How was the line? Foreigners steal jobs?
In before the lump of labor folks wake up, low immigration can't simutainously explain why inflation is high (due to high wages) and also not cause lower wages when you increase it.
Edit: made more clear, added context
- wage rises are suppressed
- labour is used instead of capital investment
Labour should always be in short supply and 'reassuringly expensive'. That way there is an incentive to replace it with machinery - which is where productivity and an improved standard of living comes from.
If a firm wants to use 'foreigners' then they should build the factory where the foreigners live and repatriate the profits. That way social capital is maintained.
We shouldn't judge economic success by how far away from your mum you have to live to get a job.
But for most other groups, it may lead to a reduction in real salaries, due to price inflation. Fewer carpenters makes housing more expensive, and fewer tech workers can make many businesses (especially those outside core tech that still depend on such workers) more expensive to run.
And for workers in global hubs, one could argue that the concentration in one geographic location (including immigration) has actually lead to higher demand due to the increase in vibrancy and rate of innovation, leading to an increase in salaries.
Just speaking generally, labour tends to be a market in which there is massive govt intervention (this is particularly the case in the UK). The normal rules of economics do not hold.
One very big factor in the UK is universal credit. You can Google this for yourself but the relevance here is that it acts as a wage subsidy for employers, this gets people into work but there is very little incentive to work more hours (despite the govt being able to remove universal credit from people who refuse to work more).
The UK has got read of the persistently high unemployment under left-wing govts of the 2000s but has failed to improve productivity. We employ more people but they are barely producing more on aggregate. Immigration, more women working (universal credit generally supports more women more), it is all coalescing, nothing is working properly.
> We employ more people but they are barely producing more on aggregate
Yes, and this is a management/underinvestment problem. Either better working practices need to be introduced or capital investment to substitute for labour.
No, it isn't. Because labour is not a substitute for a machine, you can get rid of a worker for a machine but a machine doesn't vote, can't riot, etc. You still need to feed and clothe a human. The UK has, literally, millions of people who need work and will be unable to support themselves with the economy at the current size. I don't know what the solution is, but we won't be able to grow our way out of this (we tried in the early 2010s, it didn't work, we tried in the 2000s, it didn't work). One issue is that we spend massive amounts of money on subsidies but don't invest in skills (a lot of the problem today is with older people...so improving education won't work there).
The scale of the underemployment is probably ~5m people...in a working population of 32m...it is far bigger than people think AND we are bringing 1m people a year into the economy whose fertility is significantly higher...it is a very big problem.
Yes, and this is a demonstration that benefit cuts to starve people into working are not going to work.
> main issue with UC is that it is too generous
People at the foodbank are not going to agree with this.
> scale of the underemployment is probably ~5m people...in a working population of 32m
[citation needed]
> don't invest in skills
This I can agree on.
> The UK has, literally, millions of people who need work
The headline is "labour shortage"? There's no evidence of a vast hidden army of the unemployed, this isn't the 1980s.
Ask any person whether they deserve to earn more? Your point is completely devoid of any attempt to reason objectively. We have a minimum income system already (UC was designed to be a taper like NIT or UBI). People are quite happy to accept free food if it is being offered, but look at how much we spend on welfare...it is staggering (if you look at stats on food bank usage, you will also see that usage is highest amongst groups i.e. single people who don't receive the really valuable UC benefits i.e. CTCs...food bank usage is generally terribly uninformative though because if you give free food, people will take it).
Yes there is evidence of a hidden army of unemployed, that is why I mentioned repeatedly that people often don't understand.
If you are familiar with DWP stats, you would know that unemployment benefit is now being phased out totally. But some people on UC who do not work are not recorded as unemployed (this numbers 3.9m). And there is evidence that a lot of the people on ESA are claiming because they are also unable to work (at least, 500k iirc). And, of course, the point of UC was to get people back into work...but it has led to people earning £15k/year working min wage for 10 hours/week, that gap is money that would have been unemployment twenty years ago but isn't now. So we have swapped paying unemployment for a wage subsidy...again, you don't appear to understand this, the point was: we will pay people to work rather than sit on the dole (through offering a subsidy that lifts low wage), this should have led to more output...it didn't.
Btw, this is all obvious without having detailed knowledge of DWP statistics...you are saying how desperately poor everyone is...unemployment is the lowest it has been for five decades, how does that make sense to you? Wage growth is 4% below inflation, how does that make sense to you? Just saying lol, increase productivity...okay, that is what UC was for...this has been tried before, the problem is that there far too many people in the UK and not enough work (it is zero-sum because population growth is so far in excess of productivity growth).
> And, of course, the point of UC was to get people back into work
You cannot get people back into work if there is not enough work!
> zero-sum because population growth is so far in excess of productivity growth
"Productivity" is usually computed as a per-person number.
1970s style "stagflation". That term is coming back.
We can see real time in the UK the effect that mass immigration has on wages: it keeps them way lower than the market rate otherwise.
Btw, something interesting about the UK is that there has been zero growth in the natural population for (I believe) almost three decades. All the growth has been immigration and natural growth from immigrants (who often have significantly higher fertility).
Personally, I don't know how the UK puts up with it. My colleagues over there make 1/3 of what I make, have 1/3 the size house, and pay 5x as much for it.
The issues that the UK are similar to a lot of developed countries just worse, and made worse by unusually bad govt interventions over decades. The frustrating thing about the UK is that a lot of the hard stuff is done well but it is just thrown away by nonsense policy in other areas (i.e. we have a great tertiary education system, and absolutely horrible primary/secondary so relatively few Brits can actually get value of more education...it is just nonsensical)
If planning/housing was solved conclusively, it would resolve 75% of the issues impacting consumers.
You see this in London and some cities outside (Glasgow is one) where there are primary schools with one or two white students (not making a racial point here, I making a point about immigration, Scotland is 99% white so these people have to be immigrants) in a class of 30 students.
This is multi-faceted. The rise in health problems is related to the collapse in the NHS. Early retirement was related to the Covid stimmy (and you are seeing people come back). There is a massive issue with training, with how companies hire...but it is also the case that high levels of immigration aren't helping (particularly at the low-skill end, the NLW is £10/hour...how are you supposed to compete with someone who will work for £3/hour cash-in-hand because they have govt-subsidized accommodation and don't pay tax).
I don't see how this gets fixed. If you talk to most Brits they will tell you that H2/21 was the best labour market for workers for years, there was unprecedented job switching...that happened to follow a period when immigration was low, ignoring this kind of stuff because you think immigration is always good (it isn't for the countries that are left with no workers either) is committing the same error that you accuse others of.