Why have wages stayed down?

 

The Uk used to enjoy plenty of wage inflation. It was called the “British disease” and went with too many strikes, frequent devaluations to keep us in  world markets, permanent decline of large nationalised industries like steel, coal and railways, and  large accompanying job losses in those state leviathans. The cash pay rises were soon eroded by price rises.

After the Thatcher Union reforms and the privatisation of much of the old nationalised industry estate the extremes of wage inflation and the accompanying poor performance were eliminated. The UK entered a “NICE” period, when  cash wages rose modestly, productivity improved and former nationalised sectors like telecommunications and energy grew with more jobs being created. Real wages rose each year.

The Great Recession of 2008 changed all that. The UK lost 7 % of ts output in a year. A new era was ushered in with low cash increases in wages, and falling real wages. This was bad for the last two years under Labour and has continued at a lesser pace under the Coalition. Productivity has been weak.

Some commentators have called this the productivity puzzle. I have never thought it much of a puzzle. Part of the reason for the decline was the big losss of output, which makes companies less efficient. Many companies do not cut their workforce in line with the loss of output. Part has been the decline of North Sea oil output, a very high value added sector. Part has been the loss of high end profitable activities from the City as people have diverted high earning areas of their banks and businesses to lower tax jurisdictions in Asia, Switzerland and the low tax islands of the world in response to 50% Income Tax and 28% CGT rates.

There is one additional issue I have not so far raised, which I would like to ask about today. That is the decision of the past government to invite in up to  5 million new people to the UK over  little more than a decade. The UK has a workforce of around 30 million, so the increase in the potential workforce from large scale immigration must have had some impact on the UK labour market. More than 2m jobs have been taken by people born overseas.

Business likes the ability to recruit people from around the world, and likes a plentiful supply of good value labour. Employees of UK companies already settled here need income levels that sustain a reasonable lifestyle in one of the dearer locations in the world.

The issue is one of balance. Allow too little migration, and business might find it difficult to set up or continue here without access to the affordable skills they need. Let in too many new people, and you must depress wages and make it more difficult for unemployed people legally settled here to find a job. Part of the issue of wages is tied up in the potential supply of labour. Over the last decade the UK has had an unprecedented expansion of its labour supply, which is part of  the background to stagnant wages.

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145 Comments

  1. Mike Stallard
    Posted January 8, 2014 at 7:14 am | Permalink

    Marx noted this. Capitalism needs a huge supply of proletarians, come in fresh from the countryside, sloshing round in the system looking for work because that is all they have to sell. They work hard – or get the sack – they are very grateful for employment – better anything than the idiocy of rural life.
    The EU realises this and has declared one United States of Europe with proletarians swilling round everywhere looking desperately for a job.
    Now add in China, Mexico, India, where the proletarians are fresh at it and where they will depress world living standards right down to grinding poverty: well below anything we in Europe have known since the Dark Ages.

    The problem, of course, is that rich workers suffer and that is us. No wonder wages are low and I should imagine falling! And the Unions are not helping either because they long ago abandoned the factories and agriculture in favour of their own computer based membership. Now factor in the benefits system which actually prevents people (including immigrants) working. And the companies which instruct immigrants how to collect Welfare.

    Nigel Farage was completely right last night on TV. There are some things which are more important than economics.

    • Leslie Singleton
      Posted January 8, 2014 at 11:12 am | Permalink

      Mike–Agree entirely that Nigel Farage was 100% right, as apparently always these days. More unified communities (or perhaps, more accurately, less fragmented communities) says it all. Birds of a feather one might say. There was a school in Southampton I think it was on the News last night where the children spoke 24 languages. That is barking mad so far as I am concerned. And as for (to my mind wrong-headed) GDP-based “growth” figures, why if we have to have them do we not hear a lot more about GDP per caput which best I can see is what counts.

      • RobertC
        Posted January 8, 2014 at 11:26 pm | Permalink

        I was told, ten years ago, of a school in Sheffield with 52 first languages.

        I have no reason to believe it was not the case.

      • zorro
        Posted January 9, 2014 at 7:01 am | Permalink

        Exactly – GDP per capita is all that matters relatively, and there is no evidence that immigration of itself necessarily contributes to any increase in GDP per capita as opposed potentially to nominal GDP.

        zorro

    • Posted January 9, 2014 at 2:22 am | Permalink

      Mike,

      Its not often that Marx get quoted in approving terms on this blog! I prefer Keynes myself but I’d have to say that Marx did make one important observation regarding wages.

      He didn’t explain it in this way, of course , but as I understand the argument, which was later picked up by Keynes he was essentially saying that we can think of the economy as one big department store full of all the goods and services we all produce and offer for sale every year. We all need to get paid enough in wages and salaries to buy everything at a sufficiently good price for capitalists to cover their costs and also provide a return on their investment. But, if we are all in aggregate paid insufficiently we are left short of the spending power we need to buy all of what has been produced.

      Keynes went on to say, in effect:

      This gives government the “room” to buy what it needs. The combined spending of government and the rest of us shouldn’t be too much or too little. If the government taxes too much – relative to its spending – total spending isn’t enough to make sure everything in the store gets sold. When businesses can’t sell all that they produce, people lose their jobs and have even less money to spend, so even less gets sold. Then more people lose their jobs, and the economy goes into a downward recessionary spiral.

      So although lower wages and salaries may seem to offer a solution, at the microeconomic level, to the problem of unemployment, a little more thought does reveal that to be superficial and incorrect.

      • Edward2
        Posted January 10, 2014 at 5:00 pm | Permalink

        Peter,
        This assumes prices do not fall in the face of reduced demand.
        Thus making goods and services more affordable to consumers and even more attractive in export markets with their lower prices.
        Which then may increase production, employment, wages and profits once more.
        Then you may get increases in savings and investment and the virtuous circle continues.
        Also it assumes a set range of goods and services with no one inventing new products or offering new services better and cheaper than the existing range.
        Marx was such a pessimist.

        • Posted January 11, 2014 at 10:17 am | Permalink

          No I’m accepting that prices will probably fall in the face of reduced demand. If that happens and goods and services are sold at a loss then there’s no reason for the manufacturer to repeat the exercise and throw good money after bad.

          The classical notion that the the price mechanism provides a perfect feedback mechanism to enable all markets to clear isn’t founded in reality. Markets don’t always self clear.

          If economics is to progress to a science it has to incorporate theories based on observations of what actually happens in the real world instead of what the observer thinks ought to happen.

          • Edward2
            Posted January 11, 2014 at 3:02 pm | Permalink

            I agree that all markets don’t always self clear but there is good evidence to show how in recession many companies find ways to pinch a profit by improved efficiencies out of their lower prices.
            I ran a manufacturing company for over 30 years and survived through several recessions by cutting out overhad waste, innovation, better product design, better manufacturing methods, all of which enabled us to lower prices stimulate sale and still show a profit.
            This has happened in white goods, computer and IT and vehicle markets for example.
            In the worst recession for decades I haven’t seen any shortages of goods and services in the marketplace despite some greatly reduced prices.

          • Posted January 12, 2014 at 7:46 am | Permalink

            Edward2,

            No you won’t see any shortage of goods in a recession. If anything the problem is one of the reverse. There are too many goods and services.

            I do the same thing myself in a recession. Everyone does. Those that can find savings and increase efficiency will get through it, hopefully, to better times. A ‘fallacy of composition’ is thinking that what works well for a subset of the whole must work well for the whole as well. Its hard to avoid that.

