Immigration and Social Security Co-ordination (EU Withdrawal) Bill (First sitting)

Debate between Paul Blomfield and Alison McGovern

Committee Debate: 1st sitting: House of Commons
Tuesday 12th February 2019 Public Bill Committees

[Paul Blomfield]

Q Do you not find it extraordinary that such a historic measure, which affects so many people in this country, does not have that provision?

Professor Ryan: Yes, indeed. That is why I started with that observation—to try to ask for the Bill to be seen in those terms. Understandably, because of the politics around leaving the European Union, everyone is concerned with the moment, as it were, but I urge the Government to take a longer view of what the Bill really means and think about other things that could go in the Bill because of the long life that it may have.

[Alison McGovern (Wirral South) (Lab)]

Q Professor Manning, on behalf of the Migration Advisory Committee, in relation to EEA nationals working in this country, you were careful to say just now that the root cause of low wages in the care sector is not immigration, but rather the funding of the system. In relation to other sectors, you seem to be saying that you believe that constraint in the labour market could have a positive effect on wages. Could you just say a little bit more about what you think the channel to that is? Is it excess profits in manufacturing that management will decide to divert to wages? Is it efficiencies that the manufacturing industry has not invested in, and now will? What do you think the channel will be? It is one thing to say that immigration has been neutral to negative—your words—but another to say that constraint in the immigration system affecting the labour market will push up wages. This is not simple supply and demand, is it?

Professor Manning: It is not just simple supply and demand, but supply and demand is relevant. It is important not to exaggerate the role that immigration plays in everything that is happening in the labour market as a whole. We have a very tight labour market at the moment, and demand for labour is running ahead of supply in many sectors. There are complaints about shortages and vacancies in a lot of places. Solving that through immigration, it is said, means increasing the supply of labour to bring demand and supply into line, but in our view that will not work because when immigrants come, they increase supply. They earn money, spend money, and add to labour demand more or less in balance. That is why the overall effect is neutral.

We think the way in which you should respond to imbalance in the labour market is through raising wages. Where do those rising wages come from? Partly, employers are put under pressure to use labour more efficiently when labour is scarce, so that is part of the efficiencies that you talked about. There might be some sectors that have been quite profitable in recent years, so there is some scope to squeeze profits, although there are many sectors where margins are tight. If you talk to employers, they would say they really have not got that much choice.

It is also the case that workers will vote with their feet and go to work for employers that they think offer them the best deal. In that process, there are good employers and bad employers. When labour markets are tight, good employers do well and bad employers find it harder. That is a natural process by which we have rising living standards in the economy.