So what’s so wrong with labour shortages driving up low wages?

[hilts]

Depends what the office worker is doing but if they’re adding £350k to the income of the company and in a skilled role (sales, consulting, whatever) then the office worker for sure is more important and worth more.

But if no cleaner will currently work for minimum wage then the wage offered to clean the place will need to increase to such a degree as the market will accept to fill the role. But now we’re out of the EU, we’ve not got as many immigrants (I say “we”, I mean “the UK”) will to work for less.

If they are adding 350k to a company they are probably on more than 35k pa. I think the problem has been the low paid jobs are undervalued and don't pay enough for people to live on. Some skilled jobs don't take as much skill as those who do them would have us believe.

The posters doing most of/all the complaining are those in the remainer/ skilled job category.

Personally I have little interest in the economics of it all but those who are currently having a paddy will receive as much sympathy as they gave previously ie none.

 

[metalblue]

Then do it. Give it more context. Get the discussion rolling.

It’s far too complex for me to do in my spare time, would take weeks/months of analysis. Too many variables between nations in what you pay in tax (across all taxes you pay not just income) and what you receive back from government. It’s what always makes me laugh when people say in x country they provide this and in y country they provide that and in z country they prove t’other ….so they extrapolate that and say we should do xyz in the UK; completely disregarding that in x country you have to put out your own fires, in y country you have to fix your own roads and in x country you get no help with a sex change. Anyroad I digress.

The good news is there is a simpler way to look at your question. We can look at the impacts of emigration from Poland (as one of the main beneficiaries of FoM). Previous studies and data into impacts show that the group most likely to emigrate, those with mid level skill sets, also saw the largest rise in wages in Poland whereas low skilled workers (least likely to emigrate) saw no wage increases at all. Thus emigration positively effects wages domestically for that group and the inverse must be true; in that immigration negatively effects wages for the working group most impacted by it - and a lot of these mid skill immigrant workers went into what we might call low skilled work. It is only when equilibrium is reached between home country domestic and emigrated workers; that the wages of the host country will begin to increase to continue to attract them (or a new source of low pay workers are found and the cycle can begin again). Of course it’s not the immigrants themselves who cause wage stagnation but rather the employers - there is zero reason they haven’t increased wages other than “because they can”.

Obviously if you remove immigration and you don’t have a wiling workforce to step in for the pay/conditions then you need to improve one or both of those. If that occurs at the lower end of the pay scale then everyone above it will naturally also want comparable wage increases - and whilst wages have largely stagnated for the past decade or more it is also where the real inflationary risks lay. Was it Heseltine who said he wanted work to pay? Well it’s about to and keeping the lid on it is going to be a challenge - but eventually balance will be achieved.

Of course it’s not so simple; immigrant workers spend money in the local communities which helps create employment and it’s impossible to quantify the effect on resultant wages for those workers. On the flip side of that is they may send money back to their home country that removes it from our economy. If they bring their families along for the ride (and many don’t they will send funds home) they will not typically be a positive contributor to the coffers of the country (based on typical tax contribution and use of public services).

I’ll conclude by saying that looking at immigration in purely economic terms does a huge disservice to the other benefits it brings.

 

[I'm With Stupid]

Obviously if you remove immigration and you don’t have a wiling workforce to step in for the pay/conditions then you need to improve one or both of those.

But people often act like if they can't find workers, they have to increase wages. Actually they don't have to. They can just not hire anyone because it's no longer profitable to do so. Imagine you have a maid from the EU who charges £10 an hour, and then because of Brexit, you can't find anyone willing to do it for less than £15. You can either pay the £15 or not bother having a maid, and plenty of people will take the latter option. So average wages for maids will increase and everyone will point to the benefits of immigration control. Meanwhile the number of people actually employed in the sector has decreased massively. And obviously I'm very sympathetic to the argument that that might be a good thing, because if you can't pay someone a living wage, you shouldn't be employing them. But when it comes to big companies who could perhaps move large chunks of their supply chain elsewhere, it might lead to a reduction in overall jobs, and an increase in unemployment, which will then put the balance back in favour of the employers, and people will be forced to take anything they can get again. Hopefully not.