            For example if you persuading your workforce to work an extra hour or two, take a bit less pay, persuade your suppliers to wait a month longer to be paid, and negotiate a better price from them, then you’re obviously going to be in a better position to survive.

            But, what if everyone does that? And of course everyone is doing that.

    • Robert Hearn-Smith
      Posted January 9, 2014 at 6:05 pm | Permalink

      Sir, I have to agree with much of what is being said here, and largely ignored by main-stream politics for too long, especially regarding the depression of wages over the past ten to fifteen years.

      Eighteen months ago I was made redundant and forced to take the first available job that came along. As it happened, I found a job at the same local supermarket where I had worked as a gap year student fifteen years previously. On taking the job I was horrified, but not surprised to learn that the supermarket’s basic pay in that time had risen by barely 1 pound an hour. From approximatly 6 pounds to 7 pounds an hour. It came to something like a 17 per cent increase over 15 years. How else could this be achieved except by increasing the work force by such a large degree so as to supress wage inflation to such a level as effectively reverse it? Thankfully, I have now found other employment and have moved on to pastures new , but I have left behind a workforce of mostly honest and very hard working people whose real income has been cut over the past decade and a half.

      I can only conclude that the ‘recent’ cost of living crisis we are currently experienced has its root in the politics of boom more than a decade ago when choices where made by a political elite who care little for the lives of those in the bottom half of our society. Hardly the politics of the working poor as they claim

      R. Hearn-Smith

  2. Richard1
    Posted January 8, 2014 at 7:31 am | Permalink

    I have seen an analysis which suggests that the issue is not that total costs accounted for by employees – the workers’ share of the pie – has fallen, the non-wage component of employment, in particular pension costs, has rocketed. Taking this into account wages have not been stagnant.

    Immigration is a toughie. We free marketeers are broadly in favour, but as you have pointed out, if a country with very generous welfare and relatively much higher wages opens its doors to unlimited numbers from countries where such conditions do not prevail we will be flooded.

    There is not nearly enough condemnation of Labour politicians’ disgraceful efforts to smear any Conservative who tried to raise immigration over the 13 years of Labour Govt as a racist. I see Jack Straw is contrite these days. If I remember rightly he was one of the smearers in the 97, 01 and 05 elections.

    People who are concerned about too high levels of immigration should not vote Labour.

    • A different Simon
      Posted January 8, 2014 at 9:13 am | Permalink

      “the non-wage component of employment, in particular pension costs, has rocketed. Taking this into account wages have not been stagnant.”

      Only for those people who have a defined benefit pension .

      How many people outside the public sector have access to a decent pension , whether DC , DB or DA ?

      I think that it is revealing that the inflation basket does not include an item for rate of saving for making provision for old age .

      It’s very difficult to explain to those people in the public sector who insist they have had a pay freeze or even pay cut in real terms that they have not .

      Take a look at teachers pensions . Their accrual rate improved dramatically but they still insist they are worse off .

      That is not even considering that the cost of providing a virtually risk free return several times higher than is offered to everyone else under gilt edge bonds and annuity rates 50% higher (based on the govts own net present valuation of defined benefits pensions for the purposes of lifetime tax relief limits) .

      I’ve heard police officers talking about their 11% or whatever it is now employees contribution of pre-tax income to their pension as if it’s a huge amount and teachers talking about their contribution similarly .

      When the value of their packages are considered they make more than I do as a self employed I.T. consultant yet the Govt considers I.T. workers wages to be high enough as to justify over 100,000 ICT visa’s to wreck my livelihood .

      • lifelogic
        Posted January 8, 2014 at 8:20 pm | Permalink

        Indeed, when pensions are included the state sector is about 50% better paid than the worker bees. The average state sector pension is worth about 5 times the average private sector one, many have none at all.

      • Iain Gill
        Posted January 8, 2014 at 8:22 pm | Permalink

        “ICT visa’s wreck my livelihood” should be written on Camerons forehead

    • Jennifer A
      Posted January 8, 2014 at 9:18 am | Permalink

      I’m sure you are right that employers are in favour of mass immigration, Richard.

      With welfare the workforce is government subsidised, so no wonder… until the tax bills come in in various guises.

    • bigneil
      Posted January 8, 2014 at 6:23 pm | Permalink

      your last sentence – -REALLY??? – and what has DC done in the last few weeks to stop what is happening now?? – -only to waffle and say – “my EU masters wont let me – -(but I still want you to vote for me )”

      and talk of Theresa becoming leader – she took years and millions to get rid of Hamza – -France would have booted him out and stuck a reverse victory sign up -has the EU thrown them out?? – -NO – only our so called leaders continually bow down to them.

  3. matthu
    Posted January 8, 2014 at 7:46 am | Permalink

    Wages have stayed down because of the number of inconsequential and part-time or even zero-hour contracts being created i.e. productivity has fallen.

    Some of these jobs are “green jobs” – people creating checklists, other people ticking them. How much can we afford to pay these people?

    Others are semi-government agencies exploiting care staff by offering them zero-hour contracts and paying them minimal wages.

    But at the top, the bankers and lawyers and insurance company directors have not seen a corresponding drop in remuneration. They have benefited.

    These are of course coincidentally all organisations which the rest of us are more or less obliged to contribute to. More and more insurance is becoming obligatory. Lawyers fees usually outweigh compensation through the courts. And bankers typically rely on public guarantees and capital while increasing staff bonuses by eye-watering amounts.

    If immigrants increase GDP, it is the fat cats who benefit.

    • Lifelogic
      Posted January 8, 2014 at 8:36 am | Permalink

      GDP up perhaps but GDP per capita and thus real wages down.

      • Robin
        Posted January 8, 2014 at 3:54 pm | Permalink

        I agree. GDP is rather like “net immigration” , which is so beloved by the bbc and its fellow travellers, in that disguises the truth. Thank goodness for the Internet.

        • lifelogic
          Posted January 8, 2014 at 8:28 pm | Permalink

          Indeed immigration (for usually lower paid jobs) does nothing in the short or even medium term to increases GDP per capita and it is clearly a large net drain on public services. Very few will pay enough tax to cover benefits, schools, health care and all the wasteful UK government overheads. Much of the money will be remitted or spent overseas too.

          • zorro
            Posted January 9, 2014 at 7:06 am | Permalink

            Studies have shown a few years back now, that you have to earn at least £27,000 (probably more in my opinion) to not be a negative drain on resources. Of course, people will earn less than this, but it certainly makes no sense to import people on low wages whilst still paying people to do nothing.

            zorro

      • Robin
        Posted January 8, 2014 at 3:55 pm | Permalink

        I agree. GDP is rather like “net immigration” , which is so beloved by the bbc and its fellow travellers, in that it disguises the truth. Thank goodness for the Internet.

    • bigneil
      Posted January 8, 2014 at 6:14 pm | Permalink

      of course it is -that’s who they care about – the only time they have any contact with “lower” people is when the cleaner or gardener is there – or their car needs a service from one of those “dirty greasy types”. they must hate having to drive on the same roads as us. – surprised they don’t make a law that we are only allowed out in the dark.

  4. Gary
    Posted January 8, 2014 at 8:02 am | Permalink

    It does seem to be generally accepted that immigration kept wage inflation down even by those that deny that it caused stagnant wages even before the crash.

    What would have happened if there had been higher inflation during the bubble before the crash?
    I guess the BoE would have raised interest rates and the great recession would have been a lot less painful when it came.

