Quitting EU would hurt, not help low paid

by Sam Ashworth-Hayes | 10.05.2016

Myth: Brexit would help the low paid

InFact: Migration from the EU hasn’t put “colossal downward pressure on wages”. It has had no significant effect. Quitting the EU could cause economic turmoil, hitting the low paid hard.

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According to Boris Johnson, immigration puts “colossal downward pressure on wages”. Frank Field, the Labour MP, says it has “pushed down wages at the bottom of the labour market”. Even Stuart Rose, chair of Stronger In, says wages for low-skilled workers would “go up” after Brexit.

The three men are perpetuating a myth. Migration does seem to have depressed the wages of low-paid workers a bit, but the effect is small. Meanwhile, it seems to have boosted wages of higher-paid workers, also only a bit.

But these effects are dwarfed by the benefits of access to the EU’s single market – to which no country has full access without accepting free movement of people. What’s more, quitting the EU is likely to trigger economic turmoil. That would hit the low paid hard, wiping out any marginal benefit they might gain from lower migration.

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The Bank of England, which examined  data from 1992 to 2014, found the pay of semi and unskilled service workers – such as carers and bar staff – was 1.88% lower for every 10 percentage points increase in the proportion of migrants working in those occupations. For skilled production workers, such as gardeners and electricians, an equivalent rise in immigration lowered wages by 1.68%.

Jonathan Portes, principal research fellow at the National Institute for Economic and Social Research, notes that as part of this reduction reflects migrant workers taking on lower paid roles, the total effect of immigration on wages for UK-born semi/unskilled workers between 2004 and 2012 was to reduce annual pay rises by about a penny an hour. Even this small impact cannot all be attributed to EU migrants, as the study encompassed migration from further afield as well.

Quitting the EU to reverse these small negative effects would be like trying to heal an ingrown toenail with a shotgun.

Contacted for comment, Frank Field stated that he would go into further detail at a later date, Stronger In made no comment, and Vote Leave stated that InFacts is “not a journalistic enterprise”, but “campaigners registered on the Remain side”, and that they have “no interest” in talking to us.

Edited by Hugo Dixon