HOW on earth can we cope? It’s the pressing question as Europe is faced with one of the greatest mass movements of peoples in its history. The closest historical example is the immediate aftermath of the Second World War when more than 11 million people were reckoned to have moved.
The UK and Scotland in particular could be said to be well placed to take in many more refugees than either the Prime Minister (20,000 by 2020) or Scotland’s First Minister, Nicola Sturgeon (1,000 immediately) has so far offered. But the inflow of migrants into southern Europe is growing by the day. Where would the migrants go if thousands more came to the UK? Where would jobs and homes be found? How would our social services manage?
The UK looks set to become the EU’s most populous nation within a couple of decades
We fear the economic consequences of a large and sustained influx. But historical experience belies this.
Looking over the past 40 years, the UK has succeeded in migrant absorption. While Germany’s population has been falling, the UK has absorbed many, both from within and beyond the EU, and looks set to become Europe’s most populous nation within a couple of decades.
Rather than creating economic pressures, this inflow has worked to the UK’s advantage, providing both a supply of skilled labour and less skilled workers prepared to undertake tasks that the indigenous population is often unwilling or unable to do.
Social and cultural problems in areas of population density there have certainly been. And the differences in population growth between Scotland and the rest of the UK could hardly be more stark.
Between 1951 and 2011 the population of England rose by 14 million or 36 per cent, a rise particularly concentrated in greater London, the south-east of England, Birmingham and Manchester.
But Scotland’s experience has been markedly different. Scotland’s population in 1911 was 4.8 million. By 2001 it was just five million – indeed the figure in 2001 was lower than in 1951. In terms of population density, in England the figure works out at around four people per hectare, rising to five in Greater Manchester. In Scotland it is just 0.7.
We have a lower unemployment rate than the rest of the UK, higher numbers overall in work, a wide range of universities and higher education institutions and certainly no lack of skills development agencies and programmes.
But it would be naive to conclude from this that Scotland would not face challenges in taking in more migrants. Large areas of Scotland are sparsely populated for climate and employment reasons. We cannot offer the same range of employment opportunity and occupation choice that exists elsewhere. And we have population concentrations of our own in the Glasgow-Edinburgh city regions to contend with.
That said, our apprehensions have actually less to do with economic considerations than with social and cultural factors, and this is true across the UK as a whole, not just in Scotland.
The latest UK migration data, for the year ending this March showed net inward migration reaching 330,000. There has been a sharp rise in net inward migration from the EU to 183,000 in the year to March, the highest number on record and a rise of 41 per cent on a year earlier. The more recent EU member countries, chiefly Bulgaria and Romania, but also Malta, Cyprus and Croatia, were the main source of the rise, with net inflows almost doubling over the course of a year.
Oxford Economics has looked at the numbers to assess the economic implications. Of the inflow total over the past year, just 25,800, or 4 per cent comprised asylum applications. The pickup in inward migration over the past year was largely due to a sharp increase in those coming to the UK to work, up from 43,000 in the year to March 2014, to 124,000 in the subsequent 12 months.
Foreign-born workers increased by 206,000, or 4.3 per cent, over the year to the second quarter, with total employment rising by 355,000 over the same period, foreign-born workers accounting for just under three-fifths of this increase.
Oxford Economics argues that migration has helped ensure that UK potential output has been able to grow relatively firmly over the past few years. Its analysis suggests that growth in labour supply has contributed 0.7 percentage points a year to potential output growth of 2.1 per cent a year between 2012 and 2015, well up on previous levels.
Migration also looks to have improved the quality of the UK labour force, as well as increasing its size. Analysis of Labour Force Survey data by the Migration Observatory found that in 2013 nearly half of recent migrants were in the highest educational category compared with one in four among the UK-born population. The same research also found that as well as taking up highly paid jobs, there was a heavy concentration of migrants amongst the lowest paid occupations, confirming anecdotal evidence of migrants helping to fill low paid jobs the UK-born population preferred not to take up.
A more problematic outcome has been subdued wage growth, particularly in sectors where many of the roles require little in the way of skills. “To the extent that a shift towards low-productivity/low-pay jobs explains part of the UK’s productivity ‘puzzle’” says OE, “immigration may have played a role by depressing pay and making the creation of such jobs more viable”.
And this in turn has had an impact on keeping inflation low. Soft wage growth is likely to have been a key factor underpinning weak core inflation, helping to rebuild household spending power and encouraging the Bank of England to keep monetary policy loose.
Meanwhile, there is a policy problem in housing where recent high levels of inward migration have brought higher demand pressures in a period of low housing starts, resulting in upward pressure on house prices and rents.
What of the future? Estimates put the number seeking to enter the UK from Calais at between 2,500 and 4,000, or less than 1 per cent of the number of long-term migrants that entered the UK last year. There are questions over how accurate these numbers are, but there is good reason to expect net inflows to remain relatively high. OE assumes net inward migration slows only gradually from its current level of 330,000 to around 200,000 by 2018 – well above the levels assumed by official population projections.
However well we may have coped in the past, this presents a challenge of a different order of magnitude. «