    • Jennifer A
      Posted January 8, 2014 at 9:11 am | Permalink

      Sensible countries have selective immigration.

      Ours is not a sensible country.

      I had not considered that mass migration played a part in our Credit Crunch but I suppose it did: by suppressing wage inflation (interest rates) and boosting house prices on which our excessive debt was based.

      People competing for low paid work propped up their standard of living with loose credit.

      The policy of mass immigration does not work on any level and certainly not economic – except to deliberately cause harm to indigenous people.

      • Jennifer A
        Posted January 8, 2014 at 9:20 am | Permalink

        Don’t vote Labour, Tory or Lib Dem.

        Bastards all of them.

    • Dom Wynn
      Posted January 8, 2014 at 11:31 am | Permalink

      Unemployment would probably spiked much higher; I seem to recall forecasts upwards of 6 mil when the crash came. The fact that it didn’t suggests that the diagnosis of over supply of labour depressing wage inflation is probably correct, and as John says, explains the productivity paradox. The good news I think is that
      1) there is potentially substantial slack in the economy to pick up future growth
      2) productivity should also self address in the short to medium term
      I take on board comments re the risk of benefits & ‘the wrong kind of human capital’ but frankly looking at the welfare budget, the primary issue is an ageing population and the impact on benefits, healthcare and pensions.

      Arguably we have been given a one shot opportunity to change the terms of trade; with over capacity and possibly a productivity improvement on the way, there’s a 20 year odd window to get the budget under control & move the BoP into a more favourable position & a more sustainable growth pattern. If the opportunity isn’t taken, when the existing influx starts moving towards retirement we will have major structural issues necessitating either a Japanese style stagflation or another open door policy. That’s a glass half full analysis anyway :)

  5. margaret brandreth-j
    Posted January 8, 2014 at 8:07 am | Permalink

    Over the last 10 years I have developed a clinical area where needs are met on site .I do and refer when I need to and liase with another professional. I have got my system up and running by the fact , that my skills are varied and experience is vast, not by an organisational enterprise. We do not spend hours in meetings talking about it , the problems are handled there are then or put into an arena where they can be handled. The tactics to get on in life are complain and get them addressed , whether they are valid or not. Then in weak attempts by management to improve the services they are replaced by more complex systems which drain away the money and reduce productivity.
    We have a jealous workforce/ management , not simply in a clinical setting , but country wide where in attempt to take control and make money out of systems more constraints are being put in place in the guise of effeciency e.g.systems set up which do not allow direct referrals, telephone systems where we cannot speak to personnel directly , therefore problems are not quickly solved, and the problem which is causing so much ineffeciency is specialisation. Problems are not being seen in the context of the bigger picture. All up to date systems are supposed to improve communication, but it is the opposite;they impede progress.

  6. Lifelogic
    Posted January 8, 2014 at 8:34 am | Permalink

    Supply and demand is the simple reason companies will not pay more than they have to to recruit the quality of staff they need. This and the government have a clear open door policy. Indeed if the Companies did pay more they will get taken over or be unable to compete in the market long term. They thus have little choice but to pay the market rate. The absurd tax & benefit system means that even if they did pay more, so little actually gets through to the employee. So often they are unwilling to do overtime for this reason.

    Companies are open to international competition & yet have more UK burdens in the form of taxes, the new pension requirements, rates, expensive property, expensive bank lending (if any) over the top regulations, daft employment laws and much else. Also there is a lack of capital equipment investment in the UK as it is usually better to invest it elsewhere for most industries- for the above reasons of taxation, cost and OTT regulation.

    Everyone sensible knows this but Cameron/Osborne have taken no positive action, indeed they have made it worse with the 299+ increases in taxation, the open door policy on EU immigration, the benefit system, the new pension laws and their total failure to address employment laws. A boon for lawyers, accountants, HR “experts”, civil servants and other largely parasitic activity while squeezing much of productive industry out of the country.

    • lifelogic
      Posted January 8, 2014 at 11:51 am | Permalink

      Silly expensive energy from the Ed Davey/Chris Huhne religion on top for businesses too, just to further ensure they cannot compete.

      • Hope
        Posted January 9, 2014 at 8:54 am | Permalink

        Cameron made it also clear at PMQs this week that he believes climate change is causing weather change and he made it clear how he supported the carbon tax despite recent weasel words over energy bills. He gold plated Miliband’s plans that came from the EU. Perhaps a veiled gesture how much he believes and supports the EU. My concern is why intelligent people like JR still have any faith in Cameron?

    • Bazman
      Posted January 8, 2014 at 3:19 pm | Permalink

      This assumes that there is overtime. and employees are refusing to do it this is not usually the case, many employees are desperate for more hours to get more tax credits especially as we see the rise of Zero hours contracts.
      You have yet again failed to tell us what ‘daft employment laws’ and the ‘failure to address employment laws’ are, so we must assume they are your own delusion that you are trying to put around as propaganda. See previous post on this drivel.
      Most are not open to international competition as you say and operate a revolving door recruitment policy with a top down management control system. (etc ed) Hire and and leave instead of hire and fire in an attempt to fit anyone daft enough to work for them and their wages. Many just have a go in the often simple work and the next day don’t turn up. The company gets fired too.
      The rest is the usual mindless rant with no basis.

      • Edward2
        Posted January 9, 2014 at 9:32 am | Permalink

        Baz “many employees are desperate for more hours to get more tax credits”

        Quite the reverse in my experience.
        There is a problem for people that they can find themselves worse off if they get extra pay and lose some of their tax credits.

        • Bazman
          Posted January 9, 2014 at 4:05 pm | Permalink

          If work full time and earn over 26k a year and if your overtime is paid not very well this may be the case, but in these circumstances tax credits will not really be a big deal. They were brought in as an incentive to work for the low paid who need to earn enough and do enough hours to qualify, so don’t try to make out they stop work. Bear in mind too that overtime is by definition ‘overtime’ and people have other things in their life other than work meaning that overtime needs to be paid at a premium such as time and a half or the time back as a holiday.

          • Edward2
            Posted January 9, 2014 at 5:53 pm | Permalink

            I’m afraid Baz I have recent first hand experience of being in long meetings trying to sort out overtime schedules (premium rate or time off in lieu whichever you prefer, before you ask) and wage rises and promotion opportunities for staff where due to tax credit complications some staff can end up worse off.
            So as Uni says just because you don’t like it doesn’t make it untrue.

          • Bazman
            Posted January 9, 2014 at 8:43 pm | Permalink

            This all being the fault of tax credits and your idea being to stop it for everyone to enable bosses to get overtime and the employees to have to work extra hours to get more money. Overtime is just that. Not guaranteed like a pay rise and promotions need to be worth their while or it is not a promotions and pay rises need to be worth their while. Your company was clearly not doing this and then trying to blame the benefits system. Wrong.

        • uanime5
          Posted January 9, 2014 at 10:49 pm | Permalink

          Edward2 you need to work 30 hours per week to claim tax credits, this is why many employees want to work more hours.

          • Edward2
            Posted January 10, 2014 at 10:52 am | Permalink

            Thanks Uni but I already know that.

          • Edward2
            Posted January 10, 2014 at 11:02 am | Permalink

            Baz
            Youve gone off on one again.
            Ive given you real examples of staff and employers having to work out the problems caused by tax credits when pay rises or extra pay can leave some staff worse off overall.

            I thought you were against tax credits like me.

