Thursday, January 04, 2007
Blanchflower on immigration
Posted by David Smith at 12:45 PM
Category: Thoughts and responses

David "Danny" Blanchflower, a member of the Bank of England's monetary policy committee, has given a speech on the economic impact of immigration. He makes the interesting point that UK population growth over the period 1971-2004 was lower than in most other advanced countries. His broad conclusion is that immigration has eased inflationary pressures and probably lowered Britain's natural rate of unemployment.

Comments

Hi david,

I believe immigration of 500000 east europeans may be considered a drop in the ocean in terms of upcoming payround negotiations of 25.3 million currently employed in the UK. If pay rises just mirror RPI ( which I doubt) the effect will be negligable considering that the lionshare of migrant workers are lowly paid and the rest of the UK workers are certainly not!
Furthermore the new and existing unemployed will find it harder to find work. How can deflationary labour cost benefit a economy longterm if cost of living increases at the alarming rate that it does?....My hunch is that when the going gets tough.....migrant workers will move on to the next honeypot across the channel taking the assumed deflationary effect with them.

Regards,

Arik Schickendantz

P.S. Liked your recent contribution to the DT

Posted by: arik schickendantz at January 5, 2007 12:01 PM

Hello David

Clearly, immigration has held down wages for the relatively low paid, but those in employments protected by strong union closed-shops have escaped the carnage. We read that the doctors' union achieved a 30% increase a year or so ago on top of their already substantial average earnings of 80,000/year.

Have doctors wrecked our health service?

Regards

David Stonebanks

Posted by: David Stonebanks at January 6, 2007 04:05 PM

David,
That's a rather good point. The proportion of foreign workers in the NHS has increased but so have salaries, in absolute and relative terms. I wonder what might have happened to NHS salaries in the absence of immigration - perhaps they'd have gone up so more. Or perhaps the grip of the unions is so strong, and the willingness of the government to confront them so weak, that normal market conventions don't apply.

Posted by: David Smith at January 6, 2007 04:29 PM

The notion of immigrants holding down unskilled wages confuses me somewhat given the recent run of significant national minimum wage increases. As per the NHS comment, normal market conventions arguably haven't really applied there either or at least not until this year (and the lower NMW increase).

Posted by: martin taylor at November 29, 2007 01:59 PM
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