[27] Andrew Taylor, ‘Migrants win support over jobless fears’, Financial Times, 12 June 2008, http://www.ft.com/cms/s/0/af8f3d86-37dc-11dd-aabb-0000779fd2ac.html?nclick_check=1 and Alan Travis, ‘British workers lack skills and drive of east Europe’s migrants, says study’, The Guardian, 12 June 2008, http://www.guardian.co.uk/uk/2008/jun/12/immigration.immigrationpolicy1.

[28] Liam Byrne, ‘The case for a new migration system’, 6 February 2008, http://press.homeoffice.gov.uk/Speeches/sp-lb-lga-feb-08; and Byrne’s submission to the Lords committee, 15 January 2008, http://www.publications.parliament.uk/pa/ld200708/ldselect/ldeconaf/82/8011503.htm.

[29] Simon Basketter, ‘Report shows benefits of immigration into Britain’, Socialist Worker, 27th October 2007, http://www.socialistworker.co.uk/art.php?id=13313. The Home Office/ DWP submission can be found at http://www.homeoffice.gov.uk/documents/economic-impact-of-immigration?view=Binary.

[30] Christian Dustmann, Tommaso Frattini, and Ian Preston (2007), ‘A Study of Migrant Workers and the National Minimum Wage and Enforcement Issues that Arise’, Low Pay Commission, available at http://www.econ.ucl.ac.uk/cream/pages/LPC.pdf, p11-12.

[31] Jim Pickard and Jimmy Burns, ‘Ministers unaware of present migrant numbers’, Financial Times, 10 June 2008, http://www.ft.com/cms/s/0/1d9176b0-373c-11dd-bc1c-0000779fd2ac.html?nclick_check=1.

[32] Simon Briscoe, ‘UK migration data ‘not fit for purpose’, Financial Times, 19 May 2008, http://www.ft.com/cms/s/0/2be2f4a2-2524-11dd-a14a-000077b07658.html?nclick_check=1.

[33] Sara Lemos and Jonathan Portes (2008), ‘The impact of migration from the new European Union Member States on native workers’, http://www.dwp.gov.uk/asd/asd5/wp52.pdf.

[34] ‘Brickbats and Slurs’, The Independent, editorial comment, 12 June 2008, http://www.independent.co.uk/opinion/leading-articles/leading-article-brickbats-and-slurs-845159.html.

[35] David Coats (2008), ‘Migration Myths: Employment, Wages and Labour Market Performance’, http://www.theworkfoundation.com/Assets/PDFs/migration2.pdf.

[36] Centre for Economic Performance, ‘Immigration to the UK:

The Evidence from Economic Research’, http://cep.lse.ac.uk/pubs/download/pa010.pdf.

5 Responses to “Kicking away the ladder at home and abroad: immigration, globalisation and neo-liberalism”

  1. Jim Says:

    Well said! I can’t add anything to that. The most important point is that the self-styled ‘left’ are not on the side of the working class at all. The unions have funded and supported all the abominations of New Labour, and the Communist and Trotskyist parties just serve to distract, bamboozle and distract the alienated millions who have no political home anymore (the Morning Star is still worth supporting though, bearing in mind its limitations). The ‘ no platform for fascists’ thing can be, and is, used to shut up ( with the threat or actuality of violence) any opposition to immigration. Organised labour is the only power we have, or had – immigration undermines that. It’s not hard to see and, from what I can tell, most working people can plainly see it, but they’ve nowhere to go. The Greens are a slight improvement, but they seem to be hedging their bets over immigration – why? I think ultimately they are just too middle class. Your small group is the only one I don’t find an insult to my intelligence, but few have heard of you. Still, we’ve got to start, or restart, somewhere, and you’ve at least got the direction right.

  2. Daniel Says:

    That was absolutely brilliant. Kudos for sticking up working people when the Left are still mouthing Karl Marx…

    Best regards,

  3. chris b Says:

    The No Borders position which you dismiss as “liberal” is a explicitly anti-capitalist one. Both the uk and throughout europe,We have been challenging the commodification of people as either economic units, or targets for incarceration or removal. Your position is tenable only if we have global control (and global equality)of the economy, otherwise borders will still be barriers between rich and poor.

    In the meanwhile, i suggest you start showing some real unity and look after your neighbours by and joining us in physically resisting the immigration service.

  4. Paul Says:

    “The No Borders position which you dismiss as “liberal” is a explicitly anti-capitalist one.”

    How so? At this point in time the no borders position benefits capital and is anti-working class. See the Gate Gourmet dispute and how the employer was able to instantly call upon immigrant labour to replace the unionised workforce on worse conditions and pay and so on? In such circumstance, how meaningful is a ‘no borders’ position on its own?

  5. stuffit Says:

    But how often is ‘no-borders’ used on its own by no borders activists? in my experience its nearly always linked with capital and exploitation.

    Lots of things benefit capital, but it doesn’t mean you organise against the symptoms. Don’t mistake a no borders position with the liberal multicultural view of immigration that seeks to play off migrant working class against indigenous working class.

    If you talk about Gate Gourment then its also important to talk about the Justice for Tube Cleaners campaign, and Unity centre in glasgow

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