A senior Bank of England official has said British workers lose out on pay rises because cheap migrant labour takes up low-skilled jobs.
Deputy Governor Ben Broadbent, one of just four at the bank, was speaking at ‘Understanding the Great Recession: from micro to macro’, an economics conference held at the Bank of England (pictured above), when he highlighted the impact of cheap migrant labour.
Dr Broadbent said:
“We know, for example, that migration flows have risen significantly over the past fifteen years, and that immigrants are more likely to take low-skilled jobs than UK-born workers.
“So if easier immigration has made the overall supply of labour more responsive to economic conditions in this country… it’s probably done so to a greater extent for low-skilled than high-skilled workers.
“So when the UK economy grows faster than its neighbours, as has been the case over the past couple of years, you’d expect to see greater inward migration and a disproportionate rise in the supply of low-skilled labour in particular.”
He explained that in Britian in 2014 new jobs were taken by people with “below-average qualifications and experience”, with the effect in lower-paid occupations of depressing average pay growth.
Dr Broadbent went on to give a concrete real-world example of which he was recently made aware, one which also illustrates his point that reliance on low-skilled low-pay workers can also reduce productivity:
“The head of a small business told me his firm had been looking to hire an accountant.
“They’d originally wanted someone very experienced who might in time fill the shoes of the finance director. However, they soon realised that the only way they could get someone like that was to bid them from an existing job within the UK – apparently a costly and lengthy process. So they decided instead to employ two much more junior and less well trained people.
“One worked for them already; the other, from outside the UK, they found in relatively short order after advertising on an EU-wide basis.
“The firm would end up being less productive than it might have been (two people are now doing the work of one). But there’d be a compensating fall in its average wage and, given the relative availability of less experienced employees, it made sense for them to go down this route.”
In the last year the number of foreign nationals working in Britain rose by 294,000 to reach 3.09 million, reports the Daily Express, with recent figures showing that one in ten of the workforce now comes from overseas (just over three times what it was in 1997 when the last Labour government took office).
Bank of England Governor Mark Carney warned previously that wages were being kept artificially low due to increasing levels of migration, as reported by Breitbart London. The latest Bank of England data reflected this by dramatically cutting the forecast for earnings growth by the end of the year from 3.5 per cent to 2.5 per cent, as reported by This Is Money, however it predicts a rise to 4 per cent next year.
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