          • Bazman
            Posted January 10, 2014 at 3:55 pm | Permalink

            The companies need to give a pay rise that covers this. It’s their problem not the employees. You cannot give a pay rise that results in lower wages. The tax credits are not the business of the companies though, you cannot ask this information from employees. Tax credits are an incentive to work so I am not against them. It’s just wrong that they are needed because companies can get away with low wages.
            In may last company seem of the managers, and get this, even thought that if your wife worked you did not need a pay rise! All unofficial of course. When the same was put to them and it was pointed out that their wives had jobs were mortally offended! LOL! This is often what you are dealing with.

          • Edward2
            Posted January 11, 2014 at 3:09 pm | Permalink

            If a company gives a pay rise to all it staff as agreed in negotiations with their union or their staff representatives and this is a set percentage across the board, would you think it fair that those who come to you and say they don’t want the rise because it will leave them worse off should get a much bigger percentage increase than everyone else?
            Same with an offer of promotion to the next grade in a company with an agreed salary scale.
            Its not as simple as you think.
            If you employ hundreds you find nearly everyone has different circumstances and different tax situations.

          • Bazman
            Posted January 11, 2014 at 10:40 pm | Permalink

            None of it set in stone. You do not give pay rises to people and make them worse off. Your idea is to get rid of tax credits to remove this anomaly? For most the tax credit boosts their wages in low incomes with children and give an incentive to work. I concede that the whole thing should be done on tax codes though.

    • Iain Gill
      Posted January 8, 2014 at 4:38 pm | Permalink

      mostly they have little understanding of the “quality” of staff they need, or what it means. the fashions in management conferences etc tend to count heads or units produced rather than quality, innovation, or iterative improvements. lots of senior management get promoted by replacing “expensive” Brits and hiring cheaper workers from abroad (often at arms length through an outsourcer) and the spreadsheets can indeed look impressive in the cost savings they produce, but mostly they measure the easy things as the hard things are harder to measure. often its false economy, but by the time thats realised those managers have already pocketed their bonuses. these management fashions are also incentious, and ripple out, with little original thought management under pressure to improve numbers copy from their friends who have had big bonuses. mainly the only organisations which dont fall into those traps are those still led by independant folk able to ignore corporate fashions.

  7. The PrangWizard
    Posted January 8, 2014 at 9:04 am | Permalink

    I presume you are referring mainly to the low end of the wages market. The market should determine the level of wages, whatever the circumstances, they have to be able to react.

    Businesses pay what they think the job is worth, to which they can add value. If some go through hard times then they may not be able to pay what they did before. I believe you support State control of wages through a minimum wages system, I don’t know if you support the concept of the ‘living wage’, but you have said that wages are too low, and I infer you are willing to intervene to raise them. How much are you prepared to intervene? Are you prepared to bail out a business which would go under because it can’t afford the minimum wage? Would you prevent it from making people redundant?

    Labour is not a solid entity. I might not need as much to get by as the next person, and could live just as happily on a lower wage. I might economise for a while, others will no doubt refuse to do so, especially if they think they will get propped up. If there is a MW it must be enforced surely, if many immigrants are taking work at below it what would you do to punish the employers?

    Do you think there should be a minimum price I should to pay to my plumber?

  8. Old Albion
    Posted January 8, 2014 at 9:07 am | Permalink

    I may be a simple man but i will never understand why a country with over two million unemployed people has a government(s) that believes it wise to bring in 5 million immigrants.
    Surely we should get every able-bodied resident into employment first. Then invite outside workers in, if required.
    Some of the two million plus, will of course be without any skills, particularly the million or so young people who have been abandoned to life on the ‘dole’ So get them into training!
    There are enough potholes in our roads to keep hundreds busy for years.
    The country needs tradesmen, just like we used to have when i was a teenager.
    Od course there is a bit of a problem with this…………………the EU.

    • Nash Point
      Posted January 8, 2014 at 10:38 pm | Permalink

      Oh, how we need tradesmen, I agree with that, but it’s not all the fault of the EU. Able-bodied people will not look for work because they will lose their benefits. And they won’t risk those for possibly temporary employment. And the EU rules say that migrants must have the same access to benefits as the indigenous. Maybe that’s fair enough. Answer? Slash benefits

      • uanime5
        Posted January 9, 2014 at 10:53 pm | Permalink

        Able-bodied people will not look for work because they will lose their benefits. And they won’t risk those for possibly temporary employment. And the EU rules say that migrants must have the same access to benefits as the indigenous. Maybe that’s fair enough. Answer? Slash benefits

        Punishing the vulnerable won’t fix these problems. People on benefits often can’t work because they’ll get paid monthly but they get their benefits fortnightly, resulting in a two week period where they won’t have any money. So slashing benefits will make them even more reluctant to work.

  9. A different Simon
    Posted January 8, 2014 at 9:21 am | Permalink

    JR : “Why have wages stayed down?”

    They haven’t just stayed down .

    For many of us they have gone down .

    Not only in real terms but in cash terms .

    Wages haven’t bottomed out yet . They are still dropping .

    *****

    The best way to increase wages is shift the burden of taxation from employment on to land with an annual location value tax . This will also have the desirable side effect of bringing and keeping accommodation costs under control – tackling affordability from the other end .

    All but the very richest would be better off . If you don’t do this . Another party will eventually .

    • APL
      Posted January 8, 2014 at 11:22 pm | Permalink

      ADS: “For many of us they have gone down. Not only in real terms but in cash terms.”

      Yes, redundancy followed by a minimum wage job which, with savings and having paid down my mortgage during the fat years, I can just about stave off destitution, feed my family and just scrape by.

      Now I work next to a very nice guy from India, and we spend all day ‘copying and pasting’ from one system to another. He has a business diploma, both of us could be much better employed. But honestly, there is no justification for employing this man from half way around the world to do the task he is doing!

      And the whole function is only there because of government reporting regulations too. Not a profit center for the organization either.

      So impressed by MPs paying themselves more? No!

  10. alan jutson
    Posted January 8, 2014 at 9:26 am | Permalink

    Can speak from first hand experience here.

    Youngest daughter just been informed by her Company that there will be no pay rise this year, and in addittion in order to try and improve business they want to introduce longer opening/contact hours for the salesforce in the office, by extending office opening hours from 8.00am until 6.00pm.,

    Daughter was made redundant from a decent financial services job in 2008, and now working for 25% less than 6 years ago, but at least she is working, meanwhile her travel costs (by train) continue to rise each year, along with many other living costs.

    The fact is most Companies are having to work harder to make a decent return these days, so it is no surprise they ask/demand that their staff accept less.

    Long since retired from the construction industry, but that has had its fair share of immigrant labour, who were prepared to work for far less than the accepted going rate at the time when they first arrived.
    What is interesting is that those who have stayed here and set up home with families have attempted to increase their labour rates (as they have to if they want to live as a family in their own house) are now complaining that the new intake who are constantly arriving, are depressing rates further and are competition for them.

    Thus if you are happy to live 20 to a house and share all costs, you can work for less than if you are a family living in your own home.

    Alternative if you are on benefits and just work for a top up, you can afford to work for less per hour than someone who is not.
    Yes fully aware it is not what should be happening, but some people should see the World as it is, not how they think it should be.

    What is also noticeable, is that local cafes (spoke to a couple of owners recently) near to building sites who used to be very busy places when Local labour was used, are now nearly empty because foreign labour do not purchase/use such services, they make their own sandwiches to take to work.

