'Little evidence' of migrants adversely affecting UK job market » Central Government » 24dash.com

There is "little evidence" that immigrants from eastern Europe have significantly affected the wages or employment chances of British workers since they joined the European Union in 2004, according to a report by Bank of England economists published today.

The paper found that the 0.8% rise in unemployment rates seen over the past 18 months has "little to do with" the arrival of as many as 500,000 workers from Poland and other former Soviet bloc countries.

Indeed the researchers, led by Professor David Blanchflower, found that the new migrants have helped hold down unemployment, boost production and reduce inflationary pressures.

But it added that competition from the new workers - mostly young and male and earning an average 14% less than non-immigrants - had lowered British workers' power to bargain for pay rises and increased their fear of losing their jobs.

Contrary to popular myth, there was "little or no evidence" that migrants from the so-called "accession eight" (A8) countries have come to the UK to claim benefits, said the report.

Prof Blanchflower, a member of the Bank's Monetary Policy Committee which meets each month to set interest rates, surveyed a range of studies from around the world for today's report, entitled The Impact of the Recent Migration from Eastern Europe on the UK Economy.

He noted that UK population growth had been "extremely low by international standards" over the past 30 years - just 7%, compared to 42% in the US, 54% in Australia, 25% in Spain and 18% in France.

But the rate of growth has shot up in recent years, with UK population increasing by 1.8 million (3.2%) since 1999, largely because of the inflow of migrants since the borders were opened to workers from the A8 countries - Poland, Hungary, Slovakia, Slovenia, Latvia, Lithuania, Estonia and the Czech Republic.

"It would seem likely that the UK could absorb a relatively small inflow of immigrants, by international standards," said the report, adding: "It appears that it has already done so to a considerable degree.

"The entry of recent A8 migrants appears to have improved the workings of the labour market, reduced wage and inflationary pressures and lowered the natural rate of unemployment."

The A8 migrants appear to have reduced the natural rate of unemployment by making the overall workforce more flexible and more mobile, said the report. The fear of unemployment has risen among native workers, giving them less bargaining power when seeking pay rises.

The new workers have helped to hold down inflation because they typically produce more than they consume, sending a proportion of their earnings back to their homeland.

"It... seems that recent immigration is likely to have raised potential supply by more than it has raised demand, and thereby has acted to reduce inflationary pressures," said the report's authors.

Although few of the migrants have brought their families with them, and many say they are planning to return home after making some money, the report noted that 56,681 successful claims for child benefit have been filed by the new immigrants.

Some 353 applications for income support, 859 for jobseekers allowance, 32 for pension credit and 524 for homelessness assistance have been successful and 128 council homes have been let to A8 migrants in England.

But the report found: "There is little or no evidence to suggest that that the new A8 migrants have come to the UK to claim or receive benefits; they have come to work."

Workers were more likely to come to the UK - one of just three EU nations to allow A8 nationals free access to labour markets - if wages and employment prospects in their own countries were low, said the researchers.

Lithuania, with a GDP of just 2,500 euros (£1,700) a head and unemployment at 11.4%, has seen 54,600 people - 1.6% of its entire population - register to work in the UK.

The paper was published just days after the entry into the EU of Romania and Bulgaria, whose nationals have been granted only restricted access to jobs in Britain.

Copyright Press Association 2007.