Category Archives: Migration

To be less dependent on immigration, Britain must change its model of capitalism

The British economy is structurally dependent on migrant workers because it is lightly regulated and depends heavily on domestic demand, write Alexandre Afonso and Camilla Devitt. They explain why less immigration will require a greater role for the state.

The desire to lower immigration has been one of the main drivers behind the Brexit vote. Now, Theresa May’s cabinet has signaled its resolve to cut down numbers significantly, a longstanding pledge that the Conservatives had failed to make good on up to recently. With Brexit becoming a reality, however, the UK can expect lower inward migration, and numbers have been falling already.

Reduced immigration will be due to the restrictions on free movement the government will put in place and weaker economic growth (Britain has grown at a much slower rate than any other major economy in 2017). A number of EU citizens faced with uncertainties about their status will also probably leave. For the British economy, less immigration will be problematic because it has come to structurally depend on it at both ends of its labor market, mostly due to its liberal and demand-driven economic model.

In a recent article in the Socio-Economic Review, we argue that different varieties of capitalism – how the economy is organised across countries – generate different levels of demand for migrant workers. In this perspective, the UK displays features that make it especially dependent on migrant labour. The UK combines the features of a so-called Liberal Market Economy (with low employment protection, a lightly regulated labour market, and a large low-wage sector) and a consumption-led growth model (which depends heavily on domestic household consumption and population growth rather than exports). These institutional features have strengthened demand for migrant workers to compensate for mismatches and imbalances in the socio-economic regime.

First, the British economy is a demand-led economy which relies to a greater extent on domestic consumption than export-led economies such as Germany. The UK draws to a greater extent on population growth and increasing house prices. Unlike Germany, where exports of goods and services represented 46% of GDP in 2016, this share was only 28% in the UK. Another major difference is population growth: between 2006 and 2016, the British population has grown at a much higher rate than the EU average: 0.75% per year against 0.3% (0.3% for Germany). Immigration accounts for more than half of this growth, and reducing the number of people coming into the country (and consuming goods and services) will inevitably weaken what had become an important driver of growth.

This is important because apart from financial services, Britain’s export performance appears to be too weak to compensate for a smaller domestic demand. While Germany still has a strong export-oriented manufacturing base, the United Kingdom relies more heavily on services, not only high-skilled (e.g finance) but also low-skilled sectors (retail, cafés, restaurants, personal and social services) and the construction sector. These sectors depend to a larger extent on migrant workers, especially in low-paid employment. For instance, 41% of packers, bottlers, canners, and fillers in the UK are EU nationals, and so are 26% of cleaners and housekeepers.

Second, because of the liberal nature of the labour market, there is a comparatively high number of low-paying jobs that natives are reluctant to take up. About 20% of jobs in Britain are low-paid (that is, they are paid less than two-thirds of gross median earnings) while this percentage is only about 10% in France and 8% in Denmark. The turn to austerity pursued by the Conservative government may have paradoxically increased this demand for low-wage migrant workers. In social care, for example, pressure for cost containment due to austerity has led to a deterioration of working conditions, and migrant workers are often the only ones who accept the low wages and asocial working hours that these jobs entail.

In sum, the British economy offers many low-paying jobs that natives, due to higher expectations, are reluctant to accept. This mismatch is filled by migrant workers. Catering, construction and care – all domestic services sectors which had come to depend heavily on EU workers – have now all reported difficulties in finding labour in the aftermath of Brexit.

Third, the dependence on EU migration has also been accentuated by decades of deregulation which have lowered incentives for firms to produce skills domestically. This is a classic collective action problem: in order to have an adequate supply of skills, firms need to cooperate and pool resources to train new workers. However, it may be selfishly more expedient to let other firms train workers and then “poach” them without paying for training. If everybody is rational, no workers are trained.

A case in point is the construction sector, which has come to rely heavily on EU workers to compensate for the lack of domestic skills. Faced with fierce competition on costs, large-scale subcontracting and the widespread use of “bogus” self-employment, companies have been reluctant to invest in training workers, and the workforce is less skilled than its equivalents in other European countries. Naturally, it has been easier for firms to draw on the skills of workers trained abroad, especially from Poland or other Eastern European countries.

