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On the buses

Here’s a multiple choice question. Try and answer it before you read on.

What effect do you think it has, if a British bus company employs a bus driver from overseas?

a) it takes away the job of a British bus driver?

b) it increases the number of bus drivers we have?

c) it undercuts the wages of British bus drivers?

d) it reduces bus fares for British passengers?

A lot of people will probably choose (a), so let’s discuss that first.

Much of the recent coverage of migrants in the labour force has been written in a way that implies there is a fixed stock of jobs, so the more that migrants take, the fewer there are for native Brits.

A headline that says “Britons lose out on jobs and housing” or a write-up describing how “The number of British nationals in work has fallen in the past two years as 540,000 foreign workers have replaced them and taken all the net new jobs in the British economy” can easily give the impression that the labour market is a kind of musical chairs with only so many places to go round.

Economists are sceptical of this view of the world – they call it the “lump of labour fallacy”. In essence, they argue that if a migrant takes a job, they may well create a job that would otherwise not have existed too.

Buses in trafficFor example, they may fill a gap that no-one British was available to fill. They may demand a lower wage, creating a job that would otherwise have been unviable. Bus company employers would certainly argue this is the case, and point you to answer (b) in our question above.

Even better, if a migrant bus driver allows a bus to operate that would otherwise remain idle, then many other jobs could potentially be created for people who could then travel to new workplaces more flexibly and easily.

In practice, we do not know whether the labour market effect of any particular new migrant employee is to create many other jobs, to create the one job they themselves fill, or to create no jobs at all, and hence to displace one domestic worker.

We can’t be sure, and it is likely that some migrants displace, others don’t.

But if pushed, I would tend to adopt the simplifying assumption implied by a fully functioning, competitive labour market, that on average migrants create exactly as many jobs as they fill. If 1.1 million migrants are employed, there are probably 1.1 million extra jobs.

It’s only an assumption, but it’s not a bad one. And perhaps I can defend it by using an analogy. If migrants eat 8% of our food, it would be silly to think that in the absence of migrants, the native British would eat 8% more.

Far more realistic is the idea that the supply of food adapts to the demand of migrants. Similarly, it is realistic to assume the demand for labour adapts to the supply of migrants. That’s where a competitive labour market gets you.

That deals with options (a) and (b) in our bus driver multiple choice question, but many of you might have been inclined to adopt option (c).

It is very plausible that competition from migrant bus drivers undermines the wages that British bus drivers can attract. Indeed, one reason why the presence of migrant bus drivers can create new jobs is that they make it cheaper to hire bus drivers.

And businesses are pretty open about admitting that the low cost of migrant labour is one of its attractions.

But if you are right to tick option (c), don’t you also have to tick option (d)? After all, if there are more buses driven at lower cost, one would imagine that competition or regulation would create lower bus fares too.

And that’s important.

If the presence of migrants on the buses pushes down wages and fares, it pushes up the spending power of everybody using the buses. So the bus passengers’ real wages – their wages after inflation – tend to go up.

You might tell where this is going. A second simplifying assumption. Like the first, it is reasonable if one assumes fully frictionless and competitive markets. It says that on average the presence of migrants has no effect on the real wage level of the British workforce.

The wage cuts of some workers are offset by the real wage gains of other workers.

In fact, if migrants were dispersed uniformly across the economy (which of course they are not), all of us in work would lose a bit in facing more competition for our own job, but would gain a bit in being able to buy other things more cheaply. Net it all out and we are back where we started.

My two assumptions are a bit extreme in their simplicity, but they are not extreme in their implication. They end up with a rather simple conclusion: that migrants are neutral.

They don’t do the harm that some think, nor the good that others like to pretend. They expand the population, the workforce, employment and national income by more or less the same proportions. The rest of us get on with what we do.

Or, to put it another way, my assumptions imply that the employment rate and incomes of a country with 30 million workers are probably about the same as an otherwise identical country with 31 million workers.

Of course, in reality, I am assuming away all the interesting things migrants have to bring. They have different skills, work in different industries, use housing in different ways to the rest of us, and take up the scarce space of the UK.

To draw a more realistic picture we would need to engage in detailed empirical study as to what the actual effects are, not the supposed effects.

When more sophisticated economists perform more rigorous work, using more complex economic models, they invariably come to the conclusion that migrants modestly benefit the domestic population on average. But that does not preclude them hurting some particular groups.

However, I’ve taken 1,029 words and have yet to answer the multiple choice question I started with.

As is so often the case in multiple choice questions, none of the four answers are quite satisfactory. I would say, (e), all of the above. In the short term, (a) might be true, but in the long term, (c), (b) and (d) come in to play.

Comments   Post your comment

  • 1.
  • At 12:42 PM on 05 Nov 2007,
  • george wrote:

"[Immigrants}may fill a gap that no-one British was able to fill"...because they were sitting on the sofa, drinking bear, watching tele, and waiting for the next giro.

  • 2.
  • At 12:49 PM on 05 Nov 2007,
  • James Topham wrote:

Neither insightful, nor a useful contribution to Evan's subject, my only comment is that this analysis is BRILLIANT. How has this ridiculous immigration issue reared its ugly head once again, and taken up so much of print space and my time in reading it? Long may ED puncture the irrational with such verve!

  • 3.
  • At 12:58 PM on 05 Nov 2007,
  • mark j h wrote:

Thank you for bringing some sanity to the discussion. Even BBC news bulletins have been sounding at times as though they do not understand that a growing worker base can lead to even bigger growth in economy and in the amount of employment available.
There is a risk that some people are being talked into thinking that there is an unemployment problem in this country... There isn't one.

There is, by contrast, an unemployment problem in France, which restricts immigration and working-rights for immigrants more harshly than we do. Let's not make their mistakes.

  • 4.
  • At 01:12 PM on 05 Nov 2007,
  • Alison wrote:

I'm a student in Bath where at least 50% of the bus drivers are immigrants, yet year after year the bus fares goup. So maybe in theory option D is true, but I for one have never noticed a bus fare going down, not in Bath nor my hometown of Bristol, nor in London where I am living this year. I'd be interested if anyone could give me an example of bus fares decreasing!

  • 5.
  • At 01:17 PM on 05 Nov 2007,
  • mike wrote:

As a manager for a bus company that would fail to operate as it currently does without recruiting overseas workers, I found this article particularly interesting. Currently, there is a national shortage of bus drivers. The majority of a bus fare pays for the drivers wages. At present there is a public perception that fares are too high, yet with drivers earning between £8-£12 per hour depending on location, any wage increase to attract more Britsh drivers would directly increase fares. We make great efforts to recruit locally, but we have reached a point that to keep our buses on the road, we need to recruit from overseas. Our drivers recruited from overseas work under the same conditions as their UK counterparts earning the same wage.

  • 6.
  • At 01:22 PM on 05 Nov 2007,
  • Bill wrote:

Who ever heard of savings being passed on to the customer? Try this instead:

d) Increased profits for the bus company

  • 7.
  • At 01:22 PM on 05 Nov 2007,
  • Will B wrote:

A fantastic article. If only the users of the have your say forums would read it.

  • 8.
  • At 01:23 PM on 05 Nov 2007,
  • Sameer wrote:

Elements of nationalism irrationally overpower common economic sense for the majority of British folk in the days of late.

Quite unfortunate, but blindingly simple to spot. Thanks for sharing your blog with us, Evan.

  • 9.
  • At 01:26 PM on 05 Nov 2007,
  • Paul B wrote:

In theory (e) would be correct. However in reality it will not and never will be (d). The bus companies will pocket the the savings of using workers on lower wages instead of reducing fares.

  • 10.
  • At 01:28 PM on 05 Nov 2007,
  • Simon Wellicome wrote:

Trade benefits the traders.

I'm an accountant, not a plumber. If I want my bathroom fixed, it is better for me to call in a plumber and offer to do his bookkeeping for a while as payment than to try and fix the bathroom myself. Each job will get done quicker, to a higher quality and more cost-effectively for each party than if the trade did not occur.

Likewise, trade in knowledge, experience, skills, working practices, culture, etc. that happens as people move around the world to work brings a net benefit to each and every country involved in the migration.

The overall financials may be likely to be neutral, but the non-financials are win-win.

  • 11.
  • At 01:29 PM on 05 Nov 2007,
  • Phil wrote:

This analysis ignores the fact that many migrant workers send much of their earnings back to their country of origin. Doesn't that remove wealth from the UK and place it in another country?
I'm not against immigration because I think there's plenty to go around, but that seems to be too important a factor to ignore.

  • 12.
  • At 01:35 PM on 05 Nov 2007,
  • Richard Holmes wrote:

This is a very good and I think truthful analysis. But it stops short at a crucial point, and that is infrastructure and especially housing. Immigration may have a net neutral or beneficial effect on jobs and the economy, but it surely places more strain on hospitals and schools and even more importantly it cranks up the competition for the nation's already inadequate housing stock.

  • 13.
  • At 01:42 PM on 05 Nov 2007,
  • Danny Boy wrote:

Brilliant. A balanced, well thought out & economically sound (as far as my amateur comprehension will allow) discussion of an otherwise overhyped topic. Please now direct all users of HYS here - especially the ones, shockingly, supporting the BNP for their stance on immigration.

  • 14.
  • At 01:46 PM on 05 Nov 2007,
  • Scot in the Medway wrote:

If only the dumbed-down masses could be thus enlightened.
My employer has a UK workforce where 30% plus are non-British nationals - not because it needs cheap foreign labour. Rather these exceptional individuals come with linguistic skills few Brits could ever hope to possess.
On the other hand, I wonder how many Brits would flee these shores to work in the USA were their borders as open to us as the EU's are.

  • 15.
  • At 01:49 PM on 05 Nov 2007,
  • Ian Kemmish wrote:

Ewan's already taken e), so I'll have to move on to f) - it keeps the cost of your mortgage down.

There's something spooky about the statistic that nearly all of the number of newly created jobs has been taken up by immigrants. (Let's ignore the fact that even a "static" jobs market is actually a state of dynamic equilibrium with jobs being created and destroyed all the time.) It might suggest that, at the beginning of this period, our workforce was already at the limit the UK could sustain without substantially higher wage inflation. In other words, that all our unemployed were "structurally unemployed." Even if immigrants don't drive the wages down, they can perform a valuable function by preventing them from going up. And of course, lower wage inflation means the Bank of England MPC can afford to be less hawkish on inflation, in turn giving you a more affordable mortgage.

  • 16.
  • At 01:55 PM on 05 Nov 2007,
  • Julia G-G wrote:

Statistics can always be manipulated in order to illustrate a zealous viewpoint.

There is no noticable employment problem in Britain apart from the fact that so many still seem to be holding onto the negativity from the eighties when the job market was a very different place.

Has all the regeneration being going on un-noticed?

Why is there such a strong view by so many that they are owed so much without them having to go out and achieve anything themselves?

I am so exasperated by all the hype about immigration into this country. There would be no immigration if there was not the economic climate to accomodate it.

  • 17.
  • At 02:06 PM on 05 Nov 2007,
  • Lucy wrote:

"they do not understand that a growing worker base can lead to even bigger growth in economy " message 3

Could I extend that also to a growing traffic
more pollution by an increase in incinerated waste
a school place shortages...

Sure we can build new schools and new homes, [needing more builders, now where will we find those?] but do we really need to or want to?

Just for short term economic gain we might be expanding to levels of population that many feel uncomfortable with.

Is France really a terrible place to live?

  • 18.
  • At 02:07 PM on 05 Nov 2007,
  • HB wrote:

As you say, there are plausible arguments that economically active immigrants benefit the British economy. But are we prepared (both in terms of resources such as doctors, residential homes, etc. and in terms of societal acceptance) for when the immigrants forming the current wave of immigration end their working lives and become net receivers of tax revenue?

