Report shows both sides are wrong about immigration

A new analysis published today should raise difficult questions for both sides of the immigration debate. The report argues that training more domestic labour and getting more people into the labour market may not reduce the demand for overseas workers.

The reason given is simple; the terms and conditions of employment are not good enough to attract staff. There are other reasons – there is little incentive for anyone to take a long-term view and so almost no incentive for many employers to develop a workforce. It should also be added that these are not generally opportunities that offer career progression either.

But that key point – that even if you restrict the supply of overseas labour and do some training work with potential domestic workers, the wages and conditions aren't good enough to incentivise them to do these jobs – is what we should focus on here. It supports the position taken by the leaders of neither side in this debate.

For the anti-immigration side it raises the question of whether the problem is migration at all. If their argument is correct and the problem is 'crowding out' then reducing supply ought to raise domestic employment levels automatically. It completely undermines the crowding out argument if you can't replace one labour supply with another.

But it doesn't suggest a skills gap either. For a long time the construction industry claimed it needed foreign labour because a lack of domestic skills, but that doesn't stand when you're talking about what are basically low-pay, unskilled jobs.

In that instance the problem does not appear to be too much immigration but rather too much low pay and poverty. As can be expected, Reform exists in a parallel universe where all their prejudices combine to create one large fiction. They are simultaneously proposing to cut immigration and the minimum wage.

That reduces supply and incentive at the same time. It is economically illiterate, fails to take any consideration of the evidence and won't work. The reason they are able to get away with it is because the other side does not have better answers. The standard centrist liberal response is that our economy needs this labour. But why? Why do we need foreign labour while we've got unemployment? The answer is contained in the report – foreign labour will work for wages that homegrown labour won't.

Yet it has remained dogma among liberal centrists that immigrant labour does not undermine wages. So how can both be true? How can it be true that cutting immigration won't work because wages are too low for people from this society but we can fill the jobs with people fleeing conflict because they'll accept the lower terms and conditions?

The answer is that both aren't true. Liberal centrism believes fundamentally in the primacy of market economics and it is easier to pretend that poor-quality, low-pay jobs for immigrants don't exist than to ask whether they should exist.

The disconnect between these things can be seen in the data. If you average all immigrant labour over an extended period you can get the 'small marginal downward pressure' on wages liberal centrists claim. But if you then allow for categories like consultant surgeons, trained tradespeople and construction workers and senior managers, you realise the numbers are distorted.

Because even these reports accept that there is a downward pressure on wages at the bottom end of the pay spectrum. Immigration hasn't reduced wages in the NHS because it is high skilled, unionised and has standardised pay structures; but cleaners, hospitality staff and warehouse workers are not in the same category.

What pro-market economists do an enormous amount to disguise is that the market has clearly failed. Two thirds of those living in poverty are in a household with at least one person working. The market is not providing wages sufficient to sustain a workforce.

'Correct pricing of inputs and outputs' is supposed to be the defining feature of free markets, but in fact all that has happened is that government is picking up the strain through social security and gaps have been filled with migrants. Yet both sides would rather talk about migration than failed economic policies. That is why Common Weal has pressed for a Standard of Living approach to economic policy. Read more in Sorted.