Once again, EU workers have been used to plug the mismatch between the demand and supply of skills in the British labour market, and many British firms have been free-riding on skills produced abroad. This situation is not new. The NHS is a case in point: in 1971 already, 31% of all doctors working in the NHS in England were born and qualified overseas.

There has been a fundamental contradiction in the combination of economic liberalism and hostility to immigration that has characterised Conservative policies in recent years, because austerity and free market economics tend to bolster demand for immigrants. In fact, countries which experience lower levels of immigration (e.g France) are also much more interventionist in economic policies, have larger public sectors, and higher taxes. Coping with lower immigration will most probably require a greater role for the state in training and regulation to solve the labour mismatches that immigration was solving up to now. The more interventionist tone of the last Tory manifesto may be a sign of this reorientation.

Originally posted on the LSE’s British Politics and Policy Blog.

Oskar Freysinger ou le courage des pleutres

Oskar Freysinger a donné une interview à un journal turc où il remet en cause le génocide Arménien. La semaine dernière, le même Freysinger avait publié sur sa page facebook un texte qui dénonçait les dépenses exorbitantes de l’Etat du Valais pour ses prisons et la non-application de l’initiative sur les criminels étrangers: si on expulsait les criminels étrangers, on aurait plus d’argent pour l’éducation de nos petiots:

“Avec 30 criminels en moins, le service de l’enseignement pourrait engager 25 enseignants du primaire à plein temps et ouvrir presqu’autant de classes. J’en arrive à la conclusion que c’est moins l’argent qui manque en Suisse que le courage de certains politiciens d’appliquer la volonté du peuple”.

2738 “likes”, plus de 1000 partages. “Vous avez bien raison” “qu’on les renvoie”, “Y’en a marre”.

Je ne sais pas si les propos d’Oskar Freysinger ont été fidèlement retranscrits concernant le génocide Arménien, mais je peux m’imaginer que dans sa quête éperdue de publicité, il a fait ces déclarations principalement pour plaire aux journalistes d’un pays ou l’opinion publique et le gouvernement ne veulent pas entendre parler du génocide arménien. Ce qui est intéressant c’est que Freysinger parle du manque de “courage” de la classe politique pour renvoyer les criminels étrangers, alors qu’il sait que cette mesure est en fait probablement très populaire auprès de l’électorat. Personne n’aime les violeurs et les voleurs, surtout s’ils sont étrangers. Mais quelle attitude demande le plus de courage: prendre une mesure très populaire mais qui peut contrevenir a l’Etat de droit, ou défendre les principes du droit et de l’égalité de traitement même contre l’avis de la majorité? Pour ma part, je pense que c’est la seconde. Ce qui rendait le combat de Michel Foucault pour les droits des prisonniers admirable, c’est qu’il avait pour but de s’assurer que les principes de l’Etat de droit sont aussi respectés pour les groupes sociaux que tout le monde déteste et veut voir souffrir. Je n’aime pas les assassins et les violeurs mais je suis contre la peine de mort et pour des conditions décentes dans les prisons parce que nous vivons dans un État de droit. Trahir ces principes, c’est s’abaisser au niveau de ceux que l’on punit.

Ce qui est intéressant c’est que les politiciens qui dénoncent le manque de “courage” de la classe politique face au peuple sont toujours ceux qui courbent l’échine devant les puissants ou les gouvernements étrangers, en particuliers ceux qui ont des problèmes avec les droits de l’homme: Freysinger devant le gouvernement et l’opinion publique turque, ou Blocher au temps de l’apartheid. Quel courage, qu’ils démontrent aussi quotidiennement en tapant sur les immigrants, les prisonniers, les musulmans. Des groupes politiquement puissants, qui comme chacun sait, sont acoquinés avec le pouvoir. Le propre du populisme est de présenter la couardise comme du courage.

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What if More Austerity Meant More Immigration?