    Remember for the whole economy to benefit money has to circulate, if disposable income is down, or money being earned here is being sent out of the Country, that simply does not happen.

    We reap what we sow.

    • alan jutson
      Posted January 8, 2014 at 9:50 am | Permalink

      Do not forget the internet.

      With this type of business growing, far more competition is being felt by higher cost traditional outlets.

      Most internet businesses are run from low cost centres, as they can be located anywhere, thus if you are selling branded goods from a traditional outlet in a high street, you will have greater overheads than those who simply work on line.
      The situation is then complicated for you further as you display the goods, demonstrate the goods, promote the goods, answer peoples qusetions, your potential customers then often walk out and purchase on line to save a few pence.
      Eventually we will not have the facility left to examine, touch, discuss many products before we buy, because all such businesses will have long since given up due to rising costs and falling revenue.

      Thus knowledgeable staff will have long since gone only to be replaced by cheap automated picking machines.
      Many manufactureres will learn to their cost that loss of market share was due to offering no support to their real shop outlets.

      After all there really is no substitute for a touchy, feely purchase when you can examine a product when it is physically placed next to another.

      Always amazes me that people buy shoes, clothes , beds, TV’s, Hi Fi on line without trying them out.

      We seem to be getting into knowing the cost of everything, but the value of nothing phase deeper and deeper, and we will all be the poorer for it in the longer term.

      • A different Simon
        Posted January 9, 2014 at 9:00 am | Permalink

        You are absolutely right Alan .

        On 24th Dec 2013 Jacksons department store in Reading closed .

        This was one of the few places where men could buy quality clothes and receive a professional service from people who had made menswear retailing their career .

        As with everything else , you have to use it or lose it .

        I don’t have much time for people who expect something for nothing and will not take the opportunity to buy quality when they can afford it .

        Very little of the stuff being sold by the big chain stores could be called quality . You wouldn’t want to wear most of it to a “casual smart” work environment , never mind out on a date .

        Part of Jackson’s is being turned into another coffee shop . These places seldom employ British citizens and seldom pay tax here .

        With their poxy latte’s and hot chocolate they are a magnet to plastic people .

  11. Brian Tomkinson
    Posted January 8, 2014 at 9:43 am | Permalink

    Would you like to see another “5 million new people to the UK over little more than a decade”? How are you going to stop it whilst we are members of the EU? Other than talking about immigration what are you and your colleagues actually going to do? I think I know the answer – nothing.

    • Boudicca
      Posted January 8, 2014 at 7:01 pm | Permalink

      Precisely. Membership of the EU is more important to the Conservative Party than the well-being and life chances of their own people.

      The same goes for Labour and the LibDems.

      • Hope
        Posted January 9, 2014 at 9:00 am | Permalink

        Absolutely, as Cameron made clear this week when answering about the floods and HIS beliefs about links between weather and climate change and how he supported the Climate Change Act, that most bloggers here view as a waste of money as it hits their pockets each month when the bills roll in. Not much said, except Guido Fawkes and the Sun about the immigrant who Vaz greeted and turned out to have conviction for domestic violence. Has Vaz apologised for an error of judgement?

    • APL
      Posted January 8, 2014 at 7:23 pm | Permalink

      Brian Tomkinson: “what are you and your colleagues actually going to do? ”

      The usual, award themselves from our taxes, above inflation pay rises.

    • Nash Point
      Posted January 8, 2014 at 10:44 pm | Permalink

      Mr Redwood is awaiting his calling to the House of Lords. He talks the talk with his blog sounding like the UKIP manifesto. But notice how he never criticizes Cameron directly or aggressively. It’s a shame because he contributed a lot to British politics. Enoch Powell walked the walk, and he’ll be remembered

  12. Iain Gill
    Posted January 8, 2014 at 9:43 am | Permalink

    Well I watched the BBC documentary on immigration last night, and although it was a big advance on the views preached by the journalistic and political class for decades it still has some way to go before it understands reality.

    For instance the economist was allowed to state his view that immigration is good for the financial position of the country without detailed questioning. My view is that such people are missing significant things, which transform the equation. A big one being the massive amount of leading British intellectual property that is leaking abroad to be used to undercut us. From software, to production techniques, etc, having foreign workers exposed to the most advanced techniques does lead to their home country gaining those techniques. I think this is a massively bigger problem than people realise and transforms the equation. I know lots of detailed examples where this has happened, the time between the UK workforce inventing an improvement and it being copied elsewhere is getting shorter and shorter, those small innovations drove the differences that customers were prepared to pay a premium for.

    Another issue is the nature of the imported workforce. Sadly some places in the world (have racist people in business ed) (words left out ed), (with some ed) corrupt where hiding stuff from the authorities is routine, don’t have a culture of paying their intellectual property fees such as licences, routinely bully their workforces and use versions of indentured servitude to ensure compliance, don’t use modern expensive safety kit… and so much more. And we have imported these cultures with the workforces, these cultures do not instantly adopt the tolerant British ways when they arrive, they carry on “as is”. And legal, decent, honest British businesses are asked to compete with newly imported workforces who to be blunt often don’t play by the rules, and regulation does not seem to have had any impact as the regulators perceive they would be viewed as racist if they intervene etc.

    The oft-repeated mantra from politicians that “immigrants are welcome if they are working and are paying their way” is not good enough. Immigrants, who come in with skills already in oversupply, whether in low skilled or highly skilled jobs, will displace Brits from the workforce. It is clearly not true that just the lowest skilled are being impacted, ask any well educated British IT worker.

    Lack of reciprocal rights for British workers. We are printing lots of work visas to nationals from some countries where it is all but impossible for a Brit to get a work visa. We are giving big tax perks to employers who use foreign workers (first 12 months free of national insurance, allowed to pay large amounts tax free as supposedly expenses that Brits cannot have when working away from home) so there are many state incentives against using British workers.

    (para left out ed)

    You also need to look at the way international outsourcing works. The outsourcers often import a small workforce here who are just the tip of the iceberg as their main focus is moving the intellectual property and skills back to their home lower cost base economy for a much bigger virtual workforce to be used to undercut large numbers of Brits. Allowing small numbers in to engage in these activities can have a massive affect on the British workforce.

    Its not just about balance, its about the fundamental question of how do we want to pay our way in the world? Do we want to compete with the lowest cost base economies that don’t have anti pollution controls, expensive safety gear, intellectual property protections, and so on, or are we going to try and protect our leading techniques from them to preserve some premium in the market? Do we want to incentivise employers to hire, train, retain a local workforce or are we happy to endorse swamping the local workers and using offshore outsourcing on a massive scale? Do we want to sell higher quality and innovation or compete for the lowest world price? Cameron seems to think selling financial services to the emerging nations is the way to go, I don’t see that being a rounded approach to ensuring our economic survival.

    In my industry the local workers are being asked to compete with international organisations and foreign workers imported here, many of which, I know to be actively evil and criminal, breaking countless norms of decent behaviour. I am very frustrated that the regulatory framework is so light on these people, to a large degree because they simply don’t understand the scale, and partly because they don’t want to be perceived as racists, and partly because these organisations do such a good job of lobbying this countries senior leadership. This is not good enough.

    And so much more. Good luck John!

