Latest UK migration statistics likely to further turn up political heat on EU migration

The ONS has this morning released its latest long-term UK migration statistics and they are likely to increase the intensity of the spotlight on EU migration - if that was possible. The headline statistics are:

• 560,000 people immigrated to the UK in the year ending March 2014, a statistically significant increase from 492,000 in the previous 12 months. Two-thirds of the increase is accounted for by immigration of EU citizens (up 44,000 to 214,000).
• 28,000 Romanian and Bulgarian citizens immigrated to the UK in the year ending March 2014, a significant increase from 12,000 in the previous 12 months.
• This contributed to overall net migration rising to 243,000 from 175,000 the previous year, way over the totemic 100,000 figure targeted by Conservative ministers.
• It is also interesting to note that the decline in non-EU migration (the part the Government can control) seems to have stopped. The latest estimates for the year ending suggest that 265,000 non-EU citizens immigrating to the UK, a slight increase but not a statistically significant change, from 246,000 in the previous year. Net migration of non-EU citizens increased from an estimated 145,000 in the year ending March 2013 to 162,000 in the year ending March 2014.

Source: ONS

These estimates show that 54%, 30% and 14% of total EU immigration was accounted for by citizens of the EU15 (the 'old' EU member states), EU8 (central and eastern member states that joined in 2004) and EU2 (Bulgaria and Romania) respectively. Overall net migration of EU citizens was 131,000, a statistically significant increase compared to 95,000 in the previous year.

This highlights, once again, that a large part of the recent increase in EU migration is being driven by migration from the more established EU member states, presumably a large number of them looking for an alternative to the high levels of unemployment in the countries worst affected by the eurozone crisis.

In contrast, migration from the 2004 accession states has been relatively stable. Net migration from these countries was 41,000, not a statistically significant increase compared to the 34,000 in the previous year. For Bulgaria and Romania, it looks as though the ending of transitional controls on access to the UK labour market in January 2014 could have had some impact with a 12,000 increase in migration on the previous year (although we should be careful since this data mostly reflects 2013), and almost 80% of EU2 citizens arriving for work-related reasons.

Yesterday saw the German government announce tough new domestic rules on EU migrants' access to benefits, which closely mirror those announced by David Cameron late last month. Downing Street has welcomed the German proposals and added, "Clearly there is now a case for looking at other things we want to do where we may need to change the [EU] rules". The question now is whether Cameron can muster enough European support to change the EU rules in this area sufficiently to satisfy public and political opinion in Britain.

The gates are open but so far no flood

Official data from Office of National Statistics published this morning shows that the number of workers from Bulgaria and Romania have dropped from 144,000 to 140,000 since transitional controls were lifted for workers from the two countries on 1 January 2014. As we said all along, not quite the opening of the floodgates that some had predicted.

Nevertheless, this still represents an increase of 29,000 workers from Bulgaria and Romania year-on-year. And the quarterly numbers do not present a full picture on which to judge any longer-term change or pattern.

More broadly, the data shows that, while coming from a low base, EU employment has driven quite a lot of the recent increase in employment. In total, the number of  employed in the UK has increased by 741,000 year-on-year. Migrants from the Central and Eastern European 'EU 8' countries only account for 2.3% of total UK employment but, over the past year, workers from these countries have accounted for 15.5% of the increase in UK employment (see graph below).

It remains to be seen whether these figures will have any effect on the political debate about migration in the UK, particulalry from the EU. Annual migration (rather than employment) figures released later this month (potentially on European election day) are expected to show that EU migrants from the EU will outnumber migrants from non-EU countries for the first time - which has the potential to be politically explosive.

UK Govt migration report: So does immigration have an impact on jobs?

Open Europe's chosen title for migration was
"tread carefully"

The UK Government has (finally) published its review of evidence on the effects of migration on the jobs of "UK natives." (Note this is not the long-awaited Balances of Competences report on EU free movement, which has yet to be published).

This report focused purely on the labour market. Clearly migration has a wider ranging impact such as lowering prices for consumers, potentially boosting economic growth, placing greater pressure on public services, and posing the challenge of integration within communities.

So what does today's report conclude?

Well, unsurprisingly, it found that the effects of migration are very difficult to determine - the review is more a summary of existing research than an attempt to come to a hard conclusion. When we looked at EU migration, we also found it difficult to come to decisive conclusions but it is clear that the impact of migration on the labour market is much more complex than the intuitive view that there is a fixed number of jobs in the economy.

