Why Britain needs migrants

In a compelling article, Philippe Legrain (author of Immigrants: Your Country Needs Them) explains why it's time to explode the tabloid myths and welcome the huge contribution that migrants make to the national economy. (Left, an atypical immigrant: Diya Ramachandran, ex-Mumbai, now account manager, J Walter Thompson London)

by Philippe Legrain
Last Updated: 09 Oct 2013

Who would have thought that a poor immigrant from India would transform Britain's eating habits? Certainly not Gulam Noon, who arrived in London from Mumbai in the early 1970s with barely a penny. Yet he went on to found Noon Products, the country's leading supplier of Indian ready meals. If you have eaten a supermarket curry, chances are it was made by Noon Products, which supplies Sainsbury's, Morrison's, Waitrose and Somerfield, as well as Birds Eye. The company turned over £105 million in 2005 and employs 900 people, while Sir Gulam, as he is now, is worth £65 million. ‘We've changed the palates of the nation,' he boasts, ‘chicken tikka masala is now the national dish.'

Undeniably, Noon has been a boon for Britain - yet under the Government's proposed new immigration system, he would never have been allowed in, because he does not have a university degree and he wasn't from the EU.

Immigration is perhaps the most contentious issue in Britain today, yet the debate about it is often misconceived. Many believe that the UK should admit only highly skilled immigrants, such as doctors, ignoring that even in an economy where skills are at a premium, drudgery has not been eliminated. Opponents of immigration make outlandish claims: that foreigners steal jobs, strain public services, threaten our way of life. But on the contrary, immigrants do jobs that Britons can't or won't do. They allow us to consume different or cheaper goods and services - Vietnamese cuisine, more affordable childcare - and their complementary skills make native workers more productive: Filipino nurses allow British doctors to provide more patients with better care. Perhaps most importantly, they add diversity and dynamism, stimulating innovation, enterprise and productivity, thus raising economic growth and living standards generally.

Immigration has increased, but less than scaremongering headlines suggest. Although some 600,000 eastern Europeans have come to work here since Poland and seven other ex-communist countries joined the EU in May 2004, most have already left again and many are, in effect, international commuters who spend only part of the year here: according to the Office of National Statistics, the number of eastern Europeans staying in Britain for more than 12 months has risen by only 110,000.

Overall, 565,000 people arrived in the UK in 2005 intending to stay for at least a year, while 380,000 people left: a net inflow of 185,000. Significant, certainly, but an increase in Britain's population of only 0.31%. Fewer than one in 10 people residing permanently here were born abroad. Britain is not swamped with immigrants - and rising affluence combined with decades of underinvestment, rather than immigrants, are largely responsible for increasing congestion on the roads, trains and elsewhere.

Increasing international migration is part-and-parcel of globalisation: the combination of distance-shrinking technology and market-opening government policy that is bringing the world closer together. This is most obvious for skilled professionals, who increasingly operate in a global labour market. Sometimes, they cluster together in one place to serve the world market: Goldman Sachs employs people from around the world in its London offices to trade in global financial markets; Arsenal scours the world for the best footballers to challenge Chelsea on television screens everywhere. Meanwhile, multinational companies deploy managers around the world, and many businesspeople spend their year jetting from country to country. Students move to consume services rather than produce them. And migration in turn creates cross-border trade: Asian entrepreneurs who went to study in America have set up companies in Silicon Valley that source supplies in Asia; others return home and set up companies that do business with the US.

But although governments accept, or even encourage, the creation of a global labour market for skilled professionals, they make it illegal for less skilled people from developing countries who do not have family in Europe to come and work in the EU. Yet the economic forces driving poor people to cross the world to work are similar to those that lure foreign bankers to London, scatter Shell executives around the world or cause us to import computers from China. In effect, Congolese cleaners, Brazil-ian barmaids and Thai nannies are service-providers who ply their trade abroad, just as American bankers do. And just as cross-border trade in goods and services is mutually beneficial, so too is the movement across borders of people who produce goods and services.

We are forever being told that we live in a knowledge-based economy, yet British businesses still rely on low-skilled workers too. Every hotel requires not just managers and marketing people, but receptionists, chambermaids and waiters too. ‘Immigrants make a massive contribution,' says Richard Lyon, general manager of the Marriott Hotel in London's Chancery Court. ‘We have 300 full-time staff and 52 different nationalities represented. Less than a quarter of our employees are from Britain. Most are from Brazil or eastern Europe,' he says. ‘If I had to rely purely on a British workforce I'd be in serious trouble.'

Every company depends on a host of low-skilled workers: roadsweepers, couriers, cab drivers. Many low-skilled services cannot be mechanised or imported, and demand for them is rising as we get older and richer. Old people cannot be cared for by a robot or remotely from abroad, and people increasingly pay others to do the arduous tasks - such as home decoration - that they once did themselves, thus freeing up more time for more productive work or more enjoyable leisure. The Institute for Employment Research forecasts that low-skilled jobs will account for more than a quarter of the workforce in 2012; the fastest-growing sector of employment is old-age care.