  13. Rick Hamilton
    Posted January 8, 2014 at 9:47 am | Permalink

    It seems to me that as robotics and the emergence of China have reduced employment in mass production the UK has been bad at identifying new areas of wealth creating work. The green agenda was seized on by politicians but has turned out to be just an added cost for most people. If we had pols with any technical nouse at all we would be leaders in nuclear engineering and selling our technology around the world, but this has been stopped by green hysteria. The Japanese despite their domestic disasters are busily selling nuclear around the world . They are also very good at government pushing new technology – the latest being deep sea exploration for minerals etc. Although these are not jobs for unskilled workers they do create work for all the support services where the simpler jobs are. Compared with East Asia, British workers’ numeracy, literacy, attention to detail etc are, sad to say, unimpressive and it will take a generation to get them up to speed. Therefore we will need immigrants with technical skills if we are to end the delusion that the country can earn its living by playing with other peoples’ money.

  14. Mark B
    Posted January 8, 2014 at 9:51 am | Permalink

    You cannot have a Social Benefits System and an open door immigration policy. The ‘Pull Factor’ for people wanting to come here is too great and not always for the right reasons.

    John Redwood MP said;

    “There is one additional issue I have not so far raised, which I would like to ask about today.”

    Its so nice but also sad that we are only now beginning to talk about immigration without the threat of being called a racist, bigot or xenophobe.

    Mass-immigration has indeed driven down wages and kept inflation low despite QE.

    A wage is made up of four component parts. Tax, NI contributions, Employers NI contributions and what is left after that, is kept by the employee, only to be taxed again via local government, VAT etc.

    Labour costs make up a large proportion of any business’s outgoings. It is these things that make labour in this country so expensive compared to countries that do not have these things because the have no social welfare system, and so are more competitive.

    Only now is this slowly being recognized with suggestions to changes to the NHS and the benefits system. But even these changes are not going to be enough whilst we are members of the Single Market / EEA and the freedom of movement of people remains as is.

    What we need to understand is, that there is two type of immigration into the UK. EU and non-EU. EU we cannot do anything about without major treaty change, so there’s no point in debating it. Non-EU immigration we can do something about, but do precious little. A points based system with various requirements need before entry, such as private health insurance, is a minimum. All too little, and all too late from a Government which has only succeeded in one thing during its tenure. And that is to disappoint.

    • forthurst
      Posted January 8, 2014 at 6:53 pm | Permalink

      “Its so nice but also sad that we are only now beginning to talk about immigration without the threat of being called a racist, bigot or xenophobe.”

      Slightly premature, possibly, since the laws against English thoughtcrime are still on the statute book and are still being used to intimidate us.

      • Hope
        Posted January 9, 2014 at 9:02 am | Permalink

        And all the equality babble which is anything other than equality. But then who trusts the motives Harmen when she introduced it?

      • Max Dunbar
        Posted January 9, 2014 at 11:51 am | Permalink

        Correction: British Thought Crime as the same laws apply in the north of the country a well.

    • uanime5
      Posted January 8, 2014 at 9:20 pm | Permalink

      It is these things that make labour in this country so expensive compared to countries that do not have these things because the have no social welfare system, and so are more competitive.

      What about Germany which has a more generous welfare system and higher taxes, yet is more competitive than the UK?

      • Edward2
        Posted January 10, 2014 at 5:12 pm | Permalink

        Uni
        You say Germany has a more generous welfare system but teenagers in Germany cannot leave school and just sign on as they can here.
        Neither can you arrive in Germany and immediately be able to sign on as you can here in the UK.
        Workfare or compulsory work placements for the long term unemployed is much more widely used in Germany than in the UK
        Overall taxes in Germany are 40% of GDP whereas in the UK they are 39% so very little difference.

  15. Bert Young
    Posted January 8, 2014 at 10:03 am | Permalink

    Most employers would always favour talent and experience when faced with the issue of competition and the need for efficiency ; those who simply hired with economy in mind were short-sighted and ill-informed . If the talent that had been identified was not available locally , employers would broaden their search for it going abroad if necessary. Wholesale immigration without selectivity in mind is a different matter and , in this respect , Nigel Farage has got it right – the balance of communities and the quality of life have to be protected . Maintaining a high standard of living for all is entirely dependent on a healthy and prosperous economy ; the result should be spread to those who helped in bringing it about and not to hangers on .

  16. oldtimer
    Posted January 8, 2014 at 10:21 am | Permalink

    Thank you for your views on the so-called productivity puzzle. High taxation rates continue to be a disincentive.

    Re Labour`s open door policy, it clearly failed to take into account the impossible pressures this placed on the local infrastructures where new immigrants clustered. The branding of critics of the policy as “racists” was disgraceful. I believe that arguments, made after the event, that all this immigration was beneficial to the economy fail to account adequately for the infrastructure costs it has incurred.

    • JA
      Posted January 8, 2014 at 6:53 pm | Permalink

      This is without considering crime.

      A disproportionate amount of criminal convictions are held by migrants.

      How many low skilled migrants does it take to cover the costs of one migrant prisoner and the costs of getting him to prison ?

  17. Anonymous
    Posted January 8, 2014 at 10:49 am | Permalink

    We have brought 44 Wembley Stadiums worth of people into the country in ten years. This is only the official amount.

    Picture it please.

    Why, Mr Redwood, do you talk of ‘balance’ and “… too little of this” and “…too much of that” ? As though a little bit of political tinkering here and there can get us back on track.

    Stable doors.

    It’s over.

    Mr Cameron has done virtually nothing about the #1 public issue. In fact the problem has got worse.

    Politics is irrelevant except to provide the illusion to politicians of purpose for politicians. I can tell you that the people look on at the Westminster bubble in dismay at how seriously you all take yourselves.

    The point of voting Ukip is not to save a country which is beyond saving but to pull the plug on Parliament, which has done nothing but betray and belittle us.

    • Boudicca
      Posted January 8, 2014 at 7:24 pm | Permalink

      I’m a UKIP activist and I don’t agree that the point of voting UKIP is to pull the plug on Parliament.

      We WANT Democratic accountability returned to Parliament (and Whitehall).

      What we want to pull the plug on is the 3-party stitch-up which has seen our governance transferred to the EU and betrayed the British people.

      We want a new political “elite” who are not Elite …. who are ordinary people, who understand how their lives work and who believe in the UK – not a foreign supra-national organisation.

      • Hope
        Posted January 9, 2014 at 9:03 am | Permalink

        Well said Boudicca, absolute tosh by anonymous.

  18. forthurst
    Posted January 8, 2014 at 10:53 am | Permalink

    “Business likes the ability to recruit people from around the world, and likes a plentiful supply of good value labour.”

    “Merchants have no country. The mere spot they stand on does not constitute so strong an attachment as that from which they draw their gains.” Thomas Jefferson.

    However, the primary purpose of New Labour in inviting in five million ‘new britons’ was not in aid of big business but in order to multiculturalise us even more.

    When foreigners come here, they like to congregate in their own communities; when such communities originate from very poor areas abroad, why would those communities be able to achieve a manifold increase in their added value per capita other than through massive taxpayer subventions?

    Import enough people from the third world and we will become a third world country; a people make a country, not the other way round.

  19. peter davies
    Posted January 8, 2014 at 10:58 am | Permalink

    Only 5 Million? I thought it was way more than that.

