With the UK in election mode, immigration has become a significant political issue. Responses to the 2008 European Social Survey showed that 56 per cent of UK residents believed that immigrants were net recipients of welfare expenditure. However, very extensive research now available suggests that this perception is very far from the reality, and it is popular prejudice rather than facts that is currently driving the UK debate.
The atmosphere of suspicion about the costs of immigration has been politically fruitful for Ukip, with its catchcry of saying no to “benefit tourism”. In its efforts to neutralise Ukip’s threat, the UK government promised to seriously limit immigration from the newer EU member states, a promise on which it has not been able to deliver. Even the British Labour Party has been affected by the widespread concern in the UK about the alleged cost of immigration, and it has been making efforts to sound tough on the issue.
In contrast to unsubstantiated myths about immigration, a number of serious pieces of research have been published recently on the true effects of immigration on the UK economy. These include a study from the National Institute for Economic and Social Research (NIESR) and a series of papers in the leading UK academic forum, the Economic Journal.
A key conclusion from these studies is that immigrants are much less likely to draw benefits than natives and, because most are working, they are currently contributing a substantial amount of tax and social insurance to the UK treasury. As a result, the presence of immigrants from the newer member states means the UK is better off than if it had prevented them from coming.* The UK budget deficit would be even larger without the taxes paid by these immigrants.
The study by NIESR** shows that this is not just a short-term gain for the UK economy. The researchers found that the foreigners in their sample were 4.5 per cent less likely to claim benefits than the native population. They estimated that, if the UK government had achieved its targeted reduction in immigration, aggregate and per-capita GDP would be significantly lower in the long term than if immigration continued at its current rate.
They also found that, to keep the budget balanced, the income tax rate would have had to be increased by 2.2 per cent if the government had been successful in its plan to restrict EU immigration.
No surprises
Looking at the UK from outside, these results don’t seem surprising. The vibrancy of the London economy depends on the fact that it is a world financial centre, attracting skilled workers from all over the world. In fact, the movement of skilled French workers to London makes it the fifth-largest French city!
However, Ukip's expressed concern is the inflow from the new EU member states, not from France – the battle of Waterloo has, thankfully, been forgotten. Also, for the purpose of the immigration debate, Ukip is happy to classify Irish immigrants as British, apparently hoping to win their votes!
These studies also show that the UK’s immigrant population from the EU has a consistently higher level of education, including a higher proportion with degrees, than the UK-born. This difference has accelerated with the arrival of new immigrants since 2000. Ireland’s experience of well-educated immigrants is fairly similar, although the picture is different in other European countries.
While the solid evidence in these research studies has been widely reported in the UK media, it does not appear to have made any dent in political rhetoric. Controlling EU immigration and “welfare tourism” remains an important strand of the pre-election debate and there is no sign that the findings of the research have made an impact on wider public opinion.
Research into immigration in Ireland echoes the findings for the UK. Prior to the recession, immigrants to Ireland were less likely to be on welfare than the Irish-born. While, at the outset of the recession, the number of immigrants on welfare grew, more recent figures showed that these numbers had stabilised, while the number of Irish-born drawing welfare continued to rise.
Unemployed immigrants leaving Ireland
Figures from the Central Statistics Office suggest that a large number of immigrants who lost their jobs in Ireland have left the country. Having come to Ireland to work, when employment dried up they either returned home or went elsewhere in the EU in search of a job.
What is more, many of the immigrants from eastern Europe to Ireland and the UK only intended to come for a limited period. Like many young Irish people temporarily working abroad, they seek work experience, some adventure, and a chance to improve their language skills. While working, they pay tax. They are net contributors, coming here to work for a few years, but returning home to where, in due course, they will draw their pensions.
As with London, cultural diversity and an international workforce are key to Ireland's economic success. Firms such as Google and Facebook need a diversified international workforce, and the combination of skilled immigrant workers and our own educated workforce, including returning emigrants, has made Ireland an attractive place for international business. * The Fiscal Effects of Immigration into the UK, by C Dustmann and T Frattini, Economic Journal, 124 (November 2014), F565-F568; cream-migration.org/ publ_uploads/CDP_22_13.pdf ** The Long-Term Economic Impact of Reducing Migration in the UK, by K Lisenkova, M Mérette and M Sánchez-Martínez; niesr.ac.uk/sites/ default/files/publications/dp420.pdf