  • 19.
  • At 02:11 PM on 05 Nov 2007,
  • Randy Maas wrote:

Evan, you are not nearly as bright as you think you are and certainly not as bright as you should be to write this column. So, in an effort to educate you to logic I'll try to refute your idiotic proposals.
1.A Brit should get that bus driving job if a Brit who is qualified and wants the job. If none are found, fine give the job to imported labor. Reason; the UK is a country made of country men and woman. Family if you will, and family takes care of its own first and foremost.
2.There are just so many jobs.Maybe more than we consider, but finite. If available work slots, not wanted by any Brit, are available, fine, let imported labor fill that spot if it truly must be filled.
3.A bus will not remain idle. Bus company's make money from buses that run routes not fill parking spots. The law of profit and loss will certainly encourage that company to find qualified drivers, a Brit first if qualified, then imported labor would be considered.
4.Imported labor will reduce the cost of labor. Funny, what of your UK unions? Will they look the other way? Hardly.
5.Your stupid assumption that imported labor generates an equal amount of jobs for Brits is absurd! Where on Earth did you come up with that one? There are just so many things (jobs) that can be done in any country and when you approach that saturation point, Brits will be displaced.
6.Oh and that stupid statement that if outsiders are removed and thus less food is eaten, then the Brits will take up that slack by eating more food. How stupid is that! No, what will happen the first go around is that percentage will simply go into the trash bins and from there on out British farmers will simply grow only what they can sell...to make that simple for you...they will grow that percentage less.
7.My advice to you is maybe get a job driving a bus. Perhaps you will be better at that. But I doubt it.


Your biggest fan, Randy Maas,USA

  • 20.
  • At 02:17 PM on 05 Nov 2007,
  • Andrew H wrote:

Mr Davis, you neglect one major issue. The use of external capital. You assume that the benefits of all of the immigration are kept internal to the UK. What you see instead are external forces - non domiciled individuals, offshore companies and investment vehicles, expats etc - investing in the UK to mop up the benefits brought by immigration. For instance, how many naturalised UK citizens, of whatever racial group, in their mid to late 30s or older,do you see renting in the private sector? They either take council houses or have bought. However, migrant workers generally rent. How many of the landlords live in the UK, or are UK domiciled? How much of this 'value' is retained in the UK economy?

Then there is the 'election' value of the statistics. For 10 years, the increase in taxes has been excused by Labour on the grounds that Gordon has created an economic boost for everyone, and he is just sharing in our new found wealth. If, as you have suggested, the boost is based on migration, and in fact we have merely increased the pot in proportion to the number of people sharing from it, have we not been duped? Are we not back to a '1 for you, 2 for me' economy?

I have neither the time nor inclination to think further on the matter, but I hope I have succeeded in showing that, whatever the economics say the situation [i]should[/i] be, the political reality is somewhat different.

  • 21.
  • At 02:25 PM on 05 Nov 2007,
  • david wrote:

The bus driver example assumes that cheaper wages = cheaper fares. I've yet to see any sign of cheaper fares on our buses, quite the opposite.

  • 22.
  • At 02:32 PM on 05 Nov 2007,
  • Andrew Hetherington wrote:

A complex issue discussed with clarity.
I am prepared to believe the first assumption ('migrants create as many jobs as they fill') for unskilled and semi-skilled workers in the South East. For skilled workers in rural areas that evidently wont hold true.
Whilst the labour market might be entirely elastic with respect to supply and demand other things arent, especialy housing. There isnt an infinately expanding supply of houses, like there are jobs.

  • 23.
  • At 02:49 PM on 05 Nov 2007,
  • Tina wrote:

Thank god! An article about immigration that doesn't hype up fear in order to sell newspapers (which may make an interesting point about the validity of news-purveyors who do not need to sell themselves to survive...perhaps the license fee isn't such a bad thing after-all). When I hear some people's simplistic xenophobic attitudes to immigration, informed by the sensationalist headlines of some of the nation's newspapers (and I use the word 'news' in it's widest possible sense), it makes me want to cry, or rant (sometimes both!). THANK YOU, EVAN!!!

  • 24.
  • At 02:55 PM on 05 Nov 2007,
  • Juan C wrote:

Response to point raised by Phil on Comment 10.

You are partially right, but the argument also works both ways. If the country of origin (say Uzbekistan) looses a worker, its income is therefore reduced (less taxes and comsuption). The "recieving" country (say UK) benefits from tax income and consuption + labour. The remitances that person sends might be redressing the balance of the ammount (in this case Uzbekistan) looses. Obviously I haven't got precise figures on this, but I bet tuppence that the "losses" and "gains" of Uzbekistan might balance. Again the jury is still out on that one.
Another point is that once someone has put in a full days work and paid taxes, what he/she does with that money is up to individual choice. That money does not "belong" to the UK (or Uzbekistan following this example). What the person does the money earned legitimately is none of our business provided it is used legitimately as well.

  • 25.
  • At 02:58 PM on 05 Nov 2007,
  • john wrote:

I can't argue with the logic of the analysis but surely the net economic benefit of immigration must also measure what an immigrant contributes in taxes versus the cost in service provision. The reality is that some immigrants are much more valuable than others - particularly those with good skills and without dependents. The young east Europeans are thus a boon to the British economy. How does that compare to those with few skills and high numbers of dependents who themselves have a low economic participation rate?

  • 26.
  • At 03:05 PM on 05 Nov 2007,
  • James Anderson wrote:


An interesting article - but it misses out the distributional impact of the cost of lower wages on some and the benefits of lower goods on others.

Broadly speaking pressure on wages tends to be occuring in lower skilled manual or service jobs (catering, building, shop assistants etc..) whilst the benefits for this go to those who buy large amounts of these services (the more you buy means the more you benefit).

No surprises that poorer less skilled people tend to lose out with the first trend, whilst richer people who consume more tend to benefit more. That's what this article misses.

A case in point - how many Polish BBC reporters have you seen recently?

  • 27.
  • At 03:05 PM on 05 Nov 2007,
  • Geoff Winn wrote:

Using the same reasoning ...

The immigrant bus driver rents or buys somewhere to live, pushing up prices in an already overheated market. Other tenants/buyers are thus worse off through higher prices - but the landlord/seller is better off through higher income. On balance the effect is (presumably) neutral in economic terms. So I think you are telling us that the higher rent/mortgage payments are of no concern. Is that right?

  • 28.
  • At 03:05 PM on 05 Nov 2007,
  • Al wrote:

You forget the cost of keeping an unemployed bus driver on the dole, and the cost to the economy in a foreign driver sending pound notes home.

  • 29.
  • At 03:30 PM on 05 Nov 2007,
  • Nigel Jarvis wrote:

Bus fares in London have gone down 10% this year from £1 to 90p (on Oyster) and as of last year all children travel free (100% reduction). Might not be due to migrant workers, but someone has made savings somewhere and passed them on to the customer.

  • 30.
  • At 03:35 PM on 05 Nov 2007,
  • Phil wrote:

So if immigrants do not really make any difference to the economy, (after all I cannot remember failing to buy a lettuce because no-one had picked it)and they do cause social strains (mainly due to their large numbers) then from a resident's point of view their presence is detrimental. Immigration seldom helps the resident population that much, but it certainly helps the immigrants who want the cash

  • 31.
  • At 03:39 PM on 05 Nov 2007,
  • GEORGE NEIL wrote:

What concerns me more is the lack of road rules and regulations and street knowledge of a foreign driver.

  • 32.
  • At 03:43 PM on 05 Nov 2007,
  • Anand Misir wrote:

As a few people have noted, bus fares have gone up, not down. But how much more would they have gone up by, if immigrant workers hadn't kept costs down?

And to say that employers pocket ALL of the difference ignores the price elasticity considerations of public transport -- cheaper fares means more people will use buses (or, smaller price increases means that fewer people will stop using buses than if prices had rocketed by, say, £2), meaning more profit for the company than if they simply pocketed the difference. Obviously, there is a balance to be struck, but it would be "naively cynical" to assume that companies will *never* pass on savings to customers. And even if they keep the profits, where else will they go, except to invest in infrastructure, or on dividends for our own pension funds...

  • 33.
  • At 04:12 PM on 05 Nov 2007,
  • F0ul wrote:

Overall, a good clean article, explaining in simple terms how immigration works! Unfortunately, some of your commentators are more simple than you would have thought possible and ruin a good page!

It is important to point out that there is a difference between Wealth and Money for those wondering about money being sent abroad.

The wealth to the country is through the fact that there is a bus running where before there wasn't (either because the job didn't exist, or because there wasn't enough UK drivers to do the job).

Wealth is getting something you want,and the country needs bus drivers.

The immigrants excess wage might well be going abroad, but they have already spent their money for rent and food and TAX in the UK. This money would not have been spent in the UK otherwise! Swings and roundabouts as they obviously don't say in the USA, eh, Randy?

  • 34.
  • At 04:15 PM on 05 Nov 2007,
  • Andi wrote:

My overwhelming concern is not for OUR nation but for those places left bereft of their workers. Recent headlines about a lack of builders in Poland showed that my concern is not unjustified. Surely these countries NEED young skilled or semi skilled workers so that, slowly, their economies will strengthen and they will become important European economic powers. When graduates are driving buses simply for personal economics then we must look at the broader picture and see what they need to prosper and support their families in their own country, for the good of that country.

  • 35.
  • At 04:17 PM on 05 Nov 2007,
  • Douglas wrote:

The simple fact is most of the new jobs in Britain are, to put it simply, bloody awful. They are part time, low paying jobs in the service sector. These jobs are high stress, soul destroying in there monotony and have bad hours. Brits think that they are to good for these jobs, and therefore they go to foreigners. This country is full of lazy, arrogant fools who blame johnny foreigner for their being unemployed instead of thinking for two seconds that any works better than no work. If Brits did these jobs then their wouldn't be any for the Poles to take now would there?

  • 36.
  • At 04:18 PM on 05 Nov 2007,
  • mick wrote:

I disagree with you on a number of items, some have already been covered, one item I am concerned about is the discord of cultures from the overwhelming influx of immigrants in some areas of our country, due to that discord as reported by the BBC there are 2000 potential terrorists among us, I find this most disturbing as the government has got itself into a position of not being able to do much about it.

  • 37.
  • At 04:25 PM on 05 Nov 2007,
  • Manchester resident wrote:

I have no problem with migrant bus drivers except it is a challenge when their English is so poor that they cannot understand where you want a ticket to!

  • 38.
  • At 04:33 PM on 05 Nov 2007,
  • Peter Overton wrote:

Whether the increase comes from migration or from increased birth rate, the truth of the matter is that this country is grossly overcrowded and every extra person living here is reducing the quality of life of those already here. Only a revolving door migration policy of one in for one out (of whatever ethnic group) will solve this issue.

This could be achieved by focussing our resources on creating employment in other parts of the world; particularly in areas from where many of our migrants originate.

  • 39.
  • At 04:42 PM on 05 Nov 2007,
  • mark wrote:

post 19 - Randy Maas: you made me laugh... thank you for being so funny. You start off by saying that Evan Davis isn't bright and then go on to litter your comment with spelling mistakes, the word 'stupid' as your favourite adjective and no comprehension whatsoever of the content of the article you're criticising.

  • 40.
  • At 04:45 PM on 05 Nov 2007,
  • Flik wrote:

This article assumes also that the bus companies would lower fares when, lets be honest, it would be more likely they would pocket the profit of lower wage workers than transfer the savings to the paying public.

  • 41.
  • At 04:55 PM on 05 Nov 2007,
  • Neil S wrote:

Randy Maas (point 19.) - you are clearly not as bright as you think you are.

