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[August 17, 2006]

Migrant workers aid the economy

(The Birmingham Post Via Thomson Dialog NewsEdge) It may only be a small consolation for homeowners but rising mortgage bills might have arrived sooner without help from one corner of Europe.

With unemployment relatively low and bills rising, wages growth should have taken off by more - fuelling the need for an aggressive stance on interest rates.

There are several reasons it has not happened, but economists point to the arrival of Poles, Slovak and other central and eastern Europeans since the accession states joined the European Union in May 2004.

Last week, Bank of England governor Mervyn King said the increase in migrants helped keep earnings down.

Delivering the Bank's key inflation report, Mr King said: "A rise in labour force growth reflecting significant inflows of migrant labour has also contributed to subdued earnings growth."

And David Frost, director-general of the British Chambers of Commerce, observed UK companies were increasing their use of legal migrant labour at "an enormous rate".

Philip Shaw, economist at Investec, said migrant workers - skilled and unskilled -were essential to economic growth. "You get the feeling in this country, and certainly in London, it would grind to a halt without migrant workers."


He added due to increased migrant labour, in particular from accession states, the economy has grown rapidly.

Several years ago, given the rate of growth in this country, without migrant workers the UK would have had a skills shortage which would have led to higher wage inflation, he said.

"The Bank of England would have had to raise interest rates to slow the pace of the economy down," Mr Shaw added.

Some 7.5 per cent of people living in Britain were born overseas. It is difficult to keep track of accurate statistics due to the many ways people enter the UK on a permanent or semi-permanent basis.

But according to Home Office data, the rate of immigration has increased significantly over the past few years. Between 1999 to 2000 net immigration was around 100,000 but that had grown to more than 171,000 in 2001.

In 2004, when the ten accession countries joined the EU net immigration stood at 223,000.

The Association of Labour Providers, a trade association with 116 members providing workers largely to the agricultural, food packing and processing industries, believes migrant workers are vital for the life blood of the economy.

In particular, the farming industry is heavily dependent on workers from overseas, it says. Without migrant workers willing to work for low wages, food costs would have to rise for suppliers to pay more -which would lead to a decrease in living standards generally across the UK.

Retailers would also find it more economical to buy food from abroad, which would mean a reduction in employment in the food industry in the UK. Labour providers are only able to pay the minimum wage or slightly higher due to the downward pressure on prices exerted by the supermarkets, the ALP says.

Mark Boleat, chairman of the ALP, said: "In certain industries, employers cannot afford to pay workers very much money and British people are not prepared to work for those wages. So either those industries stop or we employ migrant workers."

Mr Shaw said it is not just in lower paid jobs that the benefits of immigration are felt.

It is estimated that around 70 per cent of catering jobs in London are filled by migrants. Around 31 per cent of doctors and 13 per cent of nurses were born abroad while non British nationals make up 12.5 per cent of teaching staff between 1995-6.

"It's a major plus point, not only for the economy but if you look at London itself, it's a magnet for highly skilled workers," Mr Shaw said.

The number of migrant workers is at a high in the Midlands with Eastern Europeans in particular being increasingly relied on to carry out local jobs. As a result the debate over the consequences of this tendency continues to resonate.

Midlands cities, in particular Birmingham and Coventry, have seen a huge rise in new EU citizens, particularly Polish, taking jobs in tourism and leisure.

There are estimated to be 400 polish bus drivers in the West Midlands, with an influx recently recruited by West Midlands Travel and therefore the effects are now having to be addressed.

Such is the volume of migrant workers taking up local jobs that the Midlands TUC has established initiatives throughout the region in support of migrant workers. These include the establishment of a project to support Polish migrant workers in Birmingham and the delivery of an employment law course for members of the Polish community.

There are thought to be 1.8 million migrants currently being employed in the West Midlands.

James Cooper, policy adviser at Birmingham Chamber of Commerce and Industry, said: "We conducted a poll among our members recently and the consensus was that having migrant workers coming to the city is a good thing as long as they have the right skills.

"But if companies are only employing them because they are cheaper and not because they can fill a skills gap, then they are doing themselves no favours as the quality of service they provide may suffer.

"With the opening up of Europe, the migration of workers is going to be a fact of life over the coming years and this is an important issue businesses need to address."

Copyright 2006 Birmingham Post & Mail Ltd.

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