Since January 1st, citizens from Romania and Bulgaria can freely access the labour markets of all EU member states, including the United Kingdom. Fed by the threat of UKIP and a tabloid press that doesn’t really bother with facts, both Tories and Labour are up in arms in the face of a potential “invasion” of Romanians and Bulgarian who are going to swamp Britain to take advantage of its generous welfare state and its great weather. On January 1st, MPs Keith Vaz (Labour) and Mark Reckless (Conservative) were at Luton airport to “welcome” (pronounce “deter”) Romanians arriving in Britain. Before the new year, the government promptly applied restrictions on access to welfare benefits drawing on the idea that “benefit tourism” is a main driver of migration flows. A report which showed that these fears were unfounded was duly shelved before Christmas because it was “too positive” about the impact of immigration on the British economy.

What is striking about this debate is that the political actors who are the most vocal against immigration are also the most vocal about fiscal retrenchment and reductions in welfare spending. However, nobody ever mentions that cuts in welfare spending may actually foster immigration rather than diminish it.  The common story is that retrenching the welfare state will deter immigration by making the country less attractive for migrants. At best, the welfare system may play no role at all, and at worst, retrenching the welfare state may actually increase immigration because the retreat of the state creates a demand for low-cost private services, for instance in care work, where migrants are over-represented.

First, it must be borne in mind that even if the welfare system was a driver of immigration, the British welfare state is not particularly attractive as compared to most other European countries. The thing is, in the UK it is completely possible for opinion-makers to ignore everything that is taking place “overseas” because nobody really cares. However, most available international data indicates that out-of-work benefits in Britain are actually much lower than most other countries of Western Europe (see also a comparison of net replacement rates for unemployment benefits here). The NHS is a different case because of its relatively universal access (this has been restricted for foreign nationals though) but is a service-based scheme that does not provide the cash transfers that could cause this so-called benefit tourism. If you were a benefit tourist, would you really come to a country with free healthcare but very low unemployment benefits?

Now, available evidence tends to indicate that welfare state generosity has no real impact on immigration flows. The opening of the labour market to Eastern and central European countries in 2004 offered a nice natural experiment: only three countries chose to open their labour markets right away to citizens of new member states: the UK, Ireland and Sweden. The Swedish welfare state is arguably one of the most extensive in the world, and if welfare provision was really the main driver of immigration, Sweden would have faced a much bigger flow of migrants than Britain. However, this did not happen. Between 2004 and 2011, Sweden received an average of 5000 Polish migrants per year, while the UK received 45’000. Immigration did increase after 2004, but nowhere near the proportion its big welfare state would suggest. Independently of welfare protection, demand for labour and wage differentials seem to play a much bigger role.

In theory, there are some valid reasons to believe that an extensive welfare state actually reduces the demand for foreign labour rather than stimulate it. First, to pay for an extensive welfare state such as that of Sweden or Denmark, you need fairly high taxes, which makes labour in general more expensive. Extensive collective bargaining coverage and strong trade unions makes it difficult to bypass this for employers, which means that it is more difficult to employ cheap low-skilled foreign labour in a profitable manner. Since a smaller proportion of the wages paid are actually determined by the individual characteristics of the workers, but rather by a whole set of non-market regulations and agreements which lift up wages, the lower wages that migrants may be ready to accept make a smaller marginal difference: taxes and collectively agreed wages have to be paid anyway. Moreover, since labour is expensive, employers have an incentive to invest in it. The workforce tends to be more qualified and there is a smaller demand for low-skilled cheap labour than in a more deregulated labour market. In short, this type of institutional arrangement tends to create a “race to the top” in skills and social protection, and there are therefore fewer low-skilled, cheap jobs that are typically left to immigrants. In Sweden, however, employers have sought to break this by using posted workers formally employed in other countries. This is pretty much what the much debated Laval case was about. Hence, if you reduce welfare and deregulate labour markets, you actually make it more profitable to employ migrants rather than natives, assuming that migrants are really willing to accept lower wages. More welfare, fewer migrants.