There are some interesting findings in today's report. In general it found:

"There is relatively little evidence that migration has caused statistically significant displacement of UK natives from the labour market in periods when the economy is strong."

 With regard to EU migration specifically, the Government's report concludes that:

"To date there has been little evidence in the literature of a statistically significant impact from EU migration on native employment outcomes, although significant EU migration is still a relatively recent phenomenon and this does not imply that impacts do not occur in some circumstances."

This is consistent with the view in economic theory that: "In the long term, it is argued that there is no negative impact on wages or employment of native workers as, over time, economies find ways to adjust to a stable equilibrium." But this overall impact can however mask temporary impacts or impacts on sections of the labour force. They argue for instance that:

"Where displacement effects are observed, these tend to be concentrated on lower skilled natives".

And their evidence also points to variations in impact at different points in the economic cycle suggesting:

"that the labour market adjusts to increased net migration when economic conditions are good. But during a recession, and when net migration volumes are high as in recent years, it appears that the labour market adjusts at a slower rate and some short-term impacts are observed."

So was Theresa May wrong to claim UK natives' jobs were lost due to migration? There has been a lot of discussion about the veracity of the Migration Advisory Council (MAC)'s analysis the Home Secretary relied on to claim 23 UK natives' jobs were lost for every 100 non-EU immigrants. Today's report interestingly includes what is politely called "additional testing" of the MAC results to see if this was indeed true. The additional testing "revealed that the main result remains robust to a number of tests." But they found that: "When data from part of the period of economic downturn (2009 and 2010) were omitted, the impact of non-EU migration was not found to be statistically significant."

This corresponds to a low point in the economic cycle and bears out an observation we made in our report that, when jobs were being lost in the economy during the recession, UK natives lost out disproportionately but that otherwise the effects of migration are probably about neutral. This could perhaps be due to the places where jobs were being lost in the downturn (finance and traditional industries) and created or retained (other service industries).

So was Theresa May right? In the narrow sense, yes. The study highlighted that migration can disrupt the labour market in the short term. And it is this issue - that the neutral or positive long-term aggregate effects of migration can mask short-term losers, such as those who face greater competition in a recession or specific groups such as the low skilled - that continues to make migration such a politically sensitive issue across the entire political spectrum.

Let's tone it down a notch: Comparing the UK and German debates on EU migration

No one picking up a UK paper will have failed to notice that there is some concern over EU migration on the British isles, with the debate being triggered by the end of so-called "transitional controls" for Romanian and Bulgarian workers (the countries joined in 2007).

As we've argued repeatedly, EU free movement has on the whole been beneficial for both Europe and the UK, but the issue must be handled with much care, given its exceptionally sensitive nature and the practical impact it can have on public services and certain sectors of the labour market.

But there's also a false perception in the UK that all of Europe wants to come to Britain to enjoy its superior welfare system. This is far from the truth and secondly, the UK isn't the only country that has concerns over EU migration. It is, however, the country in which the debate is the most hysterical. Philip Collins looks at this in today's Times.

Speaking in Parliament earlier this week, Work and Pensions Secretary Ian Duncan Smith said there was a “crisis” over rules on EU migrants’ access to services and welfare, particularly in light of the expiry of transitional controls on migrants from Bulgaria and Romania at the end of the year. The issue definitely needs to be looked at, and there are several things the UK needs to do (see here). The Commission also needs get its act together and drop its own-goal challenge against the UK's "right to reside" test - the test is a political hugely important filter to guard against welfare abuse. But crisis?

Duncan Smith did, however, rightly point out that other EU member states shared some of the UK’s concerns, specifically that “Germany has woken up at last to the reality that it might face a large net migration”.

So what is the nature of the corresponding debate in Germany? Well, there's a genuine concern. A recent position paper by the German Association of Cities generated a lot of coverage as it focused specifically on so-called ‘poverty migration’ from Bulgaria and Romania, particularly those from a Roma background. The report warned that these migrants arrived in cities already affected by relatively high unemployment and with severely stretched public finances, and that despite the transitional controls in place, migration from Bulgaria and Romania had increased six-fold since 2006.

In terms of the public response, German Interior Minister Hans-Peter Friedrich (CSU) recently warned that:

“Abuse of free movement could be explosive for European solidarity. If people in Germany feel that their solidarity and openness is being abused and our welfare system is looted then there will be legitimate anger. The message for the EU Commission is clear: Brussels has to take stronger account of situation of the local population in its decision making process.” 

