'It's the economy, glupi'*
(Filed: 23/01/2005)
When the Government opened the 'floodgates' to immigrants from the 10 new EU countries last year, it was grimly predicted that they would be a grave threat to Britain. Yet, as Ross Clark reports, the effect has been anything but harmful
(*Polish for 'stupid')
Flights from Eastern Europe to Britain were reported to be fully booked on May 1 last year when 10 new nations were admitted to the European Union, eight of them from the former Soviet bloc. The reason was that Britain alone, among existing EU members, had embarked on a bold policy: to grant citizens of the new EU nations the right to work here from the first day of membership. Most countries will not allow migrant workers to work without permits until 2011.
Among the first to arrive from Latvia was 22-year-old Inese Ganovsai, who spoke barely any English. After two months in Scotland working as a waitress and housekeeper, she moved to London, where she is working as a babysitter. "I charge £5 an hour for babysitting," she says. "In a good week, after I have paid the rent on the flat I share in Paddington with my boyfriend, Alexander, I have enough left to send £40 home to my mother."
Last May, migrant workers such as Inese were widely regarded as a grave threat to Britain. Tabloids attacked the Government for what they regarded as a politically correct gesture and a failure to defend national interests. In a series of front-page stories, under headlines such as "Migrants Cover-Up" and "Don't Say We Didn't Warn You", the Daily Express grimly predicted that 54,000 Eastern Europeans would descend on Britain within a year, taking the jobs of British workers and bleeding the country dry.
In the event, the numbers have exceeded the worst imaginings of the Daily Express. Between May and September, according to the Home Office, 91,000 Eastern Europeans signed up for the Workers' Registration Scheme, set up to record the numbers of Eastern Europeans working in Britain. Even if, as the Home Office estimates, 45 per cent of these workers were already in Britain before May 1 and were merely regularising their previously illegal status, the numbers greatly exceed the Home Office's original estimate that 13,000 would take advantage of the policy.
The debate on immigration from Eastern Europe is again thrown into sharp relief today with Michael Howard's pledge to limit the numbers coming to Britain, the first stage in a drive to put the issue at the heart of the coming election campaign. Yet the effect of Eastern European migrant workers on Britain has been anything but harmful. The latest beneficiaries are dental patients in Norfolk: the Great Yarmouth Teaching Primary Care Trust is recruiting 15 Polish dentists to relieve a shortage that has left patients waiting three months for an appointment.
While critics raise the spectre of foreigners taking Britons' jobs, the fact is that the economy has been hugely transformed since the days of mass unemployment in the 1970s and early 1980s. The problem now is a shortage of workers to fill vacancies in an economy that has been expanding healthily for 12 years. To put the 91,000 migrant workers who signed on for the Workers' Registration Scheme between May and September 2004 into perspective, the British economy has created 99,000 new jobs in the past quarter alone.
On Wednesday, the Office of National Statistics will announce the 50th successive quarter of economic growth since the end of the last recession in 1992. That economic growth continues without erupting into an inflationary boom, as has happened during other periods of growth in recent decades, is in part thanks to the ease with which British employers can now access Eastern European labour markets. While few homeowners will appreciate the link between their Latvian babysitter and the rate they pay on their mortgage, without migrant workers the cost of employing people in Britain would have soared during the past year.
Last spring, when the Bank of England raised interest rates three times, wage inflation was a pressing concern. Speaking at the Lord Mayor's Banquet in June, the bank's governor, Mervyn King, warned: "The labour market has tightened further as employment has risen at well above the rate implied by the growth of the labour force. Cost pressures are increasing and pay growth has picked up."
At the time, wage inflation was expected to exceed 4.5 per cent: the level the Bank believes would lead to unhealthy inflation in consumer prices. Yet last week's figures, published by the Office for National Statistics, show that in November it was below the danger threshold, at 4.4 per cent. The subdued inflation level, the Bank believes, is down to one thing: the availability of Eastern European labour. The result has been a boon to the economy. Last summer, economists predicted interest rates of 5.5 per cent by early this year. Yet, after raising rates to 4.75 per cent in August, the Bank has kept them there, and even discussed reducing them.
One who has felt the effect of Eastern European migrant workers on the price of labour is Piotr Krzysztofic, 31, a Polish builder who came to Britain as an asylum-seeker in 1996. After six years working as a contractor, he has now set up his own company in Stamford Hill, north London. "When I first came here there were 17 Polish builders working in and around Stamford Hill. Now there are maybe 2,000. I have always had to be a little bit cheaper than English builders in order to get work, but since last May things have been different. There are a lot more Poles and they are pushing the prices down. Last month I was asked to give a quote to redecorate a one-bedroom flat in a poor condition. I quoted £1,200, but the owner told me another Polish worker had quoted £500. A lot of Eastern European workers are so desperate that if they earn £100 a week they are happy."