"There are just so many things (jobs) that can be done in any country". What a ludicrous statement. Economic activity (and by extension employment) is governed by a multitude of factors that constantly shift over time. How else do you explain the fact that more people are employed in the UK now than ever before?

The point that Evan (correctly) makes is that migrant workers demand goods and services in the same way that UK nationals do. As a result, a net inflow of migration can actually stimulate activity and boost employment.

What's more, there are good reasons to think faced with the looming demographic challenges posed by an ageing population, the only way the UK (and US for that matter) can sustain recent growth rates is by attracting a constant flow of migrant workers.

Unfortunately your misinformed line of argument is also peddled by the bulk of commentators in this country and that is preventing us from having a proper debate on the pros and cons of migration.

"...it would be silly to think that in the absence of migrants, the native British would eat 8% more."

Hah! Ho! Hmmm ... Well written article.

  • 43.
  • At 05:43 PM on 05 Nov 2007,
  • Hannah wrote:

This is an amazing, straightforward and informed view of immigration. What a relief!

The frustrating problem (as you can see from some of the previous posts here)is you will never convince the racist & ignorant people in this country, no matter how much proof you have.

With every wave of immigration there is a wave of xenophobia from doom-saying locals, yet the economy goes from strength to strength. If immigrants were such a threat, the economy would have collapsed years ago.

I am sick and tired of misinformed people taking everything at face value and saying, simplistically "1 job to foreign worker = 1 Brit on the dole and 1 homeless family"

I am also sick and tired of the same people blaming absolutely EVERYTHING that's wrong in this country on immigrants. It's much easier to blame everything on other people and to point the finger, rather than take some of the blame.

  • 44.
  • At 06:36 PM on 05 Nov 2007,
  • Pete wrote:

Prices on the buses go up not down My mortgage went up this year, food went up. So who really benefits?

In principle, I have some sympathy with the arguments presented. However the problem with economic theories is that they assume a 'perfect market' where supply and demand meet. Immigration on a sensible scale to fill defined skill shortages is sensible but there is no real assessment of what the skills shortages are and the effects of filling that shortage with foreign immigrants e.g. extra homes, schooling, NHS provision haven't been worked out either. The Government has been woefully inadequate in looking after their own citizens, left it up to 'the market' and the criticism is my view, wholly justified.

  • 45.
  • At 06:41 PM on 05 Nov 2007,
  • Pix6, Vienna wrote:

An interesting article.

I realise the word "demand" is being used in a particular context here, but would it not be fairer to say [immigrants]...may settle for (rather than demand) a lower wage [than a British worker]? I doubt they actually "demand" to be paid less!
I would also be interested to know exactly how immigrants "use housing in different ways to the rest of us"... Is this a politically correct way of saying that they are more likely to tolerate overcrowded accommodation for financial reasons?

  • 46.
  • At 06:46 PM on 05 Nov 2007,
  • Mark Dunn wrote:

The newly arrived Eastern European immigrants will not be competing for his job or his pampered friends in the BBC. So he can benefit from the reduced price of Coffee Latte, cheap cleaners and work men. He will not have to worry about the excessively high house prices, the overcrowding and his wages being held down. It is like most things in life, the rich will benefit and the poor will suffer.
Evan, I hope you and your rich friends enjoy the great benefits of immigration but remember it is the poorer people in our country who will have to pay the cost.

  • 47.
  • At 06:52 PM on 05 Nov 2007,
  • JD wrote:

In reply to comment 17 - incinerating waste actually reduces pollution. Incinerators actually only make up about 10% of the facilities where waste is burnt! The incinerators in these facilities operate at about 1100 degrees C which destroys nearly all the particles and gases that you regard as pollutants. Alongside this they use very advanced 'scrubber' systems to remove most of the pollutants that are produced. Electricity can be generated using the heat, and in addition the heat generated can then be distributed around local houses and businesses. This therefore reduces our reliance on fossil fuels (and nuclear power, which undoubtedly you are misguidedly against). Also, if we incinerate the waste we reduce the amount of waste sent to landfill and consequently we reduce the amount of methane released from landfills (and as you will know, methane is a very potent greenhouse gas). Check this out: http://en.wikipedia.org/wiki/Waste-to-energy Benefits all round!

  • 48.
  • At 07:20 PM on 05 Nov 2007,
  • Robert wrote:

Taking a long term view, I don't really think anybody has an issue with hiring foreign workers. However, what is of more concern is the fact that foreigners working in the UK are pretty much entitled to a passport after a short stay here.

If these foreign workers are from the EU, then taking British citizenship should not be possible (after all, what can be the point? We are all 'EU citizens' anyway). If they are non-EU citizens, they shouldn't be here in the first place: there is plenty of skilled and affordable labour in 'New Europe', so why do we need to look elsewhere?

  • 49.
  • At 07:28 PM on 05 Nov 2007,
  • Helen Carter wrote:

I am a British bus driver......at least I was. Having to economize on food at the end of a 70.hr. work week, working 13 days out of 14, never having a holiday or being able to afford the most basic requirements of life in the 4th richest country on earth. Yup, I got on my bike. In fact, I left the country and have a standard of living, benefits, and leisure time I could never have dreamed of in UK. I feel really, really sorry for those desperate foreigners who's life in their home country must be so awful that they have to come to UK and drive a bus. I was fortunate that I could give up having just an existence and get my life back and I appreciate it every single day.

  • 50.
  • At 07:32 PM on 05 Nov 2007,
  • Josie wrote:

In response to Alison from Bath, bus fares in London have been reducing steadily since the introduction of the Oystercard. It's amazing...I've never come across bus fares going down anywhere else either! I've started using the bus!

  • 51.
  • At 07:41 PM on 05 Nov 2007,
  • David wrote:

Some very good theories Evan but you need to consider the facts of an actual case involving bus drivers. Approximatley 2 years ago East Midlands Today covered a story of a Nottingham bus company that claimed they could not recruit the numbers of bus drivers they required. Therefore, they went to Poland and recruited them there. After listening to the company's representative trying to justify the policy they spoke to a union reprsentative. He revealed all the other Nottingham bus companies were managing to recruit drivers and the reason was that the company being featured paid lower wages than anyone else, hence the shortage.

Excellent blog, well written and very interesting.

As a lot of people said, British drivers don't want the work, me included, but generally it is because of the way the public treat most public sector workers, not just bus drivers. My only fear is that the drivers and companies are under no real obligation to train to the standard we should expect when paying top prices for our seat.

I therefore champion the CPC that comes in next year, so that, no matter which language the driver speaks, his work language will be that of UK Road Law. The most important langauge a bus driver should understand.

  • 53.
  • At 08:54 PM on 05 Nov 2007,
  • Emma wrote:

How about e) less people use buses?
- how many times have you tried to get on a bus in a town you dont know to find out that the bus driver can't understand you, you dont know how much the fare costs or even if the bus will take you to the right place. In the past the bus driver would tell you where to get off....in places i dont know i feel forced to spend extra money and get a cab

  • 54.
  • At 09:08 PM on 05 Nov 2007,
  • Bedd Gelert wrote:

Hmmm.. I think you could have chosen a better example than the privatised bus companies, as they don't appear to be anything close to an example of a 'perfect market' - more a duopoly or even a monopoly in local areas - and so any savings will go to increased divs for the shareholders, and very little will be passed on to the consumers.

This is an interesting and thought provoking article, although I think the impact on the 'donor countries' will be a useful one to consider.
If immigrants are helping to pay the current pensions of our population, as well as having to put their own money aside for 'personal pensions', that money is lost to the 'donor country', and must have implications for health and long term care of the elderly population ?

Over time [10 years ?] one would expect wages in the donor / donee countries to move toward each other.

But surely this is predicated on a level playing field across the EU, and as Mark Mardell points out, we are some years away from this, due to the differences in treaty obligations and no doubt the different currency regimes in place across the continent.

It is also interesting to speculate on the impact in France, where the 'market' for labour has other factors such as union agreements, minimum wage and social costs, restricted working week and high unemployment.

  • 55.
  • At 10:31 PM on 05 Nov 2007,
  • paw wrote:

you should also add

e) It reduces bus driving training places by 1.

you should also allow multiple choice - both c and e are happen ing - as most working class people know their salaries are being pushed down to the minimum wage.

It's refreshing to read some intelligent commentary on immigration. I'd be interested to hear you expand on this topic.

  • 57.
  • At 10:41 PM on 05 Nov 2007,
  • John (Kent) wrote:

This is why we love the Labour Broadcasting Corporation, Ooops sorry, I meant the Britsh Broadcasting Corporation, always able to spin a positive out of a negative. Oh course we want more immigration, that way we can concrete over the entire south east of England and watch it break off and sink into the sea under it's own weight taking Westminister/BBC's controllers with it! Maybe Davies should consider the real financial cost of immigration and forget the dumb quiz. I do think he would make a great Labour candidate though!

Re: For example, they may fill a gap that no-one British was available to fill. They may demand a lower wage.
So this is "taking" a job from a "british person" then!
If the immigrant did not take the job, on probably under minimum wage, the company would have had to pay the correct money for the job and would have employed a UK resident. Effectivly under-cutting the british work force AKA stealing jobs! (Ask any builder plumber or tesco's factory worker).
Big business is the only thing to make a profit from this!!!!!

  • 59.
  • At 11:27 PM on 05 Nov 2007,
  • marcmc wrote:

Oh yeah, i nearly forgot.
We already have immigrants on lower than minimum wage and the companys I'm sure are reaping huge benefits.
HOWEVER: For the normal man on the street things WILL not and HAVE not got cheaper. The money just goes to the shareholders.
END OF STORY!
People able to work for less than uk workers, is ruining the economy and the job prospects of millions.

  • 60.
  • At 11:43 PM on 05 Nov 2007,
  • Rory wrote:

I just ready Randy Maas' posting.

It made me laugh.

The problem with common sense is that, Randy, it's often wrong. If just guessing at the answers was useful, then people wouldn't spend years studying economic effects in detail. It's not that much fun. I know. I tried (and found out it wasn't for me).

The point is, the 'common sense' view of what is happening in the economy isn't accurate, and we require some form of economic modelling in order to get a realistic picture on which to base policy. The problem is, because the ill-informed often drown out the rational, we, sadly, in the UK often base policy on 'common sense', not on informed opinion.

So I'm glad that Evan keeps on pointing out the flaws in the common sense approach.

  • 61.
  • At 12:06 AM on 06 Nov 2007,
  • jay wrote:

You forgot e) driver gets lost whilst on route. The driver on Sunday didn't know the route and we got lost, one of the passengers had to sit up the front giving directions in simple english with hand signals!

  • 62.
  • At 05:00 AM on 06 Nov 2007,
  • Richard Carling wrote:

'After all, if there are more buses driven at lower cost, one would imagine that competition or regulation would create lower bus fares too.' - Evan Davis

Sadly there is little to no competition in the bus industry and, since Thatcher did away with it, no regulation either.

  • 63.
  • At 05:14 AM on 06 Nov 2007,
  • Doug wrote:

I left the already overcrowded UK in 2004, doesn't sound like its getting any less crowded, and the thought of three million new homes being required to help with the housing shortage which must in part be due to higher migration to Britain does not make me want to come back, even if there are enough bus drivers!

  • 64.
  • At 09:06 AM on 06 Nov 2007,
  • Andrew M wrote:

The whole idea of the free market is that prices (in this case bus driver's wages) adapt and finally reach a level that is justified by the balance of supply and demand. This means that a shortage of bus drivers pushes up bus driving wages and this in turn encourages more people to drive buses until eventually a balance is found.

