Is immigration “good” for British business? Introduction In the most industrialized countries of the world, the rapid increase of immigration has become a contentious issue. As immigration has a great impact on a country’s economy, its benefits and costs have been hotly debated. This essay will focus the economic effects of immigration into United Kingdom. Large-scale immigration has been a essential factor that contributes to a healthy UK economy and society and is encouraged to flow into UK since a new UK immigration policy published in 1997(D. Colemanand R. Rowthorn,2004 ).
According to the office for National Statistics, the net immigration- immigration minus emigration to the UK increased to 237,000 in 2007 (2008). Supporters of immigration will often point to the good impacts of immigration, such as fiscal advantage, increased gross domestic product per head and available supply of labor, while opponents of immigration argue that large-scale immigration will compete with native-born workers in the labor market, displace some natives from jobs and lower their wages. The remainder of this paper is to evaluate the impacts of immigration on British business.
It is divided into three sections, the impacts of immigration on wages, on employment and on growth. The impacts of immigration on wages It is undoubted that there is a negative effect of immigration on the wages of natives. Assumed that all immigrants are low-skilled, this will lead to a supply shock of unskilled labour at pre-immigration wages. In that case, firms will try their best to lower the wages of unskilled workers to meet their demand of labour (C. Dustmann and A. Glitz, 2005). However, this impact on wages of unskilled natives is not enormous.
Due to the excess supply of unskilled workers, skilled workers in the economy are employed at a higher wage. In other words, reducing wages of unskilled workers may contribute to an increase of wages skilled workers (C. Dustmann and A. Glitz, 2005). The data mentioned by A. Hijzen and P. W. Wright (2009) shows that every 1% increase in the supply of unskilled non-native workers led to a 0. 02% decrease in the wages of native unskilled workers. Moreover, a notable proportion of resident workers “whose wages have adversely affected by immigration are previous immigrants and exciting ethnic minority groups” (Coleman, D. nd Rowthorn, R. 2004). In addition, according to Professor William Brown, though the national minimum wage (NMW) has played a significant role in protecting low-paid labours from unfavorable effects of immigration. The government was required to take measure to force those sectors that employ large number of immigrant to pay wages that equal to or up the minimum wage. Some immigration was found to be illegally employed at a very low wage which is below the minimum wage by some employers and agencies. The impacts of immigration on employment
The main impact of immigration on employment is that immigrants are an essential source of labour. Until the end of 2003, the total net increase in the number of people in the employment in the UK was 2. 076 million, which include 1. 435 million (69%) of native workers and 640,000(31%) of non-native workers (Leberal Conspiracy, 2009). And it showed a significant increase trend after the inflow of migrants from the Eastern European from May 2004 onwards (Ibid). Moreover, a great number of immigrant workers were encouraged to flow into UK by the government to fill the labour shortage after Second World War (J.
Wills, K. Datta, Y. Evans, J. Herbert, J. May and C. Mcilwaine, 2010). In order to be sure that immigrants will not displace native workers from their jobs, the most occupations that immigrants take is the most dangerous, dirty, disadvantaged (Ibid). For instance, Darcus Howe(2007) claims that the place he live is mainly settled by eastern Europeans and the men are mainly in building trade as plumber or carpenter, the women are largely work in service sectors, such as small restaurants, dry-cleaners and bars. In other words, immigrants usually do the jobs that native workers are not reluctant to do.
Therefore, immigrants do not take away native workers’ jobs but fill the labour shortage. However, to some extent, The Lords’ all-party Economic Affairs Committee claimed that the large-scale immigration into UK will lead to a fierce competition. Some certain groups in Britain, such as low-paid, ethnic minorities and some young people will be struggling to look for job (dailyrecord. co. uk, 2008). The recent ITEM Club report indicates that “youth employment increased by about 100,000 since early 2004 and the participation rate has dropped from 69. % to 67. 4 %”( 2008). The impact of immigration on growth According to BBC (2008), the government’s decision to use GDP as the measure of immigration’s economic contribution was ‘irrelevant and misleading’ and GDP per capita or income per head of population should be a better measure. For GDP per capita considers the fact that immigration increases not only GDP but also population, so it is better than GDP to measure the economic impacts of immigration on resident population (2008).
According to NIESR, there is a negative impact of A8 immigration in the short run (2001-2005) on GDP per capita and a small positive impact on GDP per capita in the longer run which shows a 0. 3% increase from 2005 to 2015(2008). In the short run, the negative effect is because of “a short-term increase in unemployment and the slow adjustment in the capital stock in response to immigration”, while the positive effect in the long term due to “the relatively high proportion of immigrants that are of working age and the increase in the capital stock”(2008).
Thus, immigration has a little or no good influence on UK’s growth. Conclusion The article has evaluated the impact of immigration on British business. The first claim that immigration has a negative effect on the wages of native workers is right. But it can be ignored, that is, the impact of immigration on the wages of unskilled natives is negligible. Refer to the impacts of immigration on employment, there are mainly three points. The first two are positive, immigration as an essential source of labor and contribution of immigration to the labor shortage.
The third one is negative which leads to a cruel competition in the low paid and youth. The last claim is the impacts of immigration on the growth, which shows that immigration has very small impacts on GDP per capita though it has both positive and negative impact. Based on the above discussion, it can be clearly seen that immigration has a little bit of benefit to British business.