Justice Minister Sabine Leutheusser-Schnarrenberger (FDP) has also stressed that "Many Roma flee their homes because of discrimination and resulting poverty… Poverty-related migration must be addressed at its roots." Germany has also said it might veto Bulgaria and Romania’s entry to the border-free Schengen zone, which the UK is not part of.

Clearly, Germany could be an ally for the UK in terms of instituting clearer and more transparent rules on EU wide migration and access to welfare which are necessary to restore public confidence in free movement, as we’ve argued in our report on the subject.

However, on the whole, the debate in Germany has been far more measured than in the UK, with substantially fewer scare-stories on the subject from the press and politicians. For example, the often sensationalist Bild ran a feature on Roma migration earlier this week which was relatively balanced, stating that “there has been no mass immigration” and that migrants tend to seek employment, not benefits.

And that's what UK politicians and media need to remember: the overwhelming evidence suggests EU migrants come to Britain to work, not take advantage of the system.

Italy is testing the limits of EU integration

Italy's Lega Nord has probably been dreaming of this moment for years: a head-on European collision over immigration, with Italy pitted against the Commission and other EU governments. The 20,000 North African migrants stranded on the tiny Italian island of Lampedusa provided Italian Interior Minister Roberto Maroni (from Lega Nord, see picture) with an"opportunity" to make a point that he hardly would miss out on.

Speaking after yesterday's heated meeting of EU interior ministers in Luxembourg - where Italy found itself completely isolated with only Malta on its side - Maroni launched a full-scale attack on virtually everyone. He said that the EU is

"an institution which takes action quickly only to bail-out banks and declare wars, but when it comes to showing concrete solidarity to a country like Italy, then [the EU] hides itself...I wonder if it really makes sense [for Italy] to remain part of the EU."

Ouch!

Italy isn't in any way contemplating leaving the EU of course, so Maroni is engaging in political posturing. This is obviously a hugely sensitive issue, but Maroni needs to chill a bit. It's not like Italy has completely been left hanging, as Maroni seems to suggest. This year, the country receives roughly €140 million in EU funding aimed at tackling various migration-related issues. In addition, it hasn't exactly used the billions it has recieved in EU structural funding in the most effective way - Italy's south is probably the biggest bottomless pit for EU funding. Instead of wasting it, this money could be used to deal with social exclusion and create more jobs for migrants. Call it "concrete solidarity" with European taxpayers.

But there's lots more to this story, and Italy does have a point, in so far as the distribution of migrants across Europe is hugely uneven (though this doesn't only apply to southern Europe. Finland took in 700 asylum seekers in 2010 for example, whereas its neighbour Sweden last year accepted close to 30,000 of them, which alongside Malta, is the most per capita in Europe). This is to say that if the wave of migrants from North Africa continues, and intensifies, the European Commission, and the member states that support this agenda, has been given a pretty strong hook for pushing a common EU immigration policy, including "burden sharing" between member states. Writing in Swedish daily Dagens Nyheter, the EU's genial Home Affairs Commissioner, Cecilia Malmström, recently argued that, in the light of recent events in the EU's Southern neighbourhood,

“The need for a common EU policy on asylum and immigration is urgent...I hope that the current situation also contributes to the EU taking several steps forward towards a common asylum and immigration policy.”

For various reasons, Italy's clout in Europe has been seriously reduced recently - the country is unlikely to emerge as winners from this recent spat. However, calls for a common EU immigration policy won't go away - whether we agree or disagree with it, it's hard to a find more controversial area to outsource to Brussels, so this is likely to drag on.

In fact, it's up there with cross-border bail-outs and EU-enforced austerity measures, as the top issue that really will test the limits of European integration.

row incoming

PA reports on new statistics from the Home Office, out this morning:

Nearly 8,000 Bulgarians and Romanians came to work in Britain in the first three months after their countries joined the EU, the Home Office said today.

A further 2,400 have joined the seasonal agricultural workers' scheme.

The figures did not provide a full picture of the numbers who have moved to the UK because no such records are kept by the Government.

The Government had initially said that the number of jobs for migrants from the A2 would be 20,000. The Home Office said that "Low-skilled migration from Bulgaria and Romania will be restricted to those sectors of the economy where the UK already has low-skilled schemes and will be subject to a strict quota which will not exceed 20,000 workers per year."

But later, after a run in with farmers, the Government reduced the cap to just 10,000. (See the Sunday Times and our blog from last October). But now it looks like we are already over that - with nine months to go.

Whether the "limit" was 10,000 or 20,000, it looks like the fantasy idea of "limiting" the number of jobs available without limiting free movement is about to collide with reality.