    The past government due to their policy on mass immigration helped depress wages and affect the very people who are supposedly their core support more than anyone else rather than taking the necessary action to “encourage” the #benefitsstreet types into work

    • Iain Gill
      Posted January 8, 2014 at 7:44 pm | Permalink

      they have no clue how many illegal immigants are here.

      figures on visa holders leaving are not reliable.

      stick your finger in the air

  20. Max Dunbar
    Posted January 8, 2014 at 11:17 am | Permalink

    I think that it is wrong to conflate mass immigration with business’s requirements to recruit people from around the world. We have had episodes of high immigration and lesser immigration but never, as far as I am aware, have we had problems with business recruiting freely during either of these periods.
    Mass immigration (invasion), dreaded by all normal people, should have been a thing of the past but Labour were determined to impose their revolution on us. Politicians of the Left such as Cable like to connect the free movement of people with unfettered mass immigration. This is typical of the way in which the cynical language of Leftists is used to promote a position linking the reasonable to the indefensible.

  21. Robert Taggart
    Posted January 8, 2014 at 11:24 am | Permalink

    More pressingly – for some of us – why have benefits stayed down and their capital allowances frozen ?
    Signed, Middle Class Scrounger !

  22. lojolondon
    Posted January 8, 2014 at 11:26 am | Permalink

    I do think that ‘Crash Gordon’ deserves a mention in this story – his ‘GDP growth’ was entirely based on housing inflation, with a smattering of Financial Sector success (fuelled by the removal of most regulations, which also boosted housing inflation).

    And the 1 million or so immigrants, together with the unemployment they bring is what has kept wages down.

    • lojolondon
      Posted January 8, 2014 at 11:27 am | Permalink

      Sorry, I mean 4 million over 10 years.

    • Bazman
      Posted January 8, 2014 at 5:59 pm | Permalink

      Did you write this to bury him or praise him?

  23. ian wragg
    Posted January 8, 2014 at 11:33 am | Permalink

    John, as we have now begun the next wave of cheap labour from Bulgaria and Romania, it is a bit of a silly post.
    As we are told, there are now 31 million in work and GDP is still below 2008 levels.
    Per Capita is down as 2 million are sharing a smaller cake and the cake will get very minutely larger (growth at 2%) but labour increasing by 5%. It would be perverse if GDP didn’t grow a little with all the immigrants you are flooding the country with.
    Farage was of course correct when he says there is more to life than the economy. We have just been told that a mega estate of 2,000 houses are to be built on green fields nearby the demand being driven almost entirely by immigration. When will it all end.

  24. Roy Grainger
    Posted January 8, 2014 at 11:46 am | Permalink

    You do not provide enough data to draw a conclusion. Some data must be readily available: How is this single measure of wage inflation calculated ? What is the relative weighting between public sector and private sector employees in the final number ? Other key data must be harder to gather: What is the weighting of sectors which have suffered preferentially in the recession (eg. banking and finance) ? What proportion of the private sector workforce have wage rises which are set by managements located in other countries with no reference to UK conditions (USA-based multinationals for example) ? Without such information any conclusions are mere speculation and encourage people to ascribe the problem (if it actually is a problem in the first place) to their own particular bête noir.

  25. Marcus
    Posted January 8, 2014 at 11:46 am | Permalink

    My understanding of economics is that there are only two ways to grow an economy;
    From John Mauldin “Six impossible Things”:

    […Increasing Productivity
    There are only two ways to grow an economy. Just two. You can increase the working-age population or you can increase productivity. That’s it. No secret sauce. The key is for us to figure out how to increase productivity. Let’s refer again to our equation:

    GDP = C + I + G + net exports…]

    So, viewed in these terms, the more-or-less unfettered immigration experienced in Britain during the last EU enlargement resulted in a positive effect on UK GDP growth. The fact that GDP growth may have been negative during some of this period does not disprove the premise – without the increase in the labour force, things may have been much worse.

    Mass-immigration as a policy tool to increase the size of the workforce and so increase GDP growth is actually quite easy for a government to achieve if only by practising some ‘benign neglect’ at the borders – “if they’re open, they will come”. The challenge was to maximise the number of of immigrants while minimising push-back from the native population (like goose-plucking; […the most amount of feathers with the least amount of hissing…]). On balance, I think the government of the day largely succeeded – the debate on the issue is moving into the centre of the public domain, but the immigrants are already here.

    The second and third arrows of the workforce quiver – participation rates and productivity improvements are much harder targets to hit. Education, re-skilling, tuning welfare and benefit regimes to encourage and support re-entry into the workforce all cost money up front and may takes many years to show any pay-back.

    Injecting 5 million new highly skilled and motivated workers into the economy over a decade (likely the maximum rate that could be absorbed) was a net benefit to the country on almost every metric and measure.

    • Jennifer A
      Posted January 8, 2014 at 10:24 pm | Permalink

      I draw your attention to the national debt/deficit, Marcus.

      Also to the housing, service and infrastructure crisis.

    • Denis Cooper
      Posted January 9, 2014 at 12:10 am | Permalink

      And who told John Maudlin that they are “highly skilled” workers?

      • alan jutson
        Posted January 9, 2014 at 8:03 pm | Permalink

        Dennis

        Exactly

    • Edward2
      Posted January 9, 2014 at 9:58 am | Permalink

      I think your economist forgot education, invention and individual creativity as a way to growth.
      His ideas seem in the past where the nation with the biggest population built the most pyramids in the shortest time.
      Today it is the nations with the most JCB’s and big cranes with the best educated engineers who build the most pyramids.

      If I write some music or write a book or a think of a new product or think of a new invention or sell my intellectual brilliance to other nations, I can do all these things, which will improve my wealth and the wealth of my nation, without needing to increase the population, nor increasing the productivity per head of my nation.
      So via improved ingenuity of individuals, wealth can be created without needing millions more people.

      The UK should have tried a totally different model, one of being a high tech, highly automated nation, with a small, wealthy, highly educated population, using their heads not their hands to earn their living.
      Employers have been able to take an easy way out.
      Instead of investing in high tech machinery they can now fall back on a huge readily available supply of cheap labour.
      So GDP may rise but when you look at GDP per person in the UK the figures are not so good.
      Overall we get poorer. Its a fools paradise.

    • Narrow shoulders
      Posted January 9, 2014 at 1:17 pm | Permalink

      Injecting 5 million new highly skilled and motivated workers into the economy over a decade (likely the maximum rate that could be absorbed) was a net benefit to the country on almost every metric and measure.

      Only if you view collect metrics. GDP per capita and individual satisfaction have not improved.

      • Narrow shoulders
        Posted January 9, 2014 at 6:39 pm | Permalink

        Correction collective metrics

      • Denis Cooper
        Posted January 9, 2014 at 7:20 pm | Permalink

        Well, per capita GDP could improve if the immigrants really were highly skilled or talented in other ways and they brought in or created important expertise which was absent or in very short supply. Then the established population might benefit from their inventions and innovations, which might not have arisen in the society without the immigrants and also their offspring. We will never know what would have happened in this country without Brunel, the son of a French civil engineer. But while that might well apply to a small number of immigrants it would not apply to 5 million who were allowed in without any selection process and most of whom have no special skills that our country really lacks, or indeed any skills at all in many cases.

  26. Posted January 8, 2014 at 12:56 pm | Permalink

    If I read the recent figures correctly, there are more people in employment in the UK than ever before. This being so, the only reason for unemployment is that the number of those seeking work has increased, and as western birth rates are falling, it can only be due to immigration. As long as there is this surplus of labour, wage rates will stay low.

    Historically, when there was a shortage of labour, the problem was overcome by innovation. For example, the shortage of labour to work on the land, due to migration to the towns, led to mechanisation on the land. But change costs money, and no employer is going to invest in expensive machinery whilst he can get cheap labour, and as a result, big business sees no problem with continued immigration.

