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Do migrants contribute more to the economy than they take out?

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It all started with a Twitter exchange. A lot does these days, doesn’t it? I was sparring with some Remoaners in a conversation which started over the supposed economic benefits of Brexit and morphed into whether migrants, specifically low-skilled ones, have a positive or negative contribution economically. I said that migrants take more out of the economy than they contribute. My main antagonist (a Remoaner, of course) argued the opposite and supplied some links...

Full Fact stated that ‘research has found that recently-arrived immigrants from other EU countries contribute £1.34 for every £1 they take from the public purse. The same figures for all EU immigrants show smaller contributions’ (citing a British Influence report of Feb 2016 as source).

Another link from The Guardian from November 2013(!) had a headline ‘Migrants contribute £25bn to UK economy’ based on a study by the University College London's migration research unit. This article stated that ‘People from European Economic Area countries have been the most likely to make a positive contribution, paying about 34% more in taxes than they received in benefits over the 10 years from 2001 to 2011’ and that ‘other immigrants paid about 2% more than they received’. The overall claim of the article and research paper was that ‘immigrants who arrived since 2000 have made a very sizeable net fiscal contribution and therefore helped to reduce the fiscal burden on UK-born workers’.

A more recent article by another Remoaner title, The Independent, from September 2018 quotes a report by Oxford Economics that ‘migrants from the EU contribute £2,300 more to the exchequer each year in net terms than the average adult’. It goes on to say that ‘over their lifetimes, they pay in £78,000 more than they take out in public services and benefits - while the average UK citizen’s net lifetime contribution is zero’. That’s quite a claim.

So that’s two Remoaner titles quoting reports that migrants have a net contribution. But is this true when all costs of migrant people living here are factored in? I didn’t think so but was challenged to provide evidence to support my claim. So what do respected and authoritative expert organisations have to say on this?

Migration Watch, an independent and non-political Think Tank, has been producing economic reports for a while now. In its ‘main points’ about migration and its effect on wealth of the UK, it makes the following points:

• There is no evidence that immigration adds to the wealth per head of the UK population although it is, of course, beneficial to the immigrants themselves.

• Over the last decade, productivity has barely grown despite the number of immigrant workers growing by over two million, and the migrant share of the workforce nearly doubling

• Immigration to the UK has resulted in a considerable cost to the UK Exchequer of at least £114 billion, or about £18m a day, in the period 1995-2011, and annual costs continue.

• By contrast, a moderate level of mainly skilled immigration would be a natural part of an open economy and society and would be beneficial to both.

In July 2015 Migration Watch produced a paper on the economic characteristics of migrants in the UK in 2014. It showed significant differences in the economic profiles of migrants from different countries. For example:

'Migrants from Western European countries had higher wages and lower rates of claim to key benefits than the UK-born population, whereas those from Eastern European countries had lower wages and higher rates of claim. Similarly, migrants from India had higher employment and lower rates of claim to key benefits than the UK-born population, whereas those from Pakistan and Bangladesh had lower employment and higher rates of claim. Our findings have been confirmed by other researchers including the European Commission-sponsored EUROFOUND (see here) and the Migration Observatory (see here).'

Impact on Employment
Regarding the impact on employment, Migration Watch says ‘it is difficult to isolate the impact of immigration from the impact of wider economic factors in a large economy such as our own, particularly over the period leading up to and following the recession. However, evidence of displacement of UK-born workers has been found by the Migration Advisory Committee (MAC). They reported that for every 100 non-EU migrants employed 23 UK born workers might have been displaced during the recession. Read the full MAC report.

The MAC also observed that some employers preferred to employ migrants in low-skilled roles over young British people. The IPPR also noted this phenomenon in a 2012 report ‘Learning to Earning’. Read the IPPR report.

Futhermore, Migration Watch states that:

‘Since 2010 the number of people in employment in the UK has increased by 2.7 million (between the third quarter of 2010 and the corresponding quarter in 2017). However, the majority of this employment growth has been due to jobs being filled by people born abroad. In fact, two thirds of the growth in employment in the UK since 2010 has resulted from an increase in the number of foreign-born workers. Today there are almost 900,000 more British born people in employment than in 2010, however, British born employment is just 500,000 higher than its pre-recession level in 2008 so a considerable amount of the growth since 2010 has simply been the return to work of those who had lost jobs in the recession.’

Impact on Wages
With regard to the impact on wages, Migration Watch states that ‘a 2015 study conducted by the Bank of England found that migration caused a downward pressure on average wages. The largest effect was observed in the semi/unskilled services sector including hotels and social care where a 10 percentage point rise in the proportion of immigrants was associated with a 2 percent reduction in pay. This suggests that immigration reduces the wages of those already in low wage jobs.'

Welfare claims
Migration Watch says about welfare claims that:

‘It is often said that immigrants pay more in tax than they claim in benefits. Narrowly, that is true, as it is also true for the UK-born population. But this is to ignore the extent to which tax raised has also to be spent on services consumed by the immigrant population including health, and education and additional infrastructure required. These elements must be included to give the overall fiscal balance, as the UK continues to run a budget deficit. In 2014 the net fiscal cost of all migrants in the UK might have been as much as £17 billion, and whereas the working-age UK-born population was in fiscal credit, the working-age immigrant population was not. (For more on this see our Economics overview)'.

Migration Watch is one organisation. But what about the government’s own Migration Advisory Committee (MAC)? This is an independent, non-statutory, non-time limited, non-departmental public body that advises the government on migration issues. The Daily Mail reported that Professor Alan Manning, the chair of the MAC, told the Home Affairs Select Committee that ‘the influx of low-skilled migrants from the EU has brought ‘no clear benefit’ to Britain, and he argued it had cost taxpayers’ money as overall they cost more in benefits and public services than they paid in taxes.

He added that, ‘Our view is for that lower-skilled migration, there is no clear benefit for UK residents.’ He also rejected claims from big business that cuts to migrants would damage the economy.

So there you have it. Two different views on whether migrants bring a net benefit to the UK. Take your pick.

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