The second mechanism whereby welfare retrenchment may increase immigration is through the replacement of subsidised public social services by cheap private services that only migrants are willing to provide. In many ways, if the state cannot provide subsidized public services at a low cost, individuals will seek to buy them privately at a low cost as well, which often means from migrant workers on low wages. In  countries where the state was unable to cover needs for care for the elderly, such as in Italy, this task is already assumed to a large extent by migrant, mostly female, workers employed on an informal basis. In Britain, funding for social care has been cut by about 20% between 2010 and 2013. Since most of the care is not provided directly by the state but by private or non-profit providers that the state pays, this concretely means greater pressure on these providers on deliver the same level of service but for less money. The only way to do it is to reduce wages. In November, it was revealed that almost half of the firms delivering elderly care have been paying their workers below the minimum wage, and infamous zero-hour contracts are widespread. Unsurprisingly, this sector relies heavily on migrant workers. Research pointed out that half of the workforce in the care  sector in the London area was constituted by migrants. As working conditions in these sectors deteriorate as a result of spending cuts, they are bound to increasingly rely on migrant workers because they are the only ones willing to accept them. This is why the government’s policy stance about welfare and immigration is simply startling: like an arsonist calling the fire brigade, they are blaming a phenomenon that they are causing in the first place.

The Next Home Office’s PR stunt

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After this, I wonder If this could ever make it to souvenir shops.

UPDATE: Actually, even if you’re going home, you have to face arrest.

The Media as a Chinese Whisper Machine

In his book (based on a public lecture) on Television, Bourdieu uses a good concept to describe how information is produced within the news media: he calls it the “circular circulation of information”. In a nutshell, the main idea is that, despite its function as a window open to the world, the media actually work in a relatively closed setting. The main source of information for journalists are the media themselves, journalists have their own implicit rules about what is interesting (scandal, exclusivity, being the first on a story), and the most avid readers of newspapers are… journalists in other newspapers. The Daily Mail talks about something because the Telegraph talks about it, Channel 4 prepares its headlines after watching what the BBC has done, and so on and so forth. Competition creates a lot of uniformity. This makes for a fairly closed mechanism of production. As for analogies, you could think of a mass enterprise in Chinese whispers, or a giant echo chamber where a relatively small sample of news stories gets distorted, modified and amplified at each stage of the process, while others are ignored.

There is a great example today about – again – Oprah Winfrey’s experience in a Swiss shop, where a shop assistant allegedly refused to show her a super-expensive bag, saying it was – precisely – too expensive. Oprah said it was a case of racism, which the owner of the shop has denied. On Sunday, the Sonntagsblick has interviewed the shop assistant who served Oprah to have her version. Here’s what she said

“Was haben Sie getan?
 Ich ging zu einer Vitrine und zeigte ihr eine dieser Jennifer-Aniston-Taschen, die sehr populär sind. Ich erklärte ihr, dass es diese Taschen in verschiedenen Grössen und Materialien gibt, so wie ich das immer tue. Sie blickte auf ein Gestell hinter mir. Weit oben. Darauf aus­gestellt war die 35000-Franken-Krokotasche. Ich sagte ihr, dass es dieselbe Tasche sei wie die, die ich gerade in der Hand hielt. Nur dass sie viel teurer sei. Ich könne ihr gerne noch andere Taschen zeigen. Oprah Winfrey behauptete im US-Fernsehen, Sie hätten ihr die Tasche aus rassistischen Gründen nicht ausgehändigt.
 Das ist absolut nicht wahr! Ich fragte sie sogar, ob sie die Tasche genauer anschauen wolle. Frau Winfrey hat sich nochmals im Geschäft umgeblickt, aber nichts mehr gesagt. Dann ging sie mit ihrem Begleiter in den unteren Stock. Mein Kollege hat ihnen noch die Tür aufgehalten. Sie waren nicht einmal fünf Minuten bei uns im Geschäft. Warum macht Oprah Winfrey dann solche Anschuldigungen?
 Das weiss ich nicht! Sie ist so mächtig, und ich bin bloss eine Verkäuferin. Ich habe niemandem etwas zuleide getan. Ich verstehe auch nicht, weshalb sie das so gross im TV ausschlachten muss. Hätte sich alles so zugetragen, wie sie behauptet: Warum hat sie sich dann nicht am nächsten Tag an der Hochzeit von Tina Turner bei Trudie Götz beschwert? Meine Chefin war ja dort ebenfalls zu Gast. Ich verstehe es nicht. Sie hätten zu ihr gesagt: «Sie wollen diese Tasche nicht sehen. Sie ist zu teuer. Die können Sie sich nicht leisten», sagt Winfrey.
Das stimmt nicht. Das ist absurd. So etwas würde ich zu einem Kunden nie sagen. Wirklich nicht! Gute Manieren und Höflichkeit sind das A und O in diesem Geschäft. Was würden Sie Oprah Winfrey sagen?
Ich würde mich entschuldigen. Es war ein Missverständnis. Ich habe Frau Winfrey sicher nicht absichtlich beleidigen wollen. Ich hoffe, dieser Albtraum ist bald zu Ende.

