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Eighty-five per cent of new jobs go to British workers

John Rentoul

Fraser Nelson 53829s 235x300 Eighty five per cent of new jobs go to British workersThere is an important post at Coffee House by Jonathan Portes, an economist who is Director of the National Institute of Economic and Social Research, which thoroughly debunks the fallacy implied by the Statistic of the Week, that 90 per cent of the net increase in employment since the 2010 election was accounted for by foreigners.

The problem is that people are likely to think that this means that nearly all new jobs go to immigrants, which they do not, as Portes carefully explains:

In fact about 15 per cent of new hires in 2010 were immigrants. This is somewhat, but not much, higher than their share in the workforce; not surprising, because immigrants are younger and more likely to be new entrants to the workforce, so switch jobs more. So 85 per cent of “new jobs” went to British-born workers …

So the interpretation we see in some parts of the press — that somehow native Brits aren’t getting a look in, because employers prefer to hire migrants — is just wrong.

The Statistic of the Week was obtained by Fraser Nelson, the editor of The Spectator (above), from the Office for National Statistics. But Portes points out that looking at net changes is the wrong way to understand what is happening to the labour market:

Groups whose share in the labour force is increasing — for whatever reason — will inevitably constitute a disproportionate share of any net change in employment.

This is easy to see, because we can repeat it for lots of groups, other than immigrants, whose overall share of the labour force is increasing. For example, we can repeat Fraser’s calculations for people born between 1980 and 1990. Guess what — they too took all the net “new jobs” created in the last decade. In fact, by my very rough calculations, well over 200 per cent of them! Why? Because hardly any of them were in the labour force before 2001 and now the vast majority are, while older workers have left. Does that mean that employers hire only twenty-somethings, or that they’ve displaced others? Of course not.

Even sillier calculations are possible. Under Labour, all the net new jobs in the UK economy went to people who own iPods and iPhones. And under the Tories, they all went to people who own dishwashers.

Indeed, Declan Gaffney did another calculation on Left Foot Forward and found that 200 per cent of the net increase in employment was accounted for by disabled people.

Portes goes on to disagree with Nelson’s interpretation of his statistic:

He suggests, for instance, that immigrants have in some sense displaced Britons from the workforce, taking, in good economic times, jobs that could otherwise have gone to unemployed Brits … The problem is that this is just assertion; there’s no evidence. Fraser is just wrong to suggest that the good economic times did not benefit British workers, if what we mean is their chances of getting and keeping a job … Employment rates rose significantly after the early 1990s recession up until the mid-2000s …

So for your average (British-born) worker, there were indeed more jobs and less dole. And, contrary to Fraser’s assertion, this was at least in part the result of successful labour market reform. I don’t know a serious labour market economist who doesn’t think this good performance was largely the result of successive reforms, by governments of both parties, over the last thirty years.

Finally, Portes deals with the direct evidence for the implication that foreign workers have harmed the prospects of British workers:

My own research, with Sara Lemos at the University of Leicester … shows that there is absolutely no discernible correlation between the areas where new migrants from Eastern Europe settled and changes in the claimant count.

He quotes a summary of research (pdf) by Professor Jonathan Wadsworth of the LSE:

It is hard to find evidence of much displacement of UK workers or lower wages, on average … The less skilled may have experienced greater downward pressure on wages and greater competition for jobs than others, but these effects still appear to have been relatively modest.

In all, a comprehensive rebuttal. It does not mean that immigration is wholly beneficial, or that the welfare system, which helps to entrench millions in worklessness, works well. Indeed, the effect of free movement of labour in depressing wages at the bottom end is serious and too often downplayed. But it should dispel any simple link between the two.

None of which means that Fraser Nelson should be embarrassed. On the contrary, he should be congratulated for raising this important issue, and for being open and generous in offering rights of reply not just to Portes but to Matt Cavanagh, who was quicker but less complete.

A model of democratic debate.

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