Just how does Rishi Sunak intend to grow the economy? It’s the second of his five pledges; last week’s Budget was full of Tory talk about the virtues of getting people off benefits and into work.
But the data shows a rather different picture: five million are on benefits while mass immigration – now running at record levels – is once again the only major factor expanding the workforce. The OBR envisages this problem continuing, with immigration running at near-record numbers while Brits claim sickness benefit at the rate of about 5,000 a day. An odd and expensive economic model – some data out today puts it into more perspective.
The total on out-of-work benefits – 5.1 million or 13 per cent of the workforce – is not a figure the government likes to talk about. It’s buried in the DWP StatXplore database (published on The Spectator data hub). It forms the backdrop to the other problem: a worker shortage with 1.1 million vacancies, one of the highest figures ever recorded for the UK. So, if the Tories struggle to move people from welfare to work during the middle of such an acute worker shortage, there’s only one other option: mass migration.
The UK and America are the only G7 countries to have failed to lift their workforce to pre-pandemic levels:
Dig deeper and we find economic activity rates for those born in the UK had been slowly rising for years – and were considerably higher than the rates for those born overseas. But after the first three months of 2020 things changed. UK activity rates dipped while non-UK rates continued to grow. The positions switched – as the below graph shows. This fits a long-term trend of immigrants responding well to UK workforce incentives: during the lockdowns, for the first time, foreign-born citizens are now more likely to be in work (or to be looking for it) than Brits.
In fact, on a cumulative basis, since the end of 2019 economic activity of those born in the UK has decreased whilst the opposite is true for migrants.
Today’s census data for England and Wales breaks it down further: among the working age population of UK-born people 71 per cent are in work but for those born in the EU it’s 78 per cent. Migrant workers tended to be in higher skilled work too: over a third of those born in Australia and New Zealand were working in professional occupations such as medicine and teaching. Nearly half of oncologists and cardiologists were born overseas.
On census day some 41 per cent of British-born adults (living in England and Wales) were out of work and not job hunting either (economically inactive). But for those born in the EU it was only a fifth. You might think that the UK-born inactivity would be explained by students. Not so. Whilst just under 7 per cent of working age Brits were students during the census, the figure for the EU-born population was just over 7 per cent.
One problem for British workers sticks out: ill health. The census figures show that just 2.9 per cent of non-UK-non-EU workers were inactive due to long term sickness or disability while for EU-born people it was 1.8 per cent. But for native workers it was nearly three times as high at 5.3 per cent.
The ONS points out that Covid may have had an impact (the census was conducted in March 2021). It may be the case that British workers were more likely to be in jobs that were more likely to have been impacted by lockdowns. But the demographics of migrants play a role too. Immigrant groups tend to be younger, and younger people are more likely to be in work or seeking it.
But that could be about to change. Last week’s OBR forecasts for the Budget assumed that in the next few years migrant workers will have economic activity rates more inline with the British population as the age profile of migrants changes. More dependents and elderly people are coming through schemes such as BNO visas and the Ukraine sponsorship schemes.
Not only is the government aware of all this, it’s integral to the Tory economic strategy. As James Heale reported last week, the OBR expects the UK workforce to grow by 160,000 – compared to November forecasts – solely due to migration. It was the biggest unspoken feature of the Budget and forecasters expect the migrant workforce to account for a quarter of economic growth by 2027. All this surely leaves the government in a pickle. Many say reducing migration to the ‘tens of thousands’ is crucial to Conservative success – especially in the red wall. But today it seems, migration is crucial to our economic success too.
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