Sam Bowman

Cutting immigration won’t help youth unemployment

Cutting immigration won't help youth unemployment
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Reading the papers today, you could be forgiven for thinking that MigrationWatch’s new report was a smoking gun against immigration. Here we have a study that links immigration to unemployment, in the face of nearly all previous research that has found no such link. However, looking at the MigrationWatch piece itself, it quickly becomes clear how implausible these claims are.

The MigrationWatch report centres on a comparison of rising youth unemployment and rising immigration from the ‘A8’ countries – the Eastern European states that joined the EU in 2004. The correlation between the two is remarkably weak. During the initial rise in immigration between 2004 and the end of 2008, there is no significant rise in unemployment at all. From 2009, there is no close correlation between the two figures either; both immigration and unemployment have been rising since then, but the rise in immigration has followed the rise in unemployment.

MigrationWatch have not even had the courage to stand by their own work – the most they can muster is the vague question, “Is there a causal linkage between the two?” This is junk statistics, akin to this economics paper linking penis size to economic growth (hopefully a spoof).

In fact, there is no evidence to suggest a causal link between migration and youth unemployment, nor is there any reason to think that there would be one. The labour market is not a fixed pie, with a certain number of jobs to dole out to whoever is next in line. On the contrary, jobs are contingent on education, work ethic and demanded pay, which, as MigrationWatch point out, are often stronger among Eastern European immigrants than British youth. 

The economy is not a simple set of simultaneous equations: curbing the number of motivated migrant workers who ask for low pay would not magically make British youngsters suitable for their jobs. It would probably make most of those jobs untenable. Indeed, if there is a problem with migration it is when immigrants do not work and abuse the benefits system, not when they do work and add value to the economy.

There is no fixed pie of jobs. Immigrants don’t create unemployment any more than women entering the workforce in the 1950s and ’60s did. Protectionism of labour is as misguided as protectionism of capital and goods, and won’t do much to relieve unemployment (though it will hurt businesses).

The reality is that youth unemployment is caused by far more mundane, structural problems than MigrationWatch claims. Britain’s state education system is criminally bad, and getting worse. The national minimum wage means that young people cannot get their first step on the ladder to gain experience that immigrants may already have (especially in hands-on sectors like construction). Benefits effectively subsidize joblessness. And business regulations dreamt up in Whitehall and Brussels that may do little to hold back businesses in London can be poison for businesses in places like Merseyside and Glasgow, affecting young people with family ties to their towns far more than light-footed immigrants.

The government isn’t powerless to reduce youth unemployment. It should abolish the minimum wage for under-25s immediately; speed up the universal benefit reforms and reduce the benefits rate for under-25s; and slash regulation. That last one can be a bit of a chimera – often alluded to in general by free marketeers without specifics. One achievable option, as proposed by the Adam Smith Institute in a policy paper today, would be to allow SMEs to register employees as self-employed under contract, side-stepping a whole host of British and EU regulation. Cutting Britain off from the world won’t solve our problems. Cutting back the state just might.

Sam Bowman is Head of Research at the Adam Smith Institute.