Immigration is the trump card of capitalism in subverting this process by always bringing fresh labour onto the market and so denying workers their rightful wages. Maybe an immigrant is happy to work for less and to put up with more abuse. But I don't see anything humane about brining immigrants into a country with the express purpose of abusing and exploiting them.

So on the one hand we see capitalism shoring up its own bottom line by such practices as excessive interpretation of copyright law and clamping down on single mothers and grannies who download immature and infantile music from the internet or wear fake Lacostes, while on the other we see workers being denied the same mechanism. If you believe this editorial, then you should see no harm in exchanging your real Gucci bags for fake ones from China. After all, its making Gucci bags cheaper for all of us.

And when I catch a bus in a town I don't know, I like to ask the bus driver where he's going and where to alight for my destination and how the fares system work. Increasingly, I'm running into bus drivers who don't have detailed local knowledge or don't even speak adequate English. I'd prefer to pay slightly higher fares and het the better service.

  • 65.
  • At 09:06 AM on 06 Nov 2007,
  • PJ wrote:

It is frightening to think that Mike (message 5) is a manager for a bus company! He says "The majority of a bus fare pays for the drivers wages" He also says that a driver's wage is between £8 and £12 an hour.

So let's first look at this simplistically. In my neck of the woods it typically costs £2.00 to travel about 4 miles - taking into account "rests", buses cover about 12 miles in an hour - at the very least 8 miles, I would have thought. So, on a 70 seater bus that is full, the potential revenue is 70 x £2.00 just for the first four miles. Hmmm... £140 rather pays for more than the driver's wage, doesn't it? Even at £12 an hour!

On an 8 mile journey, the bus only needs to carry 6 separate passengers for part of the journey to cover the driver's wage.

Now, let's be more thoughtful...
Suppose on average, a bus travels just half full - and let's assume that the fare for the full 8 miles is "only" £2.50. The bus still takes 35 x £2.50 = £87.50 in an hour.

But if you put the fares UP, you might get more revenue, but you might get fewer passengers, and get less income overall. If you put the fares DOWN, you might get less revenue, but you might get more passengers, and get more income overall.

The fact is, that it is impossible to say how much of any given fare goes towards the driver's wage.

In fact, I'm sorry, but neither drivers' wages, nor the cost of fuel justifies the ridiculous bus fares that we have to pay nowadays. What does explain it, is the profiteering privately owned bus companies; who should belong to local Councils.

  • 66.
  • At 09:21 AM on 06 Nov 2007,
  • Simon Mellon wrote:

George Neil is right - what happens is that the bus driver can no longer tell you where to get off the bus to get to Park Street or the Red Lion.

  • 67.
  • At 09:25 AM on 06 Nov 2007,
  • Mark wrote:

If the effect on the economy is neutral, this means that the best course for an already over-crowded nation is to restrict immigration.

  • 68.
  • At 09:33 AM on 06 Nov 2007,
  • Tin Wheeler wrote:

Of course the question never mentioned what country we are looking at. There are plenty of British bus companies based in other countries employing 'local' bus drivers, but bringing the profits back the UK at the expense of the country they are opperating in.

  • 69.
  • At 09:49 AM on 06 Nov 2007,
  • stephen wrote:

I agree with comment 11. Many of the legitimate migrant workers immediately ship their money back to the family at home and spend little of it on UK goods and services. They live a meagre existence when they are here. (I would suggest a similar effect to the 'paradox of thrift' on our economy)

This does absolutely nothing to help our economy other than drain the resources they abuse when they are here. Plus, there are many not taking the legitimate route and merely syphoning as much as they can from the benefits system we have in the UK.

I am all for a global, fully mobile economy but I think ours is having the Mickey taken at present.

  • 70.
  • At 10:20 AM on 06 Nov 2007,
  • jimadore wrote:

Cheap wages in crease profit to companys !!!

  • 71.
  • At 10:24 AM on 06 Nov 2007,
  • Scott Graham wrote:

Evan, in response to your multiple choice question;

a) it takes away the job of a British bus driver?
YES, if the company offers better wages a British Driver will be available.

b) it increases the number of bus drivers we have?
NO, as above if the company offers better wages a British Driver will be available, therefore the same number of drivers.

c) it undercuts the wages of British bus drivers?
YES

d) it reduces bus fares for British passengers?
NO CHANCE

What are the results of paying drivers more?

Bus fares may have to go up; meaning slightly higher inflation everyone has less to spend on their Mortgage which may result in an end to the stupid house prices that exist.

Very possibly we would be removing British people from unemployment benefits and placing them in a Tax Paying situation. The higher the wages they are paid, the more money that goes back into the Country.

None of this of course can happen until the UK changes its immigration policy and only allows skilled people in to the Country.

Until this day I will continue to live and work abroad like the many thousands of other skilled Britons who are leaving precisely because of the issues discussed above and yes I did have to possess skills and qualification to allow me to stay and work in the UAE.

Scott Graham
United Arab Emirates

p.s. My wife used to work in a transport office for a large UK company. They started employing Polish workers because they could pay them minimum wage, not because of availability, however since many did not understand English well and British signposts (especially Low Bridge) the company insurance bill doubled in three years more than offsetting any savings they had made.

  • 72.
  • At 10:27 AM on 06 Nov 2007,
  • Graham Bartlett wrote:

To answer Randy Maas's comment 19:-

1) "Family takes care of its own first and foremost" has the direct result that whites give jobs to whites. As a resident of the US, you surely should know about Jim Crow laws and other results of segregation that derive from this attitude. The US still has the most segregated society in the developed world as a direct result of this.

2) "There are just so many jobs". True, but many of those jobs cannot be filled by British workers, due to pay or working hours not meeting British expectations.

3) A bus *will* remain idle if a route is not profitable. If there aren't enough passengers to pay for the driver's wages, fuel for the bus, maintenance and so on, then it's better for the bus company to keep that bus in the depot and get nothing than to send it out and lose money. So the more you have to pay the driver, the more passengers you need. This may make some routes uneconomical, thereby depriving certain areas of public transport.

4) Unions are mostly concerned with skilled professions. Most of the low-paid jobs taken by immigrants are not skilled - consider Mexican fruit-pickers in the US, for example. There are unlikely to be unions involved to object.

5) Yes, there are only so many things that can be done. But we don't seem to have reached saturation point yet! So in unskilled areas such as fruit-picking, there are still new jobs to go round. And even in skilled jobs, there is still plenty of demand for teachers, doctors, nurses, engineers, etc..

6) You seem to have misread that food analogy. Evan actually said that Brits *wouldn't* eat 8% extra food. As you say, the result would be less food grown, matching the lower demand - but there would still be the capacity for an extra 8% food to be grown in the country. Closer reading of the text would seem to be in order.

  • 73.
  • At 10:49 AM on 06 Nov 2007,
  • Ben Turner wrote:

A few more options for you;
e) decreases the sense of community as the foriegn bus driver goes to his own culture's shops, churches and social clubs.
f) increases already severe congestion on rail and road networks which cannot be expanded due to lack of space.
g) increases pressure on an already overpriced housing market, in cities where new homes can only be built very distant from the centre.
h) increases the nation's vulnerability to an economic downturn.

  • 74.
  • At 10:50 AM on 06 Nov 2007,
  • David wrote:

Excellent Article - it is refreshing to see the economics written out without the usual nationalistic rage. Working in population research it is really frustrating to see the data and arguements manipulated by the 'media'...... thank you!

  • 75.
  • At 11:03 AM on 06 Nov 2007,
  • Kelly wrote:

What about the fact that foreign bus drivers don't know the local area, and often don't speak enough English to answer questions from passengers?

I can recall a situation in which I asked a foreign bus driver if his bus went to "Road A", and I said "if it does could I have a £1 ticket please". He said "Yes, yes" and issued a £1 ticket. With hindsight it appears he only understood the "£1 ticket" part, as his bus went nowhere near "Road A", and I ended up stranded in the middle of nowhere. When I asked him how to get to "Road A" from the present location he just looked at me blankly; he obviously didn't have a clue about where different streets were, and it appeared that he didn't even have a clue about what I was saying.

  • 76.
  • At 11:24 AM on 06 Nov 2007,
  • Andy Williams wrote:

I work in a skilled IT job. 2-3 years ago the starting pay for this job was £19,000. It is now £14,700. Why? Because the first big wave of eastern europeans have now setteled and are moving out of the low paid jobs and into the more skilled ones. Employers are taking advantage of this and the wage levels are dropping.

Mass immigration is starting to depress the skilled sector. In addition, my company, a major world-wide company, has now started targetting graduate management level material from eastern europe again for far lower wages than it used to pay to UK graduate managerial staff.

When this wage depression was only affecting non-skilled jobs in manual labour and service industries most people didn't really care because it kept the cost of goods in the shops down. Now however this wage depression is affecting the skilled sector and starting to affect graduate-level managment and that more than anything is probably why the government is starting to worry. It's now affecting poeple who usually vote and we can't be having that can we.

It's just a shame they're not moving into the political sphere. They could be just as incompetent as the garbage who run the country now, but for half the price. Bargain.

  • 77.
  • At 11:41 AM on 06 Nov 2007,
  • Chris wrote:

Sound article.

Regarding the wages, due to the fact that bus companies are generally heavily unionised, all drivers' wages are set, and only differ due to the amount of overtime worked.

  • 78.
  • At 12:30 PM on 06 Nov 2007,
  • Sarah wrote:

Oyster card fares for London buses have just gone down from £1 to 90p.

  • 79.
  • At 12:30 PM on 06 Nov 2007,
  • Stacy Miller wrote:

I'm another person who has yet to see the presence of migrant workers on their local buses pushing fares down. They've just gone UP. Again. And there's already a notice for further increases within the next six months.

Strangely enough it now costs more for a return journey into town (just 20 minutes away with motorised transport) than it does to buy a full day ticket, so I now have to buy a dayrider. But that's another rant!

In my short experience of employment, migrant workers don't 'take up' the average person's job. It's college and university-age students who suffer.

I recently worked at a local, independent coffee shop which, after the summer rush was over, fired all the British staff and replaced them with migrant workers. I just managed to hang on by the skin of my teeth and became "the only English girl we've got" (their words to the regulars, not mine).

A lot of my friends (we're all aged 17 to 21) can't find part-time employment any more because the standard "student jobs" are already filled with migrant workers.

No wonder everyone thinks students are lazy... and we're only going to get lazier at this rate!

  • 80.
  • At 12:40 PM on 06 Nov 2007,
  • Andi wrote:

My relatives were immigrants - about 1,500 years ago maybe...

  • 81.
  • At 12:45 PM on 06 Nov 2007,
  • Poppaea wrote:

Lots of Polish bus drivers where I am - no complaints about them; if British workers wanted the jobs, they've had plenty of time to apply for them. These guys turn up, don't appear to throw sickies just cos it's raining, and for the most part are more polite than their British counterparts. Bring more of them, that's what I say!

  • 82.
  • At 12:57 PM on 06 Nov 2007,
  • Rebecca Hughes wrote:

Since I have been using the public transport network in Sheffield for commuting, I have experienced one price increase and two price reductions. Yes, reductions!
The new fares are more about ticket restructuring and competition from other companies, but this does show flexibility exists, perhaps due to migrant labour.
I am currently spending £6.50 LESS on my journey to work each WEEK than I was a month ago!

  • 83.
  • At 12:59 PM on 06 Nov 2007,
  • Phil T. wrote:

Evan's assumptions includes a very big one in connection with whether bus markets are competitive. Given the number of times that such markets have been investigated by the OFT one can say that prices would not adjust as easily as the article impplies or not at all. In which case the chief benefit of cheaper labour accrues to the owners of firms with such market power (bus company shareholders). This is true throughout a lot of the economy, meaning that much of the benefit does not accrue to the average consumer, who are instead finding their wages being pushed down whilst the price of goods and services remains level or increasing (especially housing, petrol and food). This article is rather poor in its overall impression.