 

[BobKowalski]

It’s far too complex for me to do in my spare time, would take weeks/months of analysis. Too many variables between nations in what you pay in tax (across all taxes you pay not just income) and what you receive back from government. It’s what always makes me laugh when people say in x country they provide this and in y country they provide that and in z country they prove t’other ….so they extrapolate that and say we should do xyz in the UK; completely disregarding that in x country you have to put out your own fires, in y country you have to fix your own roads and in x country you get no help with a sex change. Anyroad I digress.

The good news is there is a simpler way to look at your question. We can look at the impacts of emigration from Poland (as one of the main beneficiaries of FoM). Previous studies and data into impacts show that the group most likely to emigrate, those with mid level skill sets, also saw the largest rise in wages in Poland whereas low skilled workers (least likely to emigrate) saw no wage increases at all. Thus emigration positively effects wages domestically for that group and the inverse must be true; in that immigration negatively effects wages for the working group most impacted by it - and a lot of these mid skill immigrant workers went into what we might call low skilled work. It is only when equilibrium is reached between home country domestic and emigrated workers; that the wages of the host country will begin to increase to continue to attract them (or a new source of low pay workers are found and the cycle can begin again). Of course it’s not the immigrants themselves who cause wage stagnation but rather the employers - there is zero reason they haven’t increased wages other than “because they can”.

Obviously if you remove immigration and you don’t have a wiling workforce to step in for the pay/conditions then you need to improve one or both of those. If that occurs at the lower end of the pay scale then everyone above it will naturally also want comparable wage increases - and whilst wages have largely stagnated for the past decade or more it is also where the real inflationary risks lay. Was it Heseltine who said he wanted work to pay? Well it’s about to and keeping the lid on it is going to be a challenge - but eventually balance will be achieved.

Of course it’s not so simple; immigrant workers spend money in the local communities which helps create employment and it’s impossible to quantify the effect on resultant wages for those workers. On the flip side of that is they may send money back to their home country that removes it from our economy. If they bring their families along for the ride (and many don’t they will send funds home) they will not typically be a positive contributor to the coffers of the country (based on typical tax contribution and use of public services).

I’ll conclude by saying that looking at immigration in purely economic terms does a huge disservice to the other benefits it brings.

You cannot look at emigration from Poland in isolation and extrapolate. Poland pre-Covid attracted a lot of inward immigration from Ukraine. One year 600k Ukrainians obtained Polish citizenship.

Immigration grows the economy. A country’s economy is not finite, the more people in the country the more jobs are created. You need more services, teachers, doctors etc, they create shops and restaurants.

Our resistance to immigrants is cultural not economic. And by cultural I mean we don’t want too many foreigners here, hence Brexit.

Except we need more immigration. We don’t have enough labour, and we don’t have a plan or a solution.

 

[hilts]

You cannot look at emigration from Poland in isolation and extrapolate. Poland pre-Covid attracted a lot of inward immigration from Ukraine. One year 600k Ukrainians obtained Polish citizenship.

Immigration grows the economy. A country’s economy is not finite, the more people in the country the more jobs are created. You need more services, teachers, doctors etc, they create shops and restaurants.

Our resistance to immigrants is cultural not economic. And by cultural I mean we don’t want too many foreigners here, hence Brexit.

Except we need more immigration. We don’t have enough labour, and we don’t have a plan or a solution.

In your head it's all about culture you can't comment on anyone else's I'm afraid. Nothing changes I see just another thread to pollute.

 

[BobKowalski]

In your head it's all about culture you can't comment on anyone else's I'm afraid. Nothing changes I see just another thread to pollute.

Economic benefits of immigration have long been established. Opposition be it to Irish immigrants, Windrush, East European are cultural and rooted in xenophobia and racism.

