Do Migrants lower wages?

In January a much-quoted official study found “nominal wage growth below the rate of price inflation has resulted in real wages falling for the longest sustained period since at least 1964”. The figure would have been even more shocking if comparable statistics were available for earlier periods. Many economists agree that British workers are facing the longest fall in their living standards since the 1870s.

And nearly everyone knows it. Working people can feel the pressure of the relentless need to make the same or less money cover rising bills. So it’s crucial to weed out fake reasons why wages are falling — and the most pernicious is that it’s all because of immigrants. They come here, they’ll work for much less than British-born workers and so our wages are held down, runs a familiar argument. Such an analysis has purportedly right wing and left wing versions.

It’s a favourite tactic of the right to couch its hostility to immigration in words that offer pretended sympathy to workers. UKIP, for example, says, “The tide of mass EU immigration has pushed down wages” — as if Nigel Farage and his well-heeled crew care about workers. Tory John Redwood, previously Margaret Thatcher’s policy chief and therefore a man whose career and dreams are about breaking union power, says the “unprecedented expansion of labour supply” has contributed to falling pay.

Labour Party leaders have far too often repeated the same message. In a New Year message timed to coincide with the lifting of restrictions on Romanian and Bulgarian workers, shadow home secretary Yvette Cooper wrote, “Labour got some things wrong on immigration in government. For example we should have had transitional controls for Eastern Europe in 2004 and we should have looked more at the impact on low-skilled jobs and pay. We have listened and learned, while the Tories and Lib Dems aren’t learning enough of those lessons.” Cooper dodges around with warm words about “good” immigrants, but the message is clear: we will go further than the Tories in protecting you from the wage-slashing foreign horde.

Even some left wing critics of the Labour leadership can echo these arguments. So Arthur Scargill’s Socialist Labour Party, in a recent press release announcing it will stand for May’s Euro elections, says, “We have seen the uncontrollable economic migration between EU member states lead to a stagnation of the minimum wage here. This is having a serious impact on communities across Britain.”

Contributors to the Morning Star newspaper have repeatedly denounced the free movement of labour within the European Union as a bosses’ trick designed to weaken the labour movement and slash wages.

Telling the truth

Faced with such a broad consensus, it can be hard to stand against such “obvious common sense”. But it’s the job of revolutionaries to tell the truth: immigrants are not to blame for the cuts in wages, and it’s dangerous nonsense to pretend that they are.

Workers who are persuaded that immigrants are the enemy will be drawn away from struggle against the real enemy — the bankers, the bosses and the politicians that support them. And a line will be drawn through every workplace in Britain dividing the British-born from the rest.

Karl Marx described how this happened in the 19th century, when Irish workers were the main source of migrant labour in Britain. He wrote, “The ordinary English worker hates the Irish worker as a competitor who lowers his standard of life. In relation to the Irish worker he feels himself a member of the ruling nation.”

He went on, “This antagonism is kept alive and intensified by the press, the pulpit, the comic papers — in short by all the means at the disposal to the ruling class. This antagonism is the secret impotence of the English working class, despite its organisation. It is the secret by which the capitalist class maintains its power. And the latter is quite aware of this.” The right, and especially the far-right, won’t stop with the supposed culpability of recent immigrants. Any black or Asian person will also be in the firing line.

Let’s look at the facts. There are a mass of academic studies that run against the idea that immigration holds down wages. Under the headline “Immigrants Help to Raise Average Wages”, the Financial Times reported in May 2012 on a study that examined the period between 1997 and 2005, when there was an increase in the foreign-born population equal to 3 percent of the native population. The authors — economists Christian Dustmann, Tommaso Frattini and Ian Preston — estimate that immigration depressed wages by 0.7p per hour for the lowest paid 10 percent of British workers.

But immigration contributed about 1.5p per hour to wage growth for workers in the middle of the earning range, and slightly more than 2p per hour at the top of the scale. So the most comprehensive study shows that immigration raises wages for the large majority of workers.

A full-time worker in the middle of the wage distribution gains by 60p a week (40 x 1.5p) and those at the top of the wage distribution improve by 80p a week. Immigration stimulates economic activity and therefore creates more jobs and opportunities for wage earners. It increases both the available labour force and the potential consumers of goods.

What follows? Firstly that the migration effects on wages are tiny, a handful of loose change either way. And if it’s true that the increased competition among the lowest paid had cut wages by 28p a week then what is that compared to the wage-cutting, profit-seeking manoeuvres of bosses and the Tory assaults on every aspect of workers’ lives?

Furthermore there is strong research that any adverse wage effects of immigration are likely to be greatest for resident workers who are themselves migrants. This is because the skills of new migrants are likely to be closer substitutes for the skills of migrants already employed in Britain than for those of British-born workers.

Reserve army

We shouldn’t always believe the bosses (or the Financial Times), but it’s also interesting that one major study last year by the Chartered Institute of Personnel ad Development found, “Seven in ten (71 percent) employers feel the good availability of migrant workers has no impact on wages at their organisation.” Among the 14 percent of employers who do feel the availability of migrant workers has an impact on wages, about half of them (7 percent of the total) think immigration reduces wages, while the other half think it raises them. So the evidence suggests reality is different to the accepted myths. But perhaps this is just establishment propaganda designed to paper over the reality of immigration?

Left wingers who support immigration controls often quote Karl Marx’s analysis of the “reserve army of labour” to justify their position. Marx spoke of an “industrial reserve army” which plays a crucial role by increasing competition for jobs and pressuring workers to accept lower pay.

