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Does immigration force down wages for the low-paid?

Published 06/10/2015

Existing migrants are most likely to see their pay affected by immigration, a study says
Existing migrants are most likely to see their pay affected by immigration, a study says

Home Secretary Theresa May has told the Conservative Party conference that when immigration is too high, wages are "forced down even further" for people in low-paid jobs, while "some people are forced out of work altogether."

The Press Association looks at some of the evidence to support her statement:

:: Does immigration have an impact on wages?

Recent research suggests immigration has relatively minor effects on average wages.

A 2009 study by the Institute for Public Policy Research found that, between 2000 and 2007, a rise in the number of migrants equivalent to 1% of the UK-born working age population lowered average wages by 0.3%.

By contrast, a 2013 report in the Review of Economic Studies looked at the period 1997-2005, and found that a similar 1% increase in migrants saw average wages go up by between 0.1 and 0.3%.

:: What about the impact on people in low-paid jobs?

The report in the Review of Economic Studies suggested that each 1% increase in the share of migrants in the working population can lead to a 0.6% decline in the wages of the 5% lowest paid workers. At the same time, it can also lead to an increase in the wages of higher paid workers.

:: Is there any evidence of migration having an impact on a particular occupation?

The Migration Observatory at Oxford University mentions a report published in 2008 by the Federal Reserve Bank of Boston. It focused on the UK's unskilled and semi-skilled service sector, and found that between 1992 and 2006 a 1% rise in the share of migrants reduced average wages by 0.5%.

According to a May 2015 briefing from the Observatory, any negative wage effects of immigration are likely to be felt the most by workers who are already migrants.

"This is because the skills of new migrants are likely to be closer substitutes for the skills of migrants already employed in the UK than for those of UK-born workers," the briefing explains.

:: How many migrants are actually working in the UK?

Employment in the UK grew by 342,000 in the year to June 2015, according to the Office for National Statistics (ONS). Some 25% of this can be put down to a growth in employment for UK nationals and 75% by a growth in employment amongst foreign nationals. These figures refer to the number of people in employment rather than the number of jobs.

:: And where have the migrants come from?

The latest figures from the ONS suggest there are currently 3.2 million non-UK nationals working in the UK, two million of which are from the European Union.

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