You can see it in action right now amidst a labour shortage and our reluctance to address the issue through immigration. An economic problem that we decline to address because of xenophobia and racism. It’s literally staring us in the face.

 

[idahoblues]

But people often act like if they can't find workers, they have to increase wages. Actually they don't have to. They can just not hire anyone because it's no longer profitable to do so. Imagine you have a maid from the EU who charges £10 an hour, and then because of Brexit, you can't find anyone willing to do it for less than £15. You can either pay the £15 or not bother having a maid, and plenty of people will take the latter option. So average wages for maids will increase and everyone will point to the benefits of immigration control. Meanwhile the number of people actually employed in the sector has decreased massively. And obviously I'm very sympathetic to the argument that that might be a good thing, because if you can't pay someone a living wage, you shouldn't be employing them. But when it comes to big companies who could perhaps move large chunks of their supply chain elsewhere, it might lead to a reduction in overall jobs, and an increase in unemployment, which will then put the balance back in favour of the employers, and people will be forced to take anything they can get again. Hopefully not.

What is a maid?

 

[metalblue]

But people often act like if they can't find workers, they have to increase wages. Actually they don't have to. They can just not hire anyone because it's no longer profitable to do so. Imagine you have a maid from the EU who charges £10 an hour, and then because of Brexit, you can't find anyone willing to do it for less than £15. You can either pay the £15 or not bother having a maid, and plenty of people will take the latter option. So average wages for maids will increase and everyone will point to the benefits of immigration control. Meanwhile the number of people actually employed in the sector has decreased massively. And obviously I'm very sympathetic to the argument that that might be a good thing, because if you can't pay someone a living wage, you shouldn't be employing them. But when it comes to big companies who could perhaps move large chunks of their supply chain elsewhere, it might lead to a reduction in overall jobs, and an increase in unemployment, which will then put the balance back in favour of the employers, and people will be forced to take anything they can get again. Hopefully not.

Very fair points. You’re absolutely right in that wages can’t just rise beyond the point people will pay, particularly in the non-essential roles. And that the statistics might well show a higher average for exactly the reasons you state - there are lies and statistics I think is the expression. The flip side to this is that you do pay the maid £15 because you really want a maid, and then promptly ask your boss for a pay rise to help cover your increased costs. Your boss agrees and stick another 5p on the cost of what your company makes to cover it and lo and behold we have inflation.

To the wider point about paying a living wage age I fully agree mate and then some - it gets on my titties that companies like Tesco don’t pay enough so people need topping up with working tax credits - it’s basically the UK taxpayer subsiding Tesco’s profit. Wages stagnate but actually the tax credit rises with inflation - and we can see this when comparing wages in supermarkets 10 years ago to today and overlaying inflation - your average shop worker is paid less today than a decade ago - perhaps not worse off because the tax payer is filling the void and Tesco’s continue to pay dividends and support a strong share price. And it’s not like the rest of them aren’t up to the same trick so pay is no doubt broadly the same whichever supermarket you work for. It’s a scandal really.

 

[Mr Kobayashi]

Why does inflation worry the right so much? | Mark Blyth

Conservative rhetoric warning of wage-price spirals is disingenuous, says economics professor Mark Blyth

www.theguardian.com

 

[metalblue]

You cannot look at emigration from Poland in isolation and extrapolate. Poland pre-Covid attracted a lot of inward immigration from Ukraine. One year 600k Ukrainians obtained Polish citizenship.

Immigration grows the economy. A country’s economy is not finite, the more people in the country the more jobs are created. You need more services, teachers, doctors etc, they create shops and restaurants.

Our resistance to immigrants is cultural not economic. And by cultural I mean we don’t want too many foreigners here, hence Brexit.

Except we need more immigration. We don’t have enough labour, and we don’t have a plan or a solution.

Immigration does have a positive impact on demand but that doesn’t mean wages rise as a result ….which brings us back to the start really