For non-German-speakers, she says that she started showing her Jennifer-Aniston bags, and then Oprah asked about the crocodile version, and the shop assistant answered it was the same, just much more expensive. The journalist says that Oprah Winfrey has affirmed that she was not given the bag because of racial prejudice, which the shop assistant vehemently denies. She also says that she has never said that Oprah “could never afford” the bag, that politeness is the most important in this trade. She doesn’t know why Oprah tore her apart (ausschlachten) like that on TV. When asked what she would tell Oprah, she says that she would apologise, that it was a misunderstanding, that she didn’t want to offend her. She wants this nightmare to be over. As stated in the title in German, she “hasn’t been able to sleep for days”.

The story has been taken up by the Daily Mail. There are direct translations from the original Sonntagsblick article and the content is similar (even though pushed to emphasise that Oprah may have lied), but the title has radically changed. From “I haven’t been able to sleep for days”, it is now “‘Oprah’s a liar’: Sales assistant in Swiss racist handbag row denies telling TV host that she could not view item because she couldn’t afford it”. Now, what you need to know is that people who write headlines and titles in newspapers are not the same who write the articles. Besides the “Chinese whisper” phenomenon across news outlets, it also happens within news outlets. For  a headline, you don’t want nuance, you want a punchline, and for that you emphasise conflict, or drama.

Finally, the website Gawker has re-used the story of the Daily Mail – and some Google translation of the original Sonntagsblick article – with a new title: “Swiss Shop Clerk Says Oprah “Cannibalized Her” With Racism Charge”. Now the term “cannibalized” seems to be a translation of the German “aussschlachten” of the original article (but ausschlachten is also used for cars). The difference between “cannibalized” and “tore apart” is that the former reinforces the racist picture that has been constructed for this shop assistant, as if she talked about Oprah Winfrey as a cannibal just like those African tribes in Allan Quatermain’s movies. So this is how you transform an interview where the shop employee says she cannot sleep into one where she calls Oprah Winfrey a Liar and a Cannibal.

The Swiss Apartheid

This week, Switzerland has been presented as the new country of apartheid. On Wednesday, international media outlets reported that the Federal Office for Migration had agreed exclusion rules with the town of Bremgarten in the Canton of Zurich for its new national centre for asylum seekers. Asylum seekers sheltered in that small town would not be allowed to access a number of public spaces, such as the swimming pool and the school. The town’s mayor justified these rules by “security grounds”, to prevent conflict and “guard against possible drug use”. The head of the federal migration office has said that its services had agreed to these rules to ensure “peaceful coexistence” between residents and asylum seekers. On top of this, Oprah Winfrey revealed yesterday on Larry King that she had been a victim of racism in Switzerland too. When she asked to see a 35’000 CHF bag in an upmarket shop in Zurich, she was told that the bag was “too expensive for her”. This is clearly a PR disaster. Some have argued that “tourists to Switzerland should be aware of new apartheid type policies”. I was interviewed yesterday on a radio show asking whether “the most neutral country in Europe is also the most racist“.

My answer would be no, and far from it. Switzerland has admitted more immigrants than any other European country of similar size over the last 50 years. Switzerland has one of the highest shares of immigrants amongst its population in Europe. In 2011, 23% of residents did not have Swiss citizenship. This high proportion is partly due to the fact that access to Swiss citizenship is fairly restrictive, and the conditions vary significantly across cantons, but admission policy has been very liberal by any standard. During the last 50 years, about 2 million people have migrated to Switzerland from abroad, or were born in Switzerland to immigrant parents. Without any immigration, Switzerland would now have 30% fewer inhabitants, which is a  bigger proportion than “traditional” immigration countries such as the US, Canada or Australia. Immigration is the main contribution to demographic growth (there are 2.5 times more immigrations than births). Switzerland also accepts a fairly high share of asylum seekers in relation to its population. It counts one asylum seeker per 332 inhabitants, whereas the European average is one per 625. If the Swiss were so racist and xenophobic, why would they accept so many migrants, most of them integrating very successfully?

