It is a standard economic assumption that immigration doesn’t lower wages. This is because while immigrants do bring their labour with them they also bring their desires. So, demand is added to the economy as well as supply. This has the useful attribute for an economic observation of being true.
However, this is not true of all forms of importing foreign labour. The trick is being able to differentiate:
Brexit is about to give us a problem with this, though. Karl Marx was right: wages won’t rise when there’s spare labour available, his “reserve army” of the unemployed. The capitalist doesn’t have to increase pay to gain more workers if there’s a squad of the starving eager to labour for a crust. But if there are no unemployed, labour must be tempted away from other employers, and one’s own workers have to be pampered so they do not leave. When capitalists compete for the labour they profit from, wages rise.
Britain’s reserve army of workers now resides in Wroclaw, Vilnius, Brno, the cities of eastern Europe. The Polish plumbers of lore did flood in and when the work dried up they ebbed away again. The net effect of Brexit will be that British wages rise as the labour force shrinks and employers have to compete for the sweat of hand and brow.
If people only arrive when there is work and then leave when there isn’t then we can have full employment here but no upward pressure on wages. Because there is that reserve army, elsewhere, that can still be drawn upon.
That article in The Times is from two years ago. Today:
Then there is Brexit, which makes it harder for EU workers to make the move.
Ian Stewart, chief economist at Deloitte, says: “In the last 20 years, employers have got used to operating in a labour market where there is a ready supply of overseas workers, and that has changed as a result of Brexit.”
Either way, the shortage of labour is having an obvious effect: employers have to pay more.
Shouting “I told you so” is most unbecoming but, you know, I did tell you so.
One effect of Brexit is going to be rising wages at the low end of the employment spectrum. And the problem with this is?