Politics

The evidence is clear: ending free movement won't raise British wages

Pretending that the labour market is as simple as "supply and demand" panders to emotional far-right narratives

October 03, 2017
As Britain's economic growth has slowed, France and Germany are on the up. Photo: PA
As Britain's economic growth has slowed, France and Germany are on the up. Photo: PA
When does feeling matter in politics? It depends whose side it’s on.

My colleague Stephen Kinnock MP recently wrote a twitter thread on immigration and the labour market which concluded with this remark: “For too long c-left has brushed this debate under carpet & accused anyone making the case for reform of being anti-immigrant, or worse. This opened door to UKIP, the FN, the AfD, and Wilders etc. We need less anger & emotion.”

Given that this thread was his latest sortie in an online debate he and I engaged in over freedom of movement, I think I am within reason to believe that the ‘emotion’ point was directed at me.

What to make of this? As a rationalist, and a believer in evidence-based policy, at first glance I wanted to agree with this call. But I am fed up of those of us making the case for free movement, especially the women, being accused of excess “emotion.”

Because my argument on immigration is precisely that the rational economic view of problems in the British labour market cannot be solved by limiting free movement. Furthermore, I think that those in politics who argue that these problems can be solved with an end to free movement are doing so because they are responding to an emotional argument made by nativists and anti-immigration forces on the hard right and far right of British politics.



What the evidence says

In fact, my debate with Stephen was based on the fact that I believe he is asserting something—that immigration has held down wages—for which there is no conclusive evidence. 

And while I am sad that a fellow Labour Member of Parliament levelled accusations of being ‘emotional’ in response to arguments from a female colleague, I am glad that we are finally getting to the nub of a debate that has dogged the progressive wing of our politics for too long: is low pay the fault of foreigners?

Stephen’s argument, like many before him, is that it must. Apparently, it’s the“law of supply and demand.”

Unfortunately for Stephen, that isn’t true: EU migrants haven’t significantly driven down UK wages. His attempts to argue for immigration controls for low-skilled employees on the basis that this will raise the pay of existing British workers just won’t work.

The evidence is there to be seen. Freedom of movement means workers can move across countries in the EU: you would think, therefore, that if it was a simple matter of supply and demand, real wages would uniformly be held down in wealthier EU countries as workers moved there. 

This isn’t what happened. Since the global financial crash, real wages in the UK have fallen by 10 per cent. In both France and Sweden, they have risen by 10 per cent. In Germany, they have risen by 13 per cent.

The inescapable conclusion is that migration is not the problem—a theory confirmed by a recent Bank of England study that found only a tiny effect of migration on wages.

But there are still those who believe “supply and demand” holds true, despite the empirical evidence. There are those who wish to see an alternative truth want to believe in “simple economics” rather than look the facts in the face.

Yet, “simple economics” can’t help them either. Because when the labour supply increases, there is not just one effect. Across the whole economy, migrants increase demand as well as supply of labour. 

None of this is intended to suggest that there should be a free-for-all. Free movement only exists within the EU single market because of an extensive set of arrangements to protect workers’ rights and to deal with structural inequality (for example, caused by deindustrialisation, or other economic shocks that can scar towns or cities for generations).



What the voters deserve 

But there is something else at stake here. I have fought three general election campaigns in a marginal seat and spent a great deal of time listening to my constituents talk to me about immigration, and the way they want Britain to be run. I think they deserve a rational, evidence-based, answer.

I have concluded that our security and police services deserve better funding so they can properly police our border in the way that I and my constituents want. Now is not the time to scrimp on safety. 

In addition, I have concluded that we ought to properly count people in and out of the country, as well as making freedom of movement effective (as other countries already do) to make sure that people come here to work.

This all matters for two reasons. The first is about how we take on the far right. The debate about wages stems from the desire of some Labour politicians to find left-wing economic reasons to sympathise with those concerned about migration. They see their constituents in economic hardship and furious about migration and want to agree that the two must be linked. They think this is how we douse the fires of nationalism and racism. 

I take the opposite view: when the left colludes in spreading myths linking migration to economic hardship it is the right, and especially the far right, that benefits. Our job must be to offer real economic solutions the problems of low wages, casualisation and deindustrialisation, not to buy into the arguments of the right. That is how we win this fight.

The second reason is because of Brexit. This argument is happening now because concerns about free movement drove the Brexit vote, and are the main reason many on the left say we must also exit the single market. But leaving the single market would cause huge economic damage to my constituents and my country. It would be a disaster if we left this fundamentally progressive institution at all; it would be a tragedy if we left because of false arguments about free movement and wages endorsed by parts of the left. 

As I happens, I think there is nothing wrong with emotion in politics. It’s just that emotion, while necessary, is insufficient.