Immigrant labour: does it benefit or impoverish the United Kingdom?
Przemyslaw Macholak
In one month we will know the result of the football World Championship in Brazil. Although, as always, the event has been dominated by inflated hopes, there is nothing in Heaven and Earth which could have ensured an England victory. A private company, wholly owned by its 20 Member Clubs, the English Football Association is one of the strongest leagues in the world, generates the highest revenue, and is the most watched football league globally. Clubs in the English league pay their players the highest wages and spend the biggest amount of money on transfers. Despite all this, the national team cannot reach the heights of 1966, familiar to most people only due to television replays. So how can we explain the difference between the fates of English league clubs and our ill-fated world cup team? The simple fact that players from abroad have replaced English footballers in first elevens throughout the whole country. As we can see from above, the issue of migration is not relevant when any politician wants to hit the headlines, but it touches every aspect of life in the United Kingdom, as well as the front pages of newspapers. Subject to hot political debate, and in our age of globalization and when Western countries have to face aging society problem, deep analysis of immigrants’ influence is needed. Immigrant labour, analogically to the labour market it influences, is not homogenous. Therefore, description of immigrants needs many generalization. Various studies group immigrants depending on aim and factors of migration, level of skills, time of arrival, country of origin, etc. Because of such diversity and abundance of nuances, they cannot be seen only as one added population. The average UK immigrant differs from, for example, the stereotypical UK migrant - people from Albion moving to Spain for retirement. They are usually much younger, brave enough to leave her home country (legally or illegally) and start life in completely different environment. Also on average more educated than UK-born citizens, apparently they are the most educated immigrants in the whole EU (Dustmann, CREaM 2014). Hence it is hardly surprise, that one of the main arguments for the positive impact of immigrants is diversification of the culture. A more multicultural society tends to facilitate innovation diffusion (Saxenian, 2006, Florida 2002) and therefore increases productivity of the economy as a whole. No matter whether it is a meeting of a board of an international company or a discussion about funding for next month for products for the local grocery, such cognitive diversity increases chances for creating a solution for a problem, given the communication barrier is not significant. In the contrary to some other countries (e.g. Spain), the effect of immigration on UK productivity is, although small, significant and positive (Lee and Nathan 2013). Immigrants affect productivity both directly as well as indirectly. They increase access to the human capital skills pool, boosting competition in some industries and creating completely new jobs in others. Moreover, immigrants play a crucial role in providing the trade links to the global economy. Analysing the impact of people speaking the same language, knowing the domestic customs of your company trade partner in the context of P. Ghemawat’s ‘CAGE distance framework’ (Ghemawat, 2011), benefits of immigration becomes clearly visible and expansion for foreign markets may not be as demanding as famous metaphor about ‘writing simultaneously by both hands’. It lowers the UK firms’ transaction costs, enables them experience economies of scale and allows them to find niches in global markets. The situation seems to be similarly positive while analysing the impact on budget balance. According to the research Dustmann and Frattini (2013): ‘immigrants are overall less likely than natives to receive state benefits or tax credits, and similarly likely to live in social housing as natives in the same
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