But British workers are increasingly well-qualified - whereas 28% of working-age women over 50 have no qualifications, only 7% of men and 8% of women in their twenties don't - and aspire to better things. Even those with no qualifications do not want to do certain dirty, difficult and dangerous jobs. Yet someone has to clean toilets, collect rubbish and do casual labour. If immigrants do not, Britons will want to be paid over the odds to induce them to do so - making them miserable, pushing up prices, straining public finances and lowering living standards.

Skilled immigrants are not only needed to fill temporary shortages. Foreigners may also have different skills - or superior ones. Take catering. If French chefs are particularly prized, Britain might want to import some, along with Chinese cooks - if Britons also like Cantonese cuisine. A bubbling pot of immigrants may also inspire innovative fusion cooking. And immigrants' in-depth knowledge of their home country is a big bonus for British exporters.

Talented foreigners boost innovation. Consider the roll call of US technology giants founded by immigrant entrepreneurs: Intel, Yahoo!, Google, eBay, Sun Microsystems. Nearly half of America's venture-backed start-ups have immigrant founders, according to the National Venture Capital Association.

Says Jerry Yang, the Taiwanese-born co-founder of Yahoo!: ‘Yahoo! would not be an American company today if the US had not welcomed my family and me almost 30 years ago. We must do all that we can to ensure that the door is open for the next generation of top entrepreneurs, engineers and scientists from around the world to come to the US and thrive.'

Britain would do well to take heed. Highly skilled foreigners are needed to sustain industrial clusters, such as the City of London, which thrive on a mix of talent from around the globe. If London-based companies had to rely solely on a British workforce, they would lose out to those that could draw on a wider pool of talent. ‘Immigrants are part of the fabric of London,' says Jo Valentine, chief executive of London First, which represents the capital's businesses. ‘The City needs to be permanently challenged and reinventing itself.' As the number of gradu­ates in China and India rises, it is important for London to draw on their talents too.

Britain's capital has become a world city: three in 10 Londoners were born abroad. This is a cause and a consequence of its astonishing success. People are drawn to cities such as London because they are exciting, cosmopolitan places, with a huge variety of individuals, ethnic restaurants and cultural experiences.

As well as contributing directly to a city's prosperity, immigrants may help it attract talented people. In The Rise of the Creative Class (Perseus Books), Richard Florida documents how ‘regional economic growth is powered by creative people, who prefer places that are diverse, tolerant and open to new ideas'.

Diversity also boosts innovation. While innovation can come from brilliant individuals - many of whom happen to be immigrants - it more often comes from groups of talented people sparking off each other. Ten heads who think alike may be no better than one, but if they have different perspectives they can solve problems faster and better; immigrants bring something extra to the mix. The implication is clear: as China catches up, Britain must open up to foreigners if it wants to stay ahead.

The UK's recent experiment with an open-door policy for east European workers has been a huge success. The open door has proved to be a revolving one - and far from bringing Britain to its knees, these temporary migrants fill vital gaps in the labour needs of companies. They boost public finances, since they are mostly young and single, pay taxes and cannot claim benefits. They make the economy more flex­ible, because they are more willing to move to where the jobs are. They have helped sustain Britain's boom without sparking inflation or raising unemployment.

Unfortunately, the Government has now bowed to tabloid hysteria by imposing restrictions on workers from Bulgaria and Romania, which acceeded to the EU this year. Such curbs will serve largely to divert them into illegal employment. Home secretary John Reid therefore proposes to fine both immigrants working illegally and the companies that hire them, with the onus on employers to enforce the rules. But how? How can they stop immigrants using forged papers? As the US ex- perience shows, businesses do not have the resources or skills to police immigration law effectively, but requiring them to do so poses a big financial and administrative burden.

For migrants from outside the EU, the Government plans to introduce an Australian-style points system. A top tier of highly skilled workers, such as accountants, will be allowed to come to Britain without a job offer, while a second tier of skilled workers, such as teachers, will be admitted only if they have a job offer in a shortage area, as defined by a new Migration Advisory Council. This fiendishly complicated new scheme will be administered by the Immigration and Nationality Directorate, which Reid has described as ‘not fit for purpose'.

The Government's proposals are harmful and unworkable. Closing the door to low-skilled workers will increase incentives to migrate illegally. Since bureaucrats cannot correctly judge what skills British companies need, let alone how their needs will evolve, the Government's employment planning is more likely to exacerbate shortages than tackle them. It should stop trying to micro-manage migration in a way reminiscent of the Soviet Union's failed attempts to plan its labour market.

If it is politically unacceptable for Britain's borders to be open, they should at least be better regulated. Immigration policy should not discriminate arbitrarily between types of worker, and inflows should be regulated through taxes rather than quotas. The Government could, for instance, impose a payroll tax on foreign workers. This would be transparent and flexible, raise revenue for retraining UK workers, and give companies an incentive to hire or train them. It would undercut people smugglers and slash illegal immigration: who would risk death trying to get to Britain illegally - or risk deportation by overstaying their visa - if they could work legally by paying an extra tax?

Over time, if people became more relaxed about immigration, the tax could be gradually lowered - or raised again, if immigration provoked unexpected problems. The Government should think again. Immigrants: Your Country Needs Them by Philippe Legrain is published by Little, Brown at £12.99

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