The Immigrant Reform: Job Creation and Employment for Immigrants

“Immigration is the international movement of people into a destination country of which they are not natives or where they do not possess citizenship in order to settle or reside there, especially as permanent residents or naturalised citizens, or to take-up employment as a migrant worker.” By exploring the positives and negatives of immigration this essay will enquire how immigration contributes the economy. In this case, negative refers to the decrease in economic growth due to migration, whereas positive refers to the employment of migrants, contributing to an increase in the economic growth. Economic growth is an increase in the capacity of an economy to produce goods and services, compared from one period of time to another. On a global scale, the consequences for the economy due to immigration includes things such as them claiming welfare benefits. Conversely, immigrants show an increase in the labour force; they are more likely to be of working age. Some would argue that immigration benefits the consumers as immigrants tend to take on the lower paid jobs that many citizens are not interested in. However, countless immigrants face language barriers and therefore are less likely to be accepted into a job, leading them to depend on government paid housing and money, especially if they are classed as illegal immigrants.

It is argued that immigration contributes to the growth of the economy through paying more in taxes than they receive in benefits and other state assistance, since 2000 immigrants were estimated to have contributed £1.34 for every £1 the government took out in the EU alone. Furthermore, outside of the EU, immigrants contribute £1.02 for every £1 received, therefore these contributions increase economic profits as many immigrants are giving more than they are receiving. As the majority of immigrants are of the working-age, they are likely to be putting in more than they are receiving through the hard labour of low-paid work. The net fiscal impact of immigration is the difference between taxes and other contributions immigrants make to public finances, and the cost of the benefits and public services they receive (there is no “correct” estimate of this). Studies suggests the fiscal impact in the UK is relatively small, with it contributing to 1% of the countries Gross Domestic Products. Depending on how young, skilled and high-paid work the immigrants contribute to will mean that they produce a positive fiscal impact, whereas unemployed immigrants or those working in low-paid jobs produce the opposite. Internationally, studies have been carried out resulting in the findings of the net fiscal being better in the UK than many other countries. However, the positive fiscal impact of immigration was shown to be better in 10 countries than that of the UK, including; Switzerland, Belgium, Portugal and Spain. In 2008, the University of Cambridge carried out a study which showed that the immigrant population contribution in 2003-4 would have been about +0.6 billion if the UK had been balancing their budget.

On the contrary, if immigrants have family still living in their original country, they are likely to send money over to them in the hope of giving them a better quality of life. Although this positively increases the flow of foreign currencies and their economy, it affects the host county negatively. In America alone, according to the country’s central bank, $27 billion in remittances was sent to Mexico, however Mexican president Enrique Pena Nieto quoted “remittances are an invaluable contribution to national development and indispensable for millions of Mexican families.” A remittance is a transfer of money by a foreign worker to an individual in his or her home country. Money sent home by immigrants competes with international aid as one of the largest financial inflows to developing countries. On a global scale, remittances have grown from $296 billion in 2007 to $445 billion in 2016, therefore Mexico is not the only country relying on remittances, as countries such as Asia and Latin America also receive money from the U.S. [immigrants around the world, Marketplace] Money from wealthier European countries is usually sent to East and Central Europe and to Africa, which doesn’t come as a shock due to the average wage of wealthier countries will be able to accommodate for this. Overall, the impact of remittances on the growth of the economy for host countries is drastically negative due to the mass amount of money leaving their economy annually.

In contrast, many are of the opinion that immigration is a burden on the growth of the economy due to the unemployment of immigrants, outside and inside of the EU there are 5,309,580 number of claimants receiving benefits (by Telegraph, how much do immigrants claim? article). However, this article does state that this figure only includes people who were non-UK nationals at the time, but they could now be classified as a British citizen and it also excludes illegal immigrants. The main reason presented for this substantial figure incorporates immigrants in low-paid work ‘settling down’ and having children, which then leads to them being unable to afford the expenses of childcare and in the worst cases, necessities. Due to this, many immigrants are unwillingly forced to work a limited number of hours for low-paid labour. Welfare is undoubtedly an important factor when it comes to jobs, as the withdrawal of the benefits leaves individuals facing significant marginal effective tax rates, reducing the incentive to take the work. This becomes even more of a problem when the system is geared towards people finding full-time work (which is what the majority of immigrants cannot do due to childcare costs), making coming off and on benefits more difficult. Due to this the governments have suggested that welfare reform will encourage more national citizens to take up work on places such as farms, where immigrants are stereotyped to work in this sector. Numerous farmers state that immigrants from developing countries such as; Romania and Bulgaria are more flexible, more hardworking and more productive, because of the consequences of the wage difference between their developing country and the native country. Ababi Mircea, a Romanian worker who immigrated to the UK gave evidence of the wage difference when he expressed that ‘the money I make here in one week I make in one month in Romania’ (presented by the BBC). Because of this, it is no wonder that immigrants do low-paid labour as to them it is worth the work they put in [issues online website].

Furthermore, at the end of 2010 2.1 million additional jobs were created, with 53% (1.1 million) of them being taken by non-UK born workers. For some immigrants, this would have been beneficial as this would have allowed them to make an earning and provide for their families, while also being able to contribute to taxes improving the economy. Extensive academic evidence shows that immigration does not harm native employment or wages, although there can be short-term negative effects if there is a large inflow of immigrants to a small region, if immigrants are close substitutes for native workers, or if the destination economy is experiencing a downturn. A native worker means that two individuals do not compete for the same type of job, for instance, immigrants may be less productive or educated than some share of the native workers, making them fit particularly at some types of labour intensive jobs. Realising the benefits of immigration hinges on how well new arrivals are integrated into their destination country’s labour market and into society. Today immigrants tend to earn 20 to 30 percent less than native-born workers. But if countries narrow that wage gap to just 5 to 10 percent by integrating immigrants more effectively across various aspects of education, housing, health, and community engagement, they could generate an additional boost of $800 billion to $1 trillion to worldwide economic output annually. This is a relatively conservative goal, but it can nevertheless produce broader positive effects, including lower poverty rates and higher overall productivity in destination economies [the guardian, jobs and wages].