Martin Ruhs Centre on Migration, Policy and Society (COMPAS) Oxford University

1. Future of Work Termly Seminar 25th November 2010 Who needs migrant workers? Labour shortages, immigration and public policy Martin Ruhs Centre on Migration, Policy and Society (COMPAS) Oxford University

3. Britain’s growing reliance on migrant workers:What drives it? Is it inevitable?

4. Migrant shares vary across occupations and over time Source : Labour Force Survey, MAC Nov 2010

5. Intensification differentiated across sectors and occupations

6. Intensification differentiated across sectors and occupations

7. What explains (increasing) share of migrants? No easy answers Source : Aldin et al, 2010 (chapter 3)

8. Key questions: • What are the determinants and nature of employer demand for migrant workers in specific sectors and occupations? • Are migrant workers needed to “fill labour and skills shortages” and “to do the jobs that local workers cannot or will not do”? • The problem with shortages • The problem with skills • Why migrants? Employer demand for migrant labour • Alternatives to immigration • Choice or inevitability?

10. Continue here – 23 Novemployer quotes in response to cap firms were considering moving jobs abroad because they could not recruit the staff they needed BBC, 21.09.10 cap threatens the economic recovery and Britain’s ability to attract foreign investment A cap on migrant workers will hurt London’s economy PwC warned that businesses were "struggling to operate" Telegraph, 24.11.10 immigrants made a "substantial net contribution to the UK fiscal system" Independent, 24.7.09 immigration cap on non-EU workers will do nothing but create skills shortages for important industries in the UK Telegraph, 24.11.10 Farm migrants 'vital' in east England

11. The problem with “shortages“ “[If] the US develops a great labor shortage in the future, I do not see why the government should intervene to prevent labor costs from rising. If firms demand more labor than workers supply due to a reduced growth of supply, should not a country that relies extensively on unfettered markets allow those markets to raise the price of labor, just as it allowed them to reduce the pay of many in recent decades?” (Freeman 2006)

12. Identifying shortages using labour market data • Common measures • Change in wages, employment, unemployment, etc. • Vacancy rates, hard-to-fill vacancies, SSVs etc. • US Bureau of Labour Statistics (1999) • Employment growth at least 50% faster than average • Wage increases at least 30 percent faster than average • Unemployment rate at least 30% lower than average • UK’s Migration Advisory Committee (MAC) • 12 “top-down” indicators

13. MAC “top-down” indicators of shortages of pharmacists

14. The problem with “skills” • Conceptually and empirically ambiguous • Credentialised vs non-credentialised; experience • “Hard skills” vs “softs skills” • Demand for employees with specific personal characteristics and “attitudes” (good “work ethic”) • Demand for workers who are “compliant” and “cooperative”

15. Skills needed ? National Employer Skills Survey 2007

16. Why migrants?Employer demand for migrant workers • Labour demand critically depends on supply • Available pool of labour differentiated by e.g. • Gender, race, nationality, immigration status, empl. status • Frames of reference, motivations, constraints • Highly diverse and segmented labour supply • Shaped by public policy • Employers can become very “picky” • Some employers develop preference for migrants

18. How and whom do employers recruit? • Suitability of workers often determined categorically • Gender, age, race, nationality, etc. • Employers have “cognitive map” and “variable hiring queue” (Waldinger and Lichter 2003) • “country surfing” for most suitable workforce (e.g. Preibisch and Binford 2007) • Sources: prejudice; limited/incomplete information

19. Why do some employers prefer migrants? • Expectations about wages and employment conditions • Perceived/actual productivity and flexibility (“work ethic”?) • Over-qualification (e.g. A8 in UK) • Country-specific skills (e.g. Ethnic restaurants) • Immigration status (e.g. agriculture) • networks and agencies; migrants as “self-regulating and self-sustaining” labour supply (Rodriguez 2004) ,  Path dependence: migrant workers for migrant jobs ?

20. Alternatives to immigration • Alternatives • Increase wages, improve working conditions; training • make production process less labour intensive • relocate to countries where labour costs are lower; • switch to production (provision) of less labour-intensive commodities and services; • How do employers decide? • Relative cost matters; path dependence • … but employers do not make choices in a vacuum

21. “System effects”: how public policiescreate demand for migrant labour • e.g. construction • Fragmented industry; low levels of labour market regulation; temporary, project-based labour; casualised employment; no comprehensive vocational education and training system • e.g. social care • Publically funded and privately provided • Council budgets have kept wages low • Demand for low-wage flexible workers

22. Britain’s growing reliance on migrant labour:choice or inevitability? • Not simply “lax immigration controls”, “exploitative employers”, “lazy Britons won’t do the work”, or “migrants are needed for the economic recovery” • Demand for migrant labour arises from broad range of public policies and institutions that go beyond immigration policy • Is the UK willing – and able? – to make changes in wider public policy in exchange for fewer migrant workers?

23. Centre on Migration, Policy and Society University of Oxford 58 Banbury Road Oxford OX2 6QS

24. Source: ONS

25. Source: ONS