  • 84.
  • At 01:11 PM on 06 Nov 2007,
  • Paul wrote:

People seem to focus on economics when debating the pros and cons of immigration.

However there are other issues, to list just a few:
1) Cultural change and loss of our culture. Depending on your view point you may see this as a pro or a con

2) Communication difficulties. I read of schools in London and Luton ( and many other towns/cities ) where they speak with pride of their school having 50+ different languages. However such diversity does bring challenges and extra costs and problems.

3) Limited resources. The South East water is, in the summer at least, becoming an increasingly scarce resource, due partly to environmental changes but also increases in population. If we increase population then either each person must use less water or new and more expensive ways must be found of obtaining water. Water is only one finite resource – energy is another. Again more people = more energy = more pollution.

4) Increasing population density and general business. More people generates more traffic , more pollution, more noise and so on. Sure parts of Scotland are virtually empty and could fit a few more million people in there, but most of the jobs are not in Scotland but the South East.


Pro immigration people, like Evan, seem to operate on the more = better philosophy. And yes more does have advantages but it will bring big disadvantages – the main one being poorer quality of life. And where does it stop? Population of 75M? 150m? Is our country’s capacity to take in immigrants truly unlimited?

Of course England with a 150 million population will be a country with a truly massive economy but one of scare resources spread out ever more thinly, of traffic jams of epic proportions, of constant noise, of decreasing green spaces and places for alone time.

The trouble is the argument involves personal preferences. Personally I like a bit of peace and quiet but I had a friend from Taipei in Taiwan who found London too quiet and boring! It’s all about personal preferences and what you’re used to!

  • 85.
  • At 01:12 PM on 06 Nov 2007,
  • john crowley wrote:

Let's make Evan Davis minister for employment. He can then induct,say 2million foreign workers,thereby,by his own argument magically creating 2million aditional jobs,making 4million in total ! Marvellous !! Why didn't I think of that ?

  • 86.
  • At 01:19 PM on 06 Nov 2007,
  • Michael wrote:

An brilliant post Evan; cutting through the political hype to the actual economic view of the situation.

Alison: You must remember that prices don't have to fall nominally, to fall in real terms. If the bus prices rise slower than general inflation, there is a clear gain. However because buses rely on a very particular subset of the economic basket of goods it is more accurate to say that the fares are really falling when they rise less slowly than "Bus Inflation".

  • 87.
  • At 01:37 PM on 06 Nov 2007,
  • disgusted from somewhere wrote:

Response To Randy Maas.
Genius Evan may not be, but he's a lot brighter than you. An extraordinary interpretation, even more extraordinary coming from someone who comes from a country built on immigration. No-one else(quite rightly) bothered to respond to your points, I won't either.

Note to Evan. It's already a complex and difficult subject with so many aspects, but I do think infrastructure issues, in particular housing, should have been mentioned.

IT MAKES ROAD SAFETY A JOKE!
99% of foreign drivers ive had the displeasure to have travelled with are DANGEROUS! they are not properly trained, do not follow the highway code as a "professional driver" should and quite simply it is a disgrace that these people are allowed a job that could endagner lives.

all so that the bus companies can rip the public off even more.

  • 89.
  • At 01:47 PM on 06 Nov 2007,
  • Joe Blow american wrote:

I am suprised you are allowed to post a lot of american sites have closed off posting in order to control public opinion. The news is heavily controlled in America and negative stories on immigration censored. I dont think Europeans know how censored and controlled americans are. Of course it undercuts wage and off course it takes away jobs. Why all the sudden is necessary to flood countries with immigrants? Most important who is behind this? Whoever it is has lots of money to burn follow the money and you'll find the culprits.

  • 90.
  • At 01:48 PM on 06 Nov 2007,
  • Adam wrote:

A very well argued and insightful analysis.

Just to add an example from my own company, I recently employed an immigrant in a project management role. With the extra help that I now have in project management, I can tackle larger projects, and have since employed 2 new British workers to deliver the projects. So in my case, employing an immigrant certainly didn't take jobs away from Brits, it helped to create them.

But coming back to the buses, option (d) may apply in a magical and theoretical competitive market, but here in London, bus fares only ever go in one direction, and it's not down.

  • 91.
  • At 01:48 PM on 06 Nov 2007,
  • Clothilde Simon wrote:

The migrant worker needs a house, so the supply of houses has to increase. Our country loses more fields and woods. Our cities become more congested.

I think this is important and can be proved, unlike the "simplifying assumptions" in the original article.

  • 92.
  • At 01:50 PM on 06 Nov 2007,
  • Curtis wrote:

Broadly speaking, I agree with Euan over the effects of immigration. In London, we have seen our bus fares (oystercard) fall from £1 to 90p, take eed numbers 4 and 21. (Nothing to do with mayorial elections?) Another key factor is the additional strain placed on our infrastructure. Ideally, additional taxes/council tax, should be paid for by immigrants through these extra jobs created, but the lag-effect has led councils to request more money for services and will lead to yet higher council tax bills certainly in the short term.

  • 93.
  • At 01:50 PM on 06 Nov 2007,
  • kaela wrote:

MY partner was hounded off the buses in Greater Manchester by school kids taunting, jibing, being foul mouthed and making her life a misery. Her job as a Bus Driver was made impossible for her. She was proud of her job and did it very well, working with Stagecoach.

She is not from a foreign country, she is a White British Female. Her crime? Being transsexual.

  • 94.
  • At 02:10 PM on 06 Nov 2007,
  • Stan Smith wrote:

Brilliant economic argument so long as you are not the one having his wages "pushed down" so that the rest of us can enjoy a better standard of living. ( so long as the cost savings are passed on of course)
A migrant with no dependents can work cheaper than a British worker with a family and a mortgage. Cheap foreign labour will cause poverty amongst British workers because they cannot reduce their cost of living
When will these economists begin to live in the real world

  • 95.
  • At 02:12 PM on 06 Nov 2007,
  • i wilson wrote:

lets face it, if you have ever tried to emigrate to another country eg: usa, oz or NZ - they are very ruthless about letting you in - I have done this - the UK is open to all - the politicians in UK spend their time awarding themselves pay rises and the EU creates the real laws now. Brown simply follows the EU and wasn't even elected in th UK.
I have thought about being a bus driver as I would earn more money than I do now - I am English by birth and past generations - England is not coping with the increase of population and neither would any other country - there is no planning now as no-one has a clue about population figures so there is no control or management of public infrastructure. We have become a panic society and I personally expect the situation to deteriorate over the next ten years.

  • 96.
  • At 02:14 PM on 06 Nov 2007,
  • Laurie West-Knights wrote:

But if pushed, I would tend to adopt the simplifying assumption implied by a fully functioning, competitive labour market, that on average migrants create exactly as many jobs as they fill. If 1.1 million migrants are employed, there are probably 1.1 million extra jobs.

It’s only an assumption, but it’s not a bad one. And perhaps I can defend it by using an analogy. If migrants eat 8% of our food, it would be silly to think that in the absence of migrants, the native British would eat 8% more.

That is pure tosh.

It's only an assertion, and it is utterly baseless. Basic economics: in the short term, when a job is filled there is then one less vacancy. In the long term, who knows what happens (except that we are all dead). But even in the long run, there is no sound basis for your "assumption". The economy may grow, it may not, as fast as the rate of new people arriving. All you do is assume the condition for the right answer, and then say "bingo - here's the right answer"

Anyone can play this game. Let's assume that petrol will be free in 2008. It's only an assumption, but it enables me to say that the cost of petrol in 2008 will be nil.

  • 97.
  • At 02:27 PM on 06 Nov 2007,
  • Paul Owen wrote:

Your choice of bus drivers Evan is a particularly poor one. I have recently worked as a bus driver for a major company. I didn't want to but needed the job. In London these jobs are quite well paid but elsewhere considerably less so. For years the company had difficulty recruiting because of the unsocial hours, stressful conditions and poor pay. Some garages were 100s of drivers short. They thus had to pay huge amounts of overtime to the drivers they did have which meant those drivers were able to earn decent money. Then they started recruiting Polish drivers. And they also started sacking British drivers. I had gone back to the job after a break and was sacked after 6 weeks for forgetting to sign a piece of paper on a couple of occasions. That is all. The same manager has sacked over 30 drivers in the last year - all of them British, not just white but Black and Asian too. And Polish drivers do not create jobs. There are only so many buses and only so many routes. This is controlled by regulators. This is a clear example of admittedly hard working Polish drivers being preferred because they accept less pay and don't know their employment rights and so are easier to manage.

  • 98.
  • At 03:35 PM on 06 Nov 2007,
  • aidan o'neill wrote:

Can I riposte to Randy Maas, at post 19?

Randy Maas point 1: You are right, family is family. Foreign labour can become family by moving in to your metaphorical spare room - this overcomes the disadvantage of distance when bus driving. This move has a cost to the country losing the labour.

Randy Maas point 2: There are infinitely more jobs in any economy than people to do them. The investment in high capital cost machinery and automation demonstrates this point every day. In Nepal it is still cheaper to hire 200 people with shovels and baskets for 10 days in rural parts to move earth spoil than hiring a driver and sending in a single caterpillar Earthmover to move the same volume. Now, try that option in NYC.

Randy Maas point 3: A market will not expand to fill the capacity available; the buses will be idle if there is no demand. All the bus drivers in the world won’t change that. Ticket prices decide demand. In October 2001, a quarter of all US Civil Airliners were parked up in the Mojave Desert. This disproves your point entirely; when you note that fare price conscious Southwest Airlines were unaffected.

Randy Maas point 4: Imported labour reduces the cost of labour by allowing direct substitution of skilled staff. Crucially it encourages indirect labour substitution by splitting up jobs to allow less well qualified people to do them. This spreads the work, reduces the manufacturing costs and allows manufacturers to either pocket the difference or pass it on to the customer. Union memberships have consistently fallen in the UK for a reason; they no longer represent their members and like all organisations are only focussed on self survival.

Randy Maas point 5: Your assumption is that there is a fixed amount of work available in any economy is false. New services always develop when new lower cost providers join any local economy. In the 1980s there were no Polish Housekeepers in the UK, now there are thousands.

Randy Maas point 6: You should read the point again – he makes precisely your point.

Randy Maas point 7: Follow your own advice: get a job driving a bus. It is much less complicated than reading 1,000 words and comprehending some of them, and understanding none of the sentences.

  • 99.
  • At 04:18 PM on 06 Nov 2007,
  • Natalie wrote:

I have to say that this article makes a great deal of sense and it is refreshing to see something so far from the Daily Mail point of view regarding immigration. I have no problem with a foreign bus driver. All I would like is a bus driver who has a grasp of English and basic knowledge of the local area. The number of times I have heard people get on the bus to ask whether it goes past a well known landmark (e.g. the millenium dome) or down a particular main road and the driver has no idea is shocking. It would also be nice if bus drivers would desist from slamming their foot on the accelerator in an attempt to reach 30mph the moment they pull away from a bus stop as it tends to hurl children, old women and people who have not found a seat around the bus.

  • 100.
  • At 04:22 PM on 06 Nov 2007,
  • Colin Brown wrote:

"What concerns me more is the lack of road rules and regulations and street knowledge of a foreign driver"

I suspect they know more about the road rules etc than most British drivers do, the standard of driving on our roads is appalling.

  • 101.
  • At 04:40 PM on 06 Nov 2007,
  • Alan wrote:

I notice that there is no mention of housing requirements for the 'neutral' migrants. I have a friend who is registered disabled (althought capable of independent living) and wishes to move out of his parents' home. He is considered 'low priority' on the council's housing list because we are in an area of high migration.