Mr Krzysztofic is not heading home for want of work just yet. Despite competition from his countrymen, he has expanded his business over the past year. The construction industry has been so buoyant that the influx of migrant workers has only begun to address the skills shortages: 600,000 construction workers left the industry during the last recession and have never been fully replaced. The Berkeley Group is now so reliant on Eastern European labour that it employs Polish translators.
It is a similar story in the childcare industry. It isn't easy finding a nanny in London, but without Eastern European migrants it would be more difficult still. "There is a massive labour shortage," says Oliver Black, a director of Tinies, an agency that provides nursery nurses and nannies. "If the Government is going to meet the objectives in its childcare policies there will be a need for another 200,000 nursery nurses and nannies. But it is a poorly paid industry and it is hard to recruit British workers. At present, 50 of our 5,000 workers are from Eastern Europe, but we are hoping to recruit 500 more. We are establishing links with nanny agencies in Poland."
It isn't just service industries in London that have been eagerly employing Eastern Europeans. Last May, the First Group employed 32 drivers from Krakow, having failed to find enough British drivers to keep its buses running in Bristol and Bath. "At the time we were recruiting there were 1,500 job adverts in the local paper every week but there were only 500 people looking for work," says Chris Perry, managing director of the company's services in Bath and Bristol.
Whitbread, which has the franchise to run 53 Marriott Hotels in Britain, hired 30 Czech chefs last November and is looking to hire 15 more. "There is a large pool of wonderfully talented, ambitious and strong-valued people over there," says the company's talent manager Chris Dunn. "What is more, hygiene standards in the Czech Republic are actually higher than they are here. If we couldn't hire from Eastern Europe we would have to rely on agency staff. Costs would be higher and the quality would be lower."
Besides the positive effect on the British economy, the migrant workers are helping to sustain the economies in their home countries. "I send my family 50 per cent of my earnings," says Chris Lewandowski, one of First's Polish bus drivers. "It has much improved my family's living standards". Not only that: every Polish migrant worker who comes to Britain means one fewer person claiming the dole in Poland, where unemployment is 22 per cent.
The success of the Government's policy to admit Eastern European migrant workers from the day their countries joined the EU has wrong-footed the Conservatives, who commissioned a report last year into the consequences of mass immigration by their former immigration spokesmen, Tim Kirkhope. By the time Mr Kirkhope produced his report in September, calling for an end to "low-skilled mass immigration" in favour of admitting only educated foreigners, it was clear that low-skilled migrant workers are what Britain needs. The party rapidly distanced itself from the report.
Yet migration from Eastern Europe is the one policy triumph you won't be hearing ministers boasting about much during the coming general election campaign, given the political difficulties in backing immigration. That the public understands little about the role of migrant workers in the economy is clear from recent opinion polls, which have continued to detect a collective sense of fear over immigration, even when they can see migrant workers in action keeping their local buses in action and relieving their toothache.
In a YouGov poll in December, 75 per cent of respondents said there is too much immigration, while an earlier survey found a majority in favour of limiting the number of immigrants to Britain to an arbitrary level of 10,000 a year.
The reasons cited for opposing migrant workers tend to revolve around fears of job losses among native Britons, worries that foreign workers will be a burden on the welfare state, and a fear of overcrowding, especially in London and the South East. There has proven to be little justification to these fears. From May to September last year there were just 500 applications from Eastern European migrant workers for out-of-work benefits, and of these 97 per cent were rejected immediately. Only 300 applied for assistance with housing. By contrast, calculates the Home Office, Eastern European migrant workers have contributed £120 million in tax to the Exchequer. While migrant workers are eligible for NHS care, evidence suggests that the NHS needs migrant workers more than the other way around: in the past year, the NHS has had to hire 13,000 nurses from abroad.
Experience suggests that migrant workers are just that: they come here to work and nothing more. Just 5 per cent of the Eastern Europeans who arrived last summer came with dependants. The rest left their families at home. The likelihood is that, if the work dries up, the migrant workers will quickly return home. During the last recession in 1991-92, the number of foreign workers in London fell from 1.1 million to 740,000 within a year.
There are tentative signs that the opportunities for Eastern European migrant workers may already be lessening. While retaining the Polish drivers it has already recruited, First says it has more applications from British job-seekers than it can offer jobs. Inese Ganovsai, too, has noticed a change in the jobs market since she came to Britain. "I am looking for a job in a hair salon, but I can't find one," she says. "When I came to Britain it was easy to find a job. Now it is much harder."