Who are the soldiers in this army? Marx explains that capitalism is the first economic system where there are “too many” people and that some are surplus to requirements. Human energy, skill and initiative are left on the scrapheap and, in a world where there are so many unmet needs, people are left unemployed. This is because as capitalism expands it tends to spend relatively more and more on machinery and technology, and less on living labour. The progress of industry means sidelining a portion of potential workers.

Marx adds, “But if a surplus labouring population is a necessary product of the development of wealth on a capitalist basis, this surplus population becomes, conversely, the lever of capitalistic accumulation, nay, a condition of existence of the capitalist mode of production. It forms a disposable industrial reserve army, that belongs to capital quite as absolutely as if the latter had bred it at its own cost.”

Capitalism creates “disposable human material” which can be dragged into employment at one point, ejected at another. It acts as a constant threat to employed workers because there are desperate people who will take their job if they complain or seek higher wages. And this reserve army is kept on poverty conditions, dependent on meagre benefits and disciplined by a brutal state.

If you don’t want to enter the netherworld of sanctions and food banks, keep your job, accept the pay the boss offers, and shut up. This reserve army is part of capitalism from its birth and it will exist (in greater or lesser form) until capitalism is destroyed and replaced by socialism. It is formed by the operation of the system, not immigration.

The main industrial reserve army in Britain is the 2.34 million officially unemployed, the additional 1.4 million people who are in part-time jobs because they cannot find full-time work, the 917,000 unemployed 16 to 24 year olds, the millions stuck in minimum-wage jobs, or on zero-hours contracts, who desperately want secure and better-paid work. The vast majority of these people were born in Britain.

The workers’ leader JT Murphy explained in the 1920s how this “reserve army” was used: “How can you build factory organisations when you have 1,750,000 workers walking the streets? You cannot build factory organisations in empty and depleted workshops, while you have a great reservoir of unemployed workers.”

But socialists would certainly not see these people as enemies. Instead there is a widespread recognition that although the unemployed can be used by capitalism, all our efforts have to be addressed to building powerful unions to defend and extend workers’ rights, and fighting to prevent the disunity of the employed and unemployed.

There was a time when women were regarded as a “reserve army”. But today women are a permanent part of the workforce (14 million out of 30 million — although the large gender pay gap remains). But women were once seen as a threat much as immigrants are now. In the 1830s the tailors argued women’s low pay dragged down the male rate, but on the other hand if women were to gain equal pay, men’s livelihoods would be threatened.

Benefiting all

The response of the male tailors was to argue that women should not be allowed to work in the trade. And such attitudes persisted among some workers for a century or more.

The task of progressive workers and trade unionists (who often found themselves in a minority) was to explain that equal rights and equal pay for women would benefit all as it would cut against oppression and stop women being used to undercut the rate.

Women should be welcomed into the workplace, recruited into unions and everyone should demand that they receive the same wages as men. United the whole workforce could fight for a better life for all.

In the same way as the unemployed returning to work, or young people entering the workforce or women having jobs, immigration swells the labour force and can have an impact on the market for jobs and wages.

The key question is whether workers organise and fight together. Marx argued that workers must “organise a regular cooperation between employed and unemployed in order to destroy or weaken the ruinous effects of this natural law of capitalistic production on their class”. The same is true of immigrants.

There is no inevitability about what happens to wages — what matters is whether our side battles hard enough and unites strongly enough. And we can all learn from the struggles of migrant workers such as the SOAS cleaners’ dispute. And immigrants are a central part of the workforce. Today about 15 percent of the workforce was born outside Britain.

Immigrants and non-immigrants have to fight together or they will be slaughtered by bosses playing on division. Blaming immigrants is another excuse, a despairing alibi for the politicians and trade union leaders who have failed to mobilise struggles that could increase pay.

One guaranteed way to lower wages is to increase racist immigration laws, to strengthen the repressive state and to scapegoat migrants. The most insecure, most vulnerable and least organised workers are the undocumented (“illegal”) workforce who feel they cannot speak out and therefore have to work for a pittance.

So if it’s not immigration, what is the problem? In short it’s about class power. The central issue is the shift in the balance of power in the workplace. When workers launch militant battles they can at least partially offset the bosses’ attempts to restrict wages and drive up profits. When unions are weakened and defeated then pay falls. Wages have declined sharply as a percentage of gross domestic product since the mid-1970s, and how within the share taken by wages there is growing inequality.

The percentage going to workers falls from Labour’s introduction of the Social Contract during the 1974-9 government, continues for much of the Thatcher years, and then slumps again with the “New Realism” after 1984 and the recession. Furthermore those at the very top have grabbed more and more of the wages share.

As James Plunkett from the Resolution Foundation writes, “Inequality accounted for more than half (53 percent) of the gap that had opened up between GDP growth and median wage growth from 1972 to 2008. Yet inequality has so far been missing entirely from government briefing on this issue.”

Of course the Tories and their coterie would rather you blamed immigrants than pointed to the way that the turbo-rich are grabbing more and more of the part of the shrinking share of the economic production that goes to income. Socialists shouldn’t connive in that cover-up.

It is crucial that socialists in the workplace combine anti-racism with all the struggles that take place. Racists offer a negative solidarity, a “we’re all in it together” of white Britishness that demonises migrants and covers up class difference. In response socialists have to deepen the real solidarity of workers, wherever they were born. An increase in the level of fightback will help to undermine the racists, and workers’ unity is essential to those struggles winning.