  • 102.
  • At 04:49 PM on 06 Nov 2007,
  • en wrote:

the peak time bus travel has gotten much worse over past year as a result of mushrooming numbers of Polish labourers who clog up the public transport in the morning. Wouldn't it be fair if we got some drivers as well???
london bus commuter

  • 103.
  • At 04:52 PM on 06 Nov 2007,
  • ajay wrote:

Good reading. I came to this`country from India when Britain had a shortage o doctors. In 2003 0r so there was an acute shortage of doctors,nurses and computer software progammers . where were all those highly pampered Brits then. Pampered because this is a rich country and nowhere in the world people get this much in fact too muck. This is a competitive world now with competiotion from India and China. Remember children in India now work so hard.they go to school at 8am and come back at 8pm after tuitions while children in this country will be having their alcohol at that time.
No point crying over spilt milk.

  • 104.
  • At 05:39 PM on 06 Nov 2007,
  • Mike Dixon wrote:

In this case B is the correct answer. Having said this, it is true if the job is a job created by the Economy and not by the Government creating jobs for political rather than economic reasons. If it is a 'Political' job either A or B may be correct or even both. Therefore the distinction is very important.

There is nothing wrong with Politally motivated jobs as such in fact it is frequently used to help regenerate areas where traditional, usually industrial, jobs have declined or disappeared. I believe the problems arise where there is insufficient investment to sustain employment in the longer term.

I must say I am more tha a little supprised that Randy Maas should write from the U.S.A. in the way he does. The United States was and is built on the free movement of labour, from overseas, from the poor South to industry in the North.

Britain imported workers from Italy as miners and to work in the brick fields. After the Second World War West Indians manned the London trnsport system and Spaniards worked in hotels and bars. Now the Spaniard have gone home and we are importing workers from Eastern Europe frrom both inside and outside the European Union. Not to mention North Africa, South America and the Far East because it is boom times here. Whether the British take advantage of the opportunities is really up to them.

Mike, Barcelona, Spain.

  • 105.
  • At 06:44 PM on 06 Nov 2007,
  • ajay wrote:

Good reading. I came to this`country from India when Britain had a shortage o doctors. In 2003 0r so there was an acute shortage of doctors,nurses and computer software progammers . where were all those highly pampered Brits then. Pampered because this is a rich country and nowhere in the world people get this much in fact too muck. This is a competitive world now with competiotion from India and China. Remember children in India now work so hard.they go to school at 8am and come back at 8pm after tuitions while children in this country will be having their alcohol at that time.
No point crying over spilt milk.

  • 106.
  • At 07:24 PM on 06 Nov 2007,
  • Calum wrote:

Well, Randy, lets have a look at your refutation...

1) Britain is a country of immigrants. In the last hundred years my part of the country has seen waves of Hungarians, Italians, Jews, Poles (the first wave, not the current one), Pakistanis, Afro-Caribbeans, and we aren't refusing them jobs on the basis that I'm not related to them. I don't see any reason to start now.

2) Wrong. As an economy develops, new jobs are created of a kind that didn't exist before. Today there are very few steel workers, ship-builders or coalminers in the UK, but there are a lot of web designers, beauty therapists, computer programmers, etc. The job market changes all the time and to suggest that the UK only has a set amount of work that needs to be done is entirely misconceived.

3) The bus company won't buy more buses if it can't crew them. It might manage to continue to run the buses it has but as cities get busier (through, ahem, economic growth) more buses would be useful to ferry people around.

4) See (2). There are not that many unionised industries left and those with effective unions are shooting themselves in the foot (would you sign a contract with Royal Mail to deliver a large volume of letters or packages after recent events?). In any case, wage competition works both ways - it would take a very good offer to get me to move from my current job, thankyou.

5) Well, when you get a job, you earn money. If you're anything like most of us, you spend it. That money you're spending on goods and services requires people to provide. So if you employ a few hundred thousand Poles, there is bound to be a knock-on effect when they start spending - even if some of it does end up winging its way overseas. Also, see (2).

6) Uh...you are saying exactly what Evan said. Your analysis is rather crude, but you've got something right. Well done!

7) Since you don't feel the need to mention your own choice of career, I'll avoid casting aspersions, except to say that if you aspire to be a bus driver you are certainly choosing a job in which your analytical skills will be well suited.

  • 107.
  • At 08:26 PM on 06 Nov 2007,
  • Ruth wrote:

from an entirely economic point of view - it seems more efficient to import young adults from other countries, than to grow our own here, having to feed them and educate them for 20 years before they produce anything

  • 108.
  • At 09:02 PM on 06 Nov 2007,
  • Diane wrote:

It's a pleasure to read a sensible immigration scenario and also the supporting letters, such a change from the usual HYS ranting. But I must respond that bus fares are going down in London, surely? Now we have a flat fare for any length of journey, I can ride the 15 or so miles to Heathrow with my luggage for 90p (using Oystercard prepay, which I do)! I think it used to cost around £2.50, and frankly it was good value even then. Whether the change is due to hiring migrant drivers, I couldn't say.

  • 109.
  • At 09:30 PM on 06 Nov 2007,
  • A Hood wrote:

I don't particlarly care who or where the workers come from as long as they work.
What i do care about is getting our indiginous lazy sods off their backsides and take these jobs in the first place, then, when that is completed we can look to immigrant labour to fill whats left.
Does this make sense or what?
Is anybody listening?

  • 110.
  • At 01:15 AM on 07 Nov 2007,
  • Steve K wrote:

Here you quote a headline:

"“Britons lose out on jobs and housing” "

You then go on to talk about a very flexible job market.

Then finish up with a sunmary as if you have 'dealt' with this issue.

Really you have not, because the Housing Market is not as flexible as the job market and there has not been 1.1m new homes created plus the additional requirements of our changing society of an increasing number of people living alone.

I really don't care about jobs.

I do really care about housing, and it is not all the fault of immigrants, but they have come at a particular bad time.

Our housing has been ignored and used as a tool for profit for decades, it has been tight since the mid 80s, housing costs have during my entire life been extremely high.

Now an influx of immigrants have arrived and the tight belt of our housing situation has evolved into a crisis.

It wasn't working before, but the extra strain has severely broken it.

You did not really deal with that, but quoted the headline above so it seemed like you had.

  • 111.
  • At 01:33 AM on 07 Nov 2007,
  • Rob Morrison wrote:

Re Randy Maas's comment - I think that's not a Native American surname? Think about it.

Also, sending money abroad...that's a little unrealistic. Immigrant A sends 5000 pounds home, the family lay out on a new-ish Toyota, which originally came on a ship insured with Lloyd's of London (do I hear that money coming back?). The Toyota workers spend some of it on Harry Potter stuff or Burberry, some send their kids to an English language school, where - good lord - their teacher happens to be one of the six million expat UK citizens, in this case me. One way or another the money comes back.

As for housing pressures...ok 125 million people in Japan and I saw a house with a small garden 40 miles outside Tokyo for 35,000 Pounds. I think we are quite capable of making our own ludicrous housing problems without requiring any overseas assistance.

  • 112.
  • At 05:38 AM on 07 Nov 2007,
  • Mark wrote:

As you imply, Evan, in a frictionless world where markets always clear, there are no information asymmetries and people freely bargain their way to an optimal outcome all of the options could, for one instant or another, hold true AND we could achieve that economic nirvana in which everyone is made better off. However, as you also imply, we don't actually KNOW how far this frictionless state represents what actually happens in all areas of the economy, let alone just for bus services!

Suppose, for example, foreign workers do accept lower money wages to work as bus drivers. If bus companies absorb the additional net profit as a distribution to shareholders rather than passing it on as lower fares - because, for example, they act to restrain any competitive fall in prices - there will be SOME gain, inasmuch as the shareholders spend that extra dividend and create jobs through their spending. But they might not spend all of it, might postpone the spending...might do many things.

Hence the frictional elements, the elements of non-competitive behaviour, and what economists call the transaction costs (the frictional costs of making the market system work without difficulty) all get in the way of our assuming that in a perfectly ordered market economy migrant labour will find a value and create value.

What is worrying about recent policy on labour migration is precisely that the government is experimenting with our economy without actually knowing what the effect will be. In some sectors, it MAY price 'British people [out of] British jobs', in others it may create them. The guess, and it is a guess, is that labour markets are bow so free that the frictional elements won't create distortions.

What I want to see is a thorough appraisal of the effects, moderation of them where necessary and careful attention to the frictional elements. That is sensible economic policy. Open the doors and hoping all works well is an abdication of responsibility and atrociously bad government.

  • 113.
  • At 08:09 AM on 07 Nov 2007,
  • Phil M wrote:

The problem with this analysis is that it omits one crucial point. If we accept the writer's argument of net economic neutrality then to the overall economy there is no loss or gain. However, what actually occurs is that all workers wages are suppressed as the immigrant labour accepts lower wages (due to a combination of factors) while prices remain the same or continue to rise at the same rate -- falling prices of certain goods being due to exploited (often child) labour in asia (eg Primark, Asda etc). Thus, the additional wealth filters up to the corporations and their owners while the workers see their relative wages decrease as prices of goods, transport, housing etc continue to rise while wages remain static or continue to fall.
The overall economy may in theory benefit but it further exacerbates the already appalling disparity between rich and poor in modern Britain.

  • 114.
  • At 08:46 AM on 07 Nov 2007,
  • Nick wrote:

The Government line that 'immigrants do the jobs that the British don't want to do' seems rather odd to me. If this is the case then presumably before Poland flocked to the UK I would not have been able to :
1) Purchase anything from Primark
2) Purchase anything from Tchibo
3) Have a meal in a restaurant
4) Eat a burger
5) Drink coffee
I somehow remember doing all these things though ??

  • 115.
  • At 09:17 AM on 07 Nov 2007,
  • Ryan Taylor wrote:

The problem with imigrant labour is that their homeland becomes depopulated and our crowded island becomes more crowded putting pressure on the environment. In an ideal world the imigrants would have access to better jobs in thier homeland and the lazy chavs in this country would do more menial tasks for a living.

  • 116.
  • At 09:51 AM on 07 Nov 2007,
  • Thomas Lowry wrote:

As an ex bus driver I find that with the present high wages paid, there is a shortage of drivers in my home town and the companies are constantly advertising for them so, if immigrants take up these jobs whats the problem. There are also crews kept on what is called "Show up" who sit around waiting to be called if one of the proper crew fail to turn up for duty.

  • 117.
  • At 10:10 AM on 07 Nov 2007,
  • Caroline wrote:

In response to Alison, the student in Bath.

I recently got back from a while abroad to find the bus price on Oyster in London has gone from £1 to 90p and they are going to be frozen next year!
Saves me money and I think that is good value, except when I forget to top up and have to pay the extortionate single fare

  • 118.
  • At 10:12 AM on 07 Nov 2007,
  • Dragisa, Belgrade wrote:

Visiting London every few years, I've noticed constant increase in foreign bus drivers but also constant, if very moderate, increase in bus fares.

Talking to some Polish immigrants, I've learned that as much as 50-60% of everything they earn is sent overseas to their country of origin(of course, not everyone sends this much). Didn't talk to bus drivers, though.

You can take a various points of view, but the fact is that everything native Brits earn stays in the country while at least some percent of money earned by immigrants is sent overseas.

One can argue that more Polish tourists will visit UK if they know that there are a lot of Poles working in UK(bringing Polish culture, food, tradition...) and in that way bring some of that money back, but I don't think that there are any evidence(or they've not been published) to back this theory.

