IT would be no exaggeration to say that last year’s EU referendum campaign UK-wide was poisoned by some of the approaches taken to the debate on immigration – but in the 11 months that have passed, the situation seems to have worsened, risking Scotland and the UK’s economic future along with it.
While at least partly because of the rather different political climate in Scotland we have been spared much of the worst excesses of scapegoating and negative rhetoric towards immigrants, that doesn't mean we are immune to such attitudes and we should never allow ourselves to become complacent.
Anti-immigrant politicians often say that they simply want a “debate” on economic migration. If that is the case then the danger is that the economic facts behind the impact of migration are being wilfully obscured by those arguing for tighter controls, and not adequately extolled by the rest of us. Targets around net migration are being proposed and discussed without even the pretence of a rational debate about the country’s future economic needs.
Regardless of the claims of some politicians, the facts are absolutely clear, and those of us who believe in the economic and social benefits of an open, welcoming society should not be shy about using them. Indeed, as we have seen in countries like Germany and France over the last year, public opinion does not exist in a vacuum – courageous political leadership can help shape that opinion.
But the political leadership required needn’t only be based on moral courage – it can be based on the basic economic facts, which are entirely unequivocal, despite the claims of anti-immigrant politicians and newspapers, which have somehow come to be considered accepted wisdom.
Firstly, there is simply no evidence that EU immigration has impacted negatively on the living standards of UK workers. A new study by the London School of Economics (LSE) has shown that there is no apparent link between changes in the real wages of UK nationals and changes in immigration – wages of UK-born workers changed at much the same rate in areas with high immigration as in areas with a low change in immigration.
The LSE paper does indeed suggest that there is a correlation between immigration and unemployment of UK-born workers – but it is a negative correlation, so that in areas with higher immigration, there have been larger falls in unemployment for those born in the UK than elsewhere, between 2008 and 2016.
Worse still, for those of us who have argued that a hard Brexit involves serious economic costs, the reduction in immigration will hit the UK hard, but possibly hit Scotland hardest.
Employment levels are currently high and what UK unemployment remains is largely structural, due to skills mismatch or a mismatch between demand and supply in different regions. It can only be reduced over time through training, and by encouraging greater investment in areas of higher unemployment.
Indeed this is why EU immigration, particularly in low and medium-skills areas, has increased over time: it’s because EU migrants to the UK are, by definition, more geographically mobile within the UK and prepared to move to areas where jobs are available or match the available skills.
The hospitality and agricultural sectors are cases in point. A reduction in immigration will hold back GDP growth and lower growth will in turn mean fewer resources for public spending. The Office for Budget Responsibility has, on a reasonably benign interpretation of Brexit, projected a shortfall in the UK’s public finances totalling about £5.9bn per year by 2020-21.
For Scotland the consequences could be particularly dire. In 2015 there were 181,000 non-UK EU nationals residing here. They contribute a significant amount to our economic output, with higher employment rates than UK nationals for all age groups except 35-49 year-olds. Indeed around 115,000 non-UK EU nationals aged 16 and over are in employment in Scotland. If we were to see a significant decline in the number of EU nationals contributing to the Scotland’s tax base post-Brexit there would be a direct impact on the resources the Scottish Parliament has it its disposal, which fund the NHS, education and other core services we all rely on.
This is a point echoed by the LSE’s report this week – which points out that with immigrants being more likely to work and pay tax, they make an often overlooked impact on deficit reduction. Should we see a large-scale reduction in immigration, the reality is that we could see an equally large reduction in the living standards of ordinary people.
None of this is to say that the undoubted concerns felt by many people about immigration do not need to be addressed. But the starting point should be an acceptance that immigration has been used as a scapegoat for a growing feeling of alienation in UK society.
Again, the data offers a clear explanation. Despite an economic recovery in GDP since the 2008 financial crisis, median real wages and living standards have declined by around 5 per cent. Apart from the UK only Greece and Portugal in the EU experienced an overall fall in median real wages since the financial crisis. Some politicians have wrongly blamed this on immigration. Instead they would be better placed addressing the issues which have caused this to happen – low productivity growth; a shift in the distribution of GDP from real wages to profits; and how better to foster a culture of investment, including in skills.
Based on academic research and evidence rather than fiery populist rhetoric, two potential solutions seem obvious. First, any clampdown on immigration focused on setting arbitrary targets which does not recognise particular labour supply and skills requirements is likely to reduce economic growth and worsen the public finances, thereby exacerbating, rather than healing, social tensions.
Second, there are differential needs in the various regional and national labour markets of the UK and a differential approach to the post-Brexit immigration regime for certain sectors and economies – in Scotland and in London in particular – will be essential to avoid major economic dislocation effects.
Of course, this is not just an economic issue: the social and cultural impact of turning inwards would be keenly felt across the country, and diminish us culturally and socially. Indeed, it could be argued this is already happening.
As someone who leads a university which depends on the diverse talents of an international community of students and academics, I know how many people felt when they saw their contribution to the country they have chosen to make their home diminished, and their value questioned by many on the Leave side.
A further negative debate on immigration would exacerbate this – a problem highlighted by the most recent ONS migration figures showing 117,000 EU citizens leaving the UK in 2016. The impact of Brexit is clearly starting to be felt.
Of course, much of the debate the UK is having on freedom of movement stands in stark contrast to that which awaits the next UK Government in the Brexit negotiations. Just last week a European Commission taskforce published a new paper setting out their position – which puts the protection of citizens’ rights at the heart of the negotiations.
If the UK focuses purely on ensuring limits on immigration, both parties will be on a collision course in the negotiations. And given the EU27’s fundamental and ideological – as well as entirely justifiable – commitment to ensuring their citizens’ rights in the UK, it is difficult to see a positive conclusion unless a common basis for negotiation is found.
The vital importance of EU migration to Scotland and the UK’s future is clear – the challenge now is for politicians and public figures from across the political spectrum to commit to using the evidence on economic benefits as well as the cultural contribution brought by economic migrants as a foundation for future policy. To be prepared to look at migration rationally, refusing to let the public debate be poisoned by some of the negative rhetoric we’ve seen in recent months.
Only then can we be guaranteed a public debate based on the national interest – rather than political choices which in the long-run amount to little more than economic self-sabotage, sacrificing the country’s future for the benefit of partisan interests.
Our economic future – as well as the very basic question of what type of society we live in – is at stake. And those of us who believe in looking outwards to build a better future, rather than inwards to the prejudices of past centuries, need to stand up and make the case for our values.
The facts are on our side – we have to ensure the population is too.
Professor Anton Muscatelli is the Principal of the University of Glasgow and one of the UK's top economists
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