Now of course, everything is not rosy. It is difficult to say whether what happened to Oprah Winfrey was a blatant case of racism from the news reports that I have read. Most normal people cannot afford a 35’000 CHF handbag, so the shop assistant may have just assumed she’s not part of the 0,001% of people who would spend that ridiculous sum of money for a handbag.  It is true, however, that Switzerland surely does have a racism problem which affects black people, but also other nationalities, and I don’t think it is worse than elsewhere. A few years ago, Swiss public TV produced a documentary which followed a Senegalese journalist equipped with a hidden camera while he was applying for jobs, seeking to rent a flat or even enter a club in a number of towns in French-speaking Switzerland. The behaviour of some people was really quite appalling. A study commissioned by the Swiss national commission against racism also pointed to a number of problems for black people. Discrimination is not really targeted at Black or ethnic minorities, but also affects European migrants. Another study of ethnic discrimination on the labour market pointed out that the most discriminated minority were (white) people from Kosovo in German-speaking Switzerland. I am not really familiar with comparative data on this, but I wonder if Switzerland is really worse than other countries. Nothing like the abuse that Cecile Kyenge has received has happened in Switzerland.

The Bremgarten case should  been seen against the background anti-immigration turn in Swiss immigration policy (as I tried to argue here) that has started in the 1990s with the rise of the xenophobic Swiss people party. This anti-immigration turn, however, has taken place elsewhere as well. In Switzerland, the Schweizerische Volkspartei – something like the local UKIP – has become the biggest party in parliament, and other parties have partly followed suit on its immigration policy positions out of fear of losing even more voters. Most immigration reforms in recent years have involved some  form of toughening, especially in the domain of asylum. What is interesting is that parties  have tried to show a tough stance in domains that have a marginal economic significance such as asylum or naturalizations. Right-wing parties have continuously toughened asylum and citizenship rules in recent years, but have been very reluctant to seek curbs in the free movement of workers with the EU, which is the main channel of immigration to Switzerland. In this way, they seek to please voters by hitting weak groups (asylum seekers) while not alienating business interests who are highly dependent on foreign (EU) labour.

Beside, there is little chance that the Bremgarten rules could stand a challenge at the Swiss constitutional court. It is not the first time that city councils want to enforce discriminatory rules for foreigners. Emmen, in canton Luzern, had introduced a naturalization procedure which provided for voters to decide on citizenship applications. Voters would receive a booklet with pictures and short biographies of individuals and families who wanted to become Swiss, and could decide on a “yes” or a “no”. Research carried out on this has shown that decisions were clearly discriminatory against certain nationalities; application from people from Turkey or Kosovo were systematically refused independently of their level of integration or language skills. However, these rules were ruled as unconstitutional by the Swiss Federal Court, and had to be withdrawn.

More generally, these exclusion rules are an attempt to deal with the well-known “NIMBY” syndrome (not in my backyard). This has been extensively analyzed for nuclear plants, airports or other things that countries need, but that people would rather not have next to their own home. People may favour open asylum policies, but many may not be too enthusiastic about having a centre next to their house with 300 people who are not allowed to work, do not speak the local language and have often experienced war or other disasters. As local authorities need to accept the establishment of these centers on their territory, there are negotiations between local communities and the federal level, and the “apartheid” rules are part of that.

The rules that have been agreed in Bremgarten are quite disgraceful (and probably impossible to enforce), but managing asylum requests is a fairly dirty business in general, and a business that most people ignore, or want to ignore. While Bremgarten doesn’t let asylum seekers use the public swimming pool, Australia has relocated its detention centers to remote islands in the pacific, where its own national legislation does not apply. In the UK, as far as I understand, people awaiting decisions on their asylum requests are routinely detained in prison-like facilities managed by private companies such as G4S. Sometimes they are killed in dubious circumstances, like Jimmy Mubenga.

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