  • 119.
  • At 10:23 AM on 07 Nov 2007,
  • Ed wrote:

In response to Alison asking whether there were any examples of bus fares going down, just look at London, where anyone who uses an Oyster card just saw bus fares go down 10% to 90p. Admittedly if you use cash its still £2, but its still a reduction for the vast majority of bus users in London who don't have travelcards.

As far as I can see, migrants are only taking jobs that British people don't want to do (eg. fruit picking), or where there aren't enough British workers to meet supply (eg. the NHS, although that's debatable I admit).

  • 120.
  • At 11:10 AM on 07 Nov 2007,
  • Iain Scott wrote:

I might believe the 'imigration time bomb' scaremongering if there was any evidence of the many non-employed indigenous UK people suddenly finding it more difficult to get jobs because of the increases in migration. However, the reality seems to be that the majority of vacancies would merely remain unfilled (with all the knock-on damage to economic growth) if migrants didn't fill them. Sadly it's the hard-core of indigenous workers who seem happy to sit back and wait at our expense to wait for that 'perfect, well paid job' jop land on their laps that are the drain on the economy.

  • 121.
  • At 11:59 AM on 07 Nov 2007,
  • Rich wrote:

The analysis on jobs is probably correct, if we assume that migrants will take on the 'unskilled' jobs, therefore encouraging the 'natives' to become more skilled.

However, I disagree with your assumption that an equal number of jobs are created, certainly in my area, the growth in population is faster than the growth in opportunities.

Equally, your model ignores largely fixed resources such as housing, roads and landfills which will not expand at the same rate as population and will therefore result in a raised cost-of-living which (as we see now in house prices) easily outstrips the rate of growth of the economy.

  • 122.
  • At 12:48 PM on 07 Nov 2007,
  • Mike Collins wrote:

Evan,
The practical and simple examples you give are just the sort of common sense we need.

I too did a similar study as part of a degree course while working for Tfl. Unremarkably, I came to similar conclusions. The overseas workers employed on London Underground for example, were more highly educated than some of us Brits. As a consequence they also benefited from promotion quicker. Thus they recreated the vacancies they previously filled!

  • 123.
  • At 12:52 PM on 07 Nov 2007,
  • Scott Latham wrote:

A good article.

Alison (#4) states that despite many immigrant bus drivers in Bath bus fares have increased. Perhaps they would have increased even more if immigrant bus drivers had not been employed?

Randy (#19) suggests that there are "just so many things" that can be done in a country - ie a finite number of jobs. This is true of only a very small number of jobs, whose existance depends on something other than the number of customers (such as lighthouse keepers or the polisher of the crown jewels). For most jobs, the more people there are to sell to the more jobs there are. Imagine a brand new "immigrantville" is built, with a population of 500,000 all from abroad. This town would need shopkeepers, doctors, teachers, bus drivers etc etc - none of which could be the indigenous population, who are busy looking after people in the existing towns. In reality the 500,000 are spread throughout the country rather than in one place, but this has only a small effect on their overall demand for goods and services in the ecomony. Shops that had 5 staff now need 6 to cope with the immigrants etc. Their existance clearly creates at least some jobs, and probably rather closer to 500,000 than 0.

  • 124.
  • At 01:45 PM on 07 Nov 2007,
  • mat wrote:

Someone post above how some british dont want to work. i blame this on housing and the price of renting a home v wages. If your working in a low paid job most of your income goes on servicing rent council tax heating very small amount of money.
most of the eastern immigrants are young how immigrants older than 35 do you see in this country? You expect a large family to live with another large family in a 4 bedroom house, thats how the immigrants live how ever they have the option to leave while the brits dont.

If you want people not too claim benefits, you want your council tax reduced then the only way to resolve this, by building council homes which would reduce rent and bring down the price of homes.

We are sucking the life out of our young, they have to pay high rents, council tax etc.. ofcourse they want to just spend whats left of their money as they see no hope. BTL should be outlawed in this country yet to many labour mps own BTL.

  • 125.
  • At 02:42 PM on 07 Nov 2007,
  • Paul wrote:

I think you've missed an important point. The average migrant is of working age and comes to the UK to work, whereas a much higher number of British are economically inactive (retired, in full time education, unemployed, etc.).

What this means is that by adding 1 million migrants, you are improving the demographic of the population, the result is a higher proportion of UK residents (migrants and nationals) in work and not drawing on benefits.

  • 126.
  • At 04:16 PM on 07 Nov 2007,
  • Clair Jones wrote:

Whilst I am aware that bus drivers are not employed by the tourist board, surely having enough English to be able to tell passengers where their bus goes should be a requirement of the job?! Apparently not for Travel West Midlands and Travel Coventry?? Thanks

  • 127.
  • At 05:05 PM on 07 Nov 2007,
  • jon wrote:

In terms of economic growth (buying more stuff) immigration might be neutral. I like a low population density, so I don't want the population to grow by 10 million.

  • 128.
  • At 05:38 PM on 07 Nov 2007,
  • J. monk wrote:

I think that your assumptions are right, but surely in economics any long term view should take into account, times in the economy when everything isn't expanding, say in a recession. Suddenly people are without jobs or any means to find a job as they are all filled. This would build up a resentment quickly or do you suggest that all migrant workers are promptly sent back to their respective countries after x years of living in the uk with their children speaking english and feeling like uk citizens. I would argue that politically and prudently immigration should be tightly managed to prevent severe tensions when the economy next catches a cold. which it could at any time.

  • 129.
  • At 07:18 PM on 07 Nov 2007,
  • Bedd Gelert wrote:

Evan, I would be interested in your views on this dilemma.

The so-called 'classical' view of economics states that there should be very little unemployment, because if there is 'spare' capacity in the economy wages are 'bid down' until everyone who wants to find work, can.

I'm not enough of an economist to begin to understand the 'post-classical' model which would explain why that doesn't work in practice.

But my question is this. If there is a 'market distortion' because benefits in this country are often paid indefinitely, what does this mean in terms of providing a solution to 'spare capacity' ?

Does this mean that wages are too high, and should be dropped, so that companies can afford to employ more people, whether they be from the dole queue, or from abroad ?

Or are wages too low, and should be raised, to give a greater incentive to move from benefits [or indeed a low wage/low skills economy abroad], and potentially 'upskill' a workforce which can then provide more tax take?

I am not advocating that all of the benefits are 'wrong', and that we should stop paying them all, but in terms of trying to understand how the economy can work more efficiently, they do 'mask' getting a better understanding of the link between wages, skills and employment levels.

  • 130.
  • At 07:53 PM on 07 Nov 2007,
  • Jimmy wrote:

Evan, perhaps sign off your next article 'ceteris paribus' then your detractors will have less excuse to rant and show-off. Keep up the good work.

  • 131.
  • At 02:59 PM on 08 Nov 2007,
  • Vicky wrote:

Thank you for an interesting article. This is a very complex issue but I think I grasped most of the points made. I have a question. What is a bus driver?.

  • 132.
  • At 03:52 PM on 08 Nov 2007,
  • Jim wrote:

Re Alison: I was a student in Bath in the mid 90's when bus fares pretty much halved over night on the Uni route. A new bus company had set up in competition. I think they were called Badgerline. Doesn't add much to this debate but you did ask!

Re Evan: Do you know much about the second law of thermodynamics? I wouldn't mind betting 30 Zloty that it applies here!

  • 133.
  • At 04:08 PM on 08 Nov 2007,
  • Dan McCullam wrote:

In response to the comments that 'my bus fares have still gone up' - given the ever increasing costs of fuel, insurance, and other such costs, it's easy to argue that fares would have gone up by *more* if there hadn't been a reduction in labour costs.

  • 134.
  • At 05:03 PM on 08 Nov 2007,
  • Gaz wrote:

Have to say there is little I accept from the article.

I see no reason to believe that if a job slot is filled that means there will be another job created. That is referred to as wishful thinking.

Abusing the workers by paying below what is a reasonable living wage for the country they are trying to live in, is immoral, and saying that it creates jobs is no excuse. Am I to believe next that slaves are a good thing because they get things done at next to no cost ?

I would tend to adopt the simplifying assumption, if 1.1 million migrants are employed, there are probably no, or very few extra jobs.

One can not reasonably compare food with jobs. Food is a commodity that one can easy buy more or less of, and waste. Jobs can only be created if the circumstances are right. So any argument based on that comparison falls at the first hurdle. Whilst the situation isn't going to be simple to describe, as a first approximation there is no reason to believe that there is not a set number of jobs regardless of the number of immigrants.

That shows that a) and b) are correct.

Obviously c) is correct since who in their right mind employs someone who wants a decent wage when more profit can be made for the company by employing an equally competent worker prepared to work for a pittance ?

But do we have to agree with d) ? Only up to a point. It assumes that for every £ saved in wages, the company profit remains the same and the cost is reduced to the customer. But in practice we all know that reducing the price is the last thing a company wishes to do (except if a price war breaks out). Best to not rock the boat with one's competitors. instead convince the customer that your service/product is special, even if it's not.

So bus fares do not change much, and even if they did you won't be benefiting from using them to get to work, because some immigrant has filled the job you were hoping to get. So no savings for you.

But of course none of this tackles the other non-employment related problems that come with allowing more and more people to come into an already overcrowded country. The housing shortages, the problems supplying water, and such-like.

So the answer to the multiple choice question is a) true b) true up to a point c) true up to a point d) if true at all it is hardly noticeable.

  • 135.
  • At 08:54 PM on 08 Nov 2007,
  • steve wrote:

I vaguely remember from my O-level economics something about income being derived from three sources - land, capital and labour. Immigration increases the supply of labour, but not the other two; while the matching increase in demand is split over all three. So overall the supply of labour increases more than demand and the price of labour goes down. Meanwhile the price of land and capital goes up.

The end result is that the rich (who own the land and capital) get riched and the poor (who only provide the labour) get poorer. Isn't that exactly what has been happening?

  • 136.
  • At 09:07 AM on 09 Nov 2007,
  • Neil wrote:

Evan , an interesting article but merely a taster to the greater debate, and one which has unfortunately encouraged many comments on this post to suggest that this is the reason we should encourage immigration, with the implication that anybody in the anti-immigration lobby is just nationalistic or racist. The point I wish you had emphasised more is the productivity argument.

There are essentially only two ways to increase national income in a country, (1) increase population, or (2) increase productivity. Because the government in the last 10 years has miserably failed to deliver any productivity improvements(in fact destroying productivity by creating more centralised bureaucracy and subsidising failure in vain attempt to encourage “equality”), and despite all their empty rhetoric about a “knowledge economy”, they have decided to go for growth by importing lots of cheap labour to do arguably a very good job, but in very low-skilled, low wage jobs – pushing up National Income, dragging down the average (not shown in the statistics because of the massive growth in The City). This is no doubt because at this low unemployment rate, most British people without jobs are incapable of even the most menial tasks (or priced-out due to the relative attractiveness of the benefit system). Some benefit to the economy then.

However, the downside of this low-productivity-cram-them-in approach to the economy is (theoretically) exactly the problems the UK economy is suffering from today: gridlocked roads, air pollution, noise pollution, strained education and health infrastructure, social tension, high price inflation of basic essential items, and a self-declared “housing crisis” leading to civil war in the parishes and a more miserable new-housing stock than even post-war planners could have envisioned!

PRODUCTIVITY is the answer, not cram them in to deliberately keep the housing market going up! Low quality growth is making us a third-world country. Let’s really become a “knowledge economy”. Ha, ha! As if.

  • 137.
  • At 10:21 AM on 09 Nov 2007,
  • Jonathan wrote:

An excellent article, helpful and informative. There are still people who seem unable to engage with or understand what Evan has said (Mr No. 19 in particular)- but they merely demonstrate their ignorance. What is more astonishing, however, is that our own Prime Minister (who presumbably has at least a tangential grasp of economic theory) has gone much further- and now preaches the xenophobic, misguided, economically unsound (and BNP derived) doctrine "British Jobs for British Workers". A more despicable piece of dirty, low politics I have yet to see, and it is one for which I hope Mr Brown is roundly punished at the polls.

  • 138.
  • At 10:33 AM on 09 Nov 2007,
  • Steve wilson wrote:

I see BBC's left wing bias has crept into the pages normally left to capitalists.

There exists arguments both for and against immigration. Whether this particular one is right or wrong has to be weighed up with all the other arguments for and against before one can make glib conclusions about immigration.

Even if the bus driver is good for the country economically, the social consequences of his arrival, and that of his brethren, is far more relevant when assessing the impact immigration has on the country.

If Evan Davis wants to keep the debate in economic terms, maybe he can include in his calculations the cost of the breakdown in trust (both between communities and within them) that occurs when a society is a recipient of a large number of immigrants. see. Robert Putnam's E Pluribus Unum: Diversity and Community in the Twenty-first Century. (http://www.humanities.manchester.ac.uk/socialchange/aboutus/news/documents/Putnam2007.pdf)

  • 139.
  • At 12:01 PM on 09 Nov 2007,
  • George wrote:

I need to be convinced more about the economic arguments on this.

A job taken by a migrant or non migrant must generate enough tax to justify his state pension (later in life) his expected use of the education system, health system etc. i.e. based on some population stats can the economists convince us that never mind short term growth (and all the government waffle) that on the longer term the economic balance of the book from that person's job is positive? This is the real deal here! If it is negative then this job post is not a real contributor over the long term to the economy.

  • 140.
  • At 12:39 PM on 09 Nov 2007,
  • HeatherM wrote:

In response to Randy (comment 19):

1. You seem to have misunderstood Evan's analogy with food. He did not say that the Brits will eat less - he was the one saying that demand and supply will adapt.

2. You are unnecessarily rude.

  • 141.
  • At 04:18 PM on 09 Nov 2007,
  • Graham Moore wrote:

I agree with the 8% food point you make and I'll extend it to the housing situation in the UK. We may be short of housing stock but if we build more we will still be just as short. The house buying market will just grow to accomodate the new properties. I think we have to decide whether we want some open space and a shortage of housing or just a shortage of housing. We are never going to be able to provide enough houses.

  • 142.
  • At 04:25 PM on 09 Nov 2007,
  • mdb wrote:

"After all, if there are more buses driven at lower cost, one would imagine that competition or regulation would create lower bus fares too."

This is GCSE level economics. Evan's whole theory rests on the assumption that lower wage costs are passed on to consumers. The reality is they go to shareholders and owners in higher profits.

There is a direct correlation between the increase in migration and the increase in inequality in our society. Wage inflation at the lower end of the scale has been supressed while those at the top have reaped the benefits.

  • 143.
  • At 10:56 AM on 10 Nov 2007,
  • Eric McCay wrote:

I disagree with Randy. Evan isn't idiotic, he is just plain dishonest. Welcome to the BBC.

Now you know why Mr (Blair/Brown) has decided to slowly privatise the BBC's programme making rather than dismantle it even though their good friend Rupert Murdoch's SKY is in direct competition.

Social engineering on a global scale is the BBC's function and it does it extremely well. This website is one of the wonders of the modern world.

  • 144.
  • At 11:25 AM on 10 Nov 2007,
  • Hamish wrote:

Um, I think that there's a of a problem with the analysis in that it tacitly assumes that there is precisely one answer - okay I might be misreading it, but I think that the actual answer should be (g - or what ever letter hasn't yet been exhausted) Any of the above depending on specific factors which tend to get ignored in crude generalisation.

I think that for each of (a-d) we can create a plausible scenario where that option is significantly "more true" than the others and then point to a corresponding real-life situation. The problem is in assuming that a particular situation is necessarily universal - and each tends to pick the situation closest to their emotional world view. It takes a bit of emotional and intellectual honesty to admit that our cherished responses (whatever they are) might not have universal applicability.

  • 145.
  • At 05:59 PM on 11 Nov 2007,
  • paul wrote:

The large flaw in your argument is the assumption that after selecting 'c' then 'd' naturally follows. However the real world result is that fares do not fall, instead larger profits are made by the operator.
In a philanthropic world I might agree with your theory but I'm afraid greed is a large motive for employing cheap labour after all we did not notice a drop in the price of 'Cockles' when the foreign gangs were employed. Cheap labour very often results in poor unsafe, conditions.

  • 146.
  • At 12:46 AM on 12 Nov 2007,
  • Russ wrote:

Firstly the food annalogy. If hte population is 8% higher etc. Well in your recent article on fuel prices you highlight that a shortage of 1% can lead to more than a 1% increase in prices. So by the same token (and with a global shortage of wheat etc) your example means that the increase in demand int he UK for food etc will push prices up. So explain how that benefits the UK as a whole?

Secondly, much of this labour is unskilled. Just because the price is cheap doesn't mean that a bus company will get more drivers. If they've only got 50 buses they don't need more than 50 drivers on any one day. So using your example hte number of jobs is fixed, unless you're now suggesting that the bus companies will make long term decisions based on fluctuating immigrant labour?

If we wanted to push the bus prices down however, a much more effective way is to reduce prices. As prices fall more people are tempted to use public transport as it becomes cheaper than running a car over the same distance. Ah, but the space on the bus is finite and demand isn't constant through the day, so really the drivers wages is a red herring in this discussion.

And following your logic, if there were to be an influx of economic commentators, you wouldn't lose your job, as the market for commentators would get bigger on a one ofr one basis with the number of immigrants. Do you want to put that one to the test?

  • 147.
  • At 12:50 PM on 12 Nov 2007,
  • Dave wrote:

So lets look at recent history...
a) Wages for the 'plebs' at the bottom of the pile are pretty stationary or going down, only those 'at the top' are doing well. This implies that there is an oversupply of labour compared to demand.
b) Prices on lots of items are soaring - whatever the inflation figure claims - fuel, housing, tax, bus tickets... This implies more demand than supply.
c) My tax is continually going up, this is despite claims that unemployment is down. Now given that a large amount of that tax is spent on those who are unemployed I'd suggest the real unemployed is much higher than reported.

All 3 of these point to situation where we have too many people here for the work there is available. Read that how you will.

There are 2 ways out of the situation. Either get rid of some people - and this governments increasingly hostile approach to its own citizens - ID cards etc - is likely to do some of that, or increase the number of jobs.
The second is easy. After all, when did you last see an LDV van driven by the army or local council, a British built police car, a non-German ambulance... The government, councils, and their agencies are all busy buying foreign goods whereever possible with your tax money. Everytime they do this they cost another British worker his job, and put more cash into foreign companies for R&D which will lead to them ultimately being more competative.
Consider £10000 on a van. Buy a Mercedes and the 10,000 goes to Germany, gets invested...
Spend the 10,000 on an LDV and you get the following - a person employed (saves 3,000 on benefits, keeps someone off the street - saving police time), a person paying tax probably another 1000, LDV make some profit - more tax - say another 1000, so the 10,000 has cost our economy less than 5,000. Add to that the fact LDV will make vans for export and you have an even more virtuous cycle. Maybe this is why if you visit Germany there are only GERMAN police cars, trucks etc., in France you find only FRENCH police cars, ambulances, army lorries, in Italy only ITALIAN, you get the picture, its not they are protectionist, it is they are SMART, we are the stupid ones.

  • 148.
  • At 04:44 PM on 12 Nov 2007,
  • ap wrote:

Would you like two polish men to move in with you and your family?

They will pay rent and do their share of the housework so are financially neutral, is that OK?

You know nothing about them but they work hard, still OK?

Of course not, space is a limited resource and the more people who come here the less we each have.

  • 149.
  • At 03:12 AM on 13 Nov 2007,
  • Mark wrote:

You certainly have taken a complex problem with many variables you didn't specify and grossly oversimplified it to come to a politically correct conclusion. How many bus driver jobs are there? How many bus drivers are out of work looking for jobs? Are bus companies regulated when they get a franchise to provide enough buses to cover certain routes on a specified schedule? What would it cost to train someone in Britain who is not a bus driver but is out of work to become one and how much would it save the country if that took someone off the dole? Do bus companies bid contracts for franchises based on fixed markups over cost? Are there bus driver unions which negotiate minimum pay rates for their members immigrants will undercut? Economists have a pretty poor record of being right. I'd consult a ouija board just to get a second opinion.

Now do you suppose outsourcing this blog to someone who wrote it in say India at a third the cost would put a BBC blogster out of work? What's the matter Mr. Davis, don't you see the analogy? Don't like my joke, don't think it's funny? Neither do all of the unemployed British bus drivers. Hey taxi, over here.

  • 150.
  • At 12:31 PM on 13 Nov 2007,
  • A Kane wrote:

Totally agree with the analysis. And to take it further, even if an increased number of lower paid immigrant bus drivers resulted in increased profits to the bus company, rather than lower average fares, the net result would be an increas in BRITISH companies proftis, therefore higher british income. Again, immigration profits the UK on average but not everyone int the UK equally.

  • 151.
  • At 05:03 PM on 13 Nov 2007,
  • Christopher wrote:

Firstly, I completely agree with skilled migrant workers. They do help our economy. But what about unskilled workers.

Let's mix a bit of common knowledge with a bit of usual goverment spin.

According to the goverment, everything illegal funds terrorism, so therefore:

Unskilled migrant workers come to the UK, get jobs with dodgy employers who don't pay tax, funding terrorism and gun crime in the process.

So Mr Brown, is it really fair on the rest of us?

  • 152.
  • At 06:40 PM on 13 Nov 2007,
  • saf wrote:

God this is so simple yet some people still dont understand it,

More workers = more tax revenues for the goverment = more goverment spending = money for the nations infastructure.

Other benefits keep inflation down, just look at the next resturant you eat, if everyone was paid a high wage there how much do you think the meal would cost

  • 153.
  • At 05:24 PM on 15 Nov 2007,
  • Christopher wrote:

I have to agree with David (comment 32). Firstly, like he suggested, I did move abroad because I was sick of what was happening to the UK. I moved to Sweden, and took an identical job with a slightly lower salary, and I pay more tax here. I would like to add that my standard of living is so much higher here.

Another thing I noticed as soon as I arrived here is that nearly every vehicle on the road is Swedish made. The people of Sweden are happy to pay more for goods they know will better their economy. We don't do that in the UK. Well, we wouldn't be able to now anyway as most of our manufacturing has been sold to foreign companies.

The British Empire is dying a slow and painful death.

  • 154.
  • At 02:23 PM on 26 Nov 2007,
  • Neil wrote:

Christopher # 153.

The reason there are so many Volvos and Saabs on Swedish roads is because a huge proportion of cars in Sweden are company cars (between 60% and 70% I think) and they receive a massive implicit tax subsidy to buy Swedish cars, making the choice to drive a foreign company car financially unacceptable.

  • 155.
  • At 08:44 PM on 20 Dec 2007,
  • Paul Davey wrote:

I am an engineer who work for a very large food company employing many thousands on migrants, I remember when it was manly English woman working on our lines, but most of them have now moved to do other services that have popped up like working in shops.

I personally know that if we didn’t have them working here this company would not be able to supply the food at the current prices…

Most of our migrants are Polish and work through an agency under the term of travellers so they don’t pay tax or N.I. on top of that most of them do not buy any of our food or drinks, at work they mainly drink water which is free, they save most of their money to send home to their partners to look after as they can work here for three years and then have money to buy a house back home in full.

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