    • Cliff. Wokingham.
      Posted January 8, 2014 at 4:00 pm | Permalink

      I don’t think the “number of people” in work is the figure that matters but rather, the “total number of man hours.”
      If one person worked Forty hours and was laid off and later, Two people were both employed part time working Ten hours each, then twice as many people are in work, but man hours or production hours are cut in half. I wonder what the total number of man hours worked today are, compared to say Eight years ago.

      • alan jutson
        Posted January 9, 2014 at 8:06 pm | Permalink

        Cliff

        “Total number of man hours”

        Excellent point, as this would be the real comparison “if known”.

    • Denis Cooper
      Posted January 8, 2014 at 5:20 pm | Permalink

      And big business has the ear of government, whether Labour or Tory or whatever, and politicians will forget about the interests of those who elected them and allow and encourage mass immigration, including through enlargement of the EU, while trying to pretend that it is for our good.

      In November 2003 Blunkett even went as far as to say that he could see no obvious limit to the numbers of immigrants who could be allowed to settle here:

      https://www.google.co.uk/#q=blunkett+no+limit

      and last night on the BBC he was totally unrepentant.

      Of course it would never cross his mind to ask what we, the citizens of this country, might think about it, why should he bother about that?

      • Alan Wheatley
        Posted January 9, 2014 at 10:17 am | Permalink

        Yes, Denis.

        Big business may well have the ear of government, but they do not have a vote. Us citizens, who do have a vote, can make our voices heard, but only if the vote can be cast for a party that offers something different.

  27. JoeSoap
    Posted January 8, 2014 at 1:01 pm | Permalink

    2 separate issues here:
    -low wages at the bottom end result from increased immigration – look around you, bars, restaurants, supermarkets, McD
    -low productivity – since Brown screwed anybody productive and the coalition continued the job, with higher taxes, lower pension allowances, regulations, highly productive formerly well paid 50 somethings have either
    -employed more people (what’s the point of killing yourself and being taxed @ 60%?)
    -walked off the job and retired
    -downsized on workload
    or a bit of all 3

  28. REPay
    Posted January 8, 2014 at 2:05 pm | Permalink

    High productivity requires a well-educated population…that is why education reform is critical if we to improve output and close the deficit. Lets hope the reforms continue and are successful and not undone by the NUT/Labour when they next come to power!

  29. REPay
    Posted January 8, 2014 at 2:09 pm | Permalink

    …the decision of the past government to invite in up to 5 million new people to the UK over little more than a decade…More than 2m jobs have been taken by people born overseas…

    Does that mean 3m dependents? I wonder how many of these contribute or will contribute to the tax take…or do they mainly swell demand for social services and benefits…

  30. miami.mode
    Posted January 8, 2014 at 2:33 pm | Permalink

    Second paragraph, last sentence “Real wages rose each year”

    After the effect of John Major’s flirtation with the Euro through the ERM was sorted out during the late nineties, Gordon Brown and Labour created an illusion of low inflation by importing cheaper and cheaper Far Eastern consumables plus cheaper labour from eastern Europe and consequently wages seemed to rise in real terms.

    However, indigenous costs such as housing, building costs, plumbers, electricians, car servicing etc all rose far above the headline rate of inflation and housing costs and Council Tax were excluded from the inflation rate, but interest rates were kept low. Coupled with the government’s lack of control and, indeed, understanding of the financial sector the whole economy blew up and will take many years to sort out.

    Most people would rather have a job at lower wages than no job at all.

  31. Antisthenes
    Posted January 8, 2014 at 3:45 pm | Permalink

    Immigration on balance is very good for the economy as it does force down unit costs and improve the demographics which may not be socially desirable in the short term. However if the UK is to continue to create wealth and prosperity for it’s citizens then that is a price that has to be paid in what is now a very competitive global market. Of course what is probably as much to blame for forcing down wages but never alluded to is that EU and left wing rules, regulations and taxes are forcing up business costs which employers have no control of (large corporations love them because they aid in reducing competition) but wages they have especially if there is a large pool of workers to pick from. So when non wage costs go up then that puts pressure on wages. The see saw effect will continue until sanity is restored and politicians start rolling back and tempering policies that increase costs and allow the UK to compete effectively with the rest of the world. This probably means having to leave the EU as they are not going to reform or change and lock up or send them off to a fanasy island where they can ply their socialist nonsense harmlessly the likes of RedEd and red faced balls.

  32. BobE
    Posted January 8, 2014 at 3:46 pm | Permalink

    Globalisation. If Ipods were made in America they would cost $15000.

    • Iain Gill
      Posted January 8, 2014 at 3:59 pm | Permalink

      funnily enough Apple is moving some production to the US

    • Bazman
      Posted January 8, 2014 at 8:35 pm | Permalink

      Who told you that?! It’s about a grand and here about 500 quid in china in non scientific economics. We are to live like Chinese to compete and make products for rich people to help their tax bill. You can never compete with a race to the bottom. Ram it.

    • uanime5
      Posted January 8, 2014 at 9:28 pm | Permalink

      Ipods used to be made in the USA (the country that invented them) but production was moved to China as soon as they’d taught the Chinese how to make them.

  33. Antisthenes
    Posted January 8, 2014 at 4:06 pm | Permalink

    The 5 million immigrants that Labour brought in I may have gently applauded if they had brought them in for the right reasons and done it in a measured and controlled way. However like all left wing policies consequences are never considered only intentions. The intention for labour was to stay in power by introducing into the UK those most likely to vote for them and for them it was what they considered the PC thing to do. The consequences of course has been a social and cultural calamity, it has lead to internal devaluation and has been to the detriment of the poorest and increased welfare dependency.

  34. John B
    Posted January 8, 2014 at 4:34 pm | Permalink

    The notion that increased supply of labour drives wages down, implies that incumbent workers are in competition with job seekers offering to work for less.

    Employment regulations covering hiring and firing make that unlikely to any noticeable degree.

    Similarly the simplistic supply and demand, implies if something is in greater supply, then the price must go down. If Tesco put more tins of beans on their shelves does that mean the price per tin will go down?

    The twins ‘supply and demand’ cannot be separated.

    It is not correct to image there is some pool of jobs just waiting to be filled. True some companies have vacancies for existing jobs, but what about jobs not yet created?

    It is clear that a significant part of Britain’s labour force is fossilised within the benefits system and so unavailable to companies for whom paying above benefit rates would cost more than it would add to the value of its product.

    We hear that the private sector has created X number of new jobs and many of these have gone to immigrants… well precisely. The jobs weren’t created first then left lying around, they were created because it was possible to do so at an acceptable cost because there were people to do them at that cost. Demand could now be supplied.

    Part of the reason for stagnant wages, is that more jobs have been added at the low end of the pay scale than elsewhere, and this will bring down the average.

    In France average wages are higher than in the UK because a higher minimum wage and other labour regulation eliminate job creation at the lower end of the pay scale, particularly for the young (chronic unemployment rate of 25%), these potential workers are on welfare, so their otherwise lower wages do not depress average wages.

    As for immigration: average wages would appear higher without it, but there would also be fewer jobs without it, by that I do not mean a reduction in existing jobs, but fewer new jobs… and thus less economic acitivty.

    • Kenneth R Moore
      Posted January 9, 2014 at 3:46 pm | Permalink

      But what of self employed tradespeople that find it harder to get work – and if they do get work they find that pay rates are depressed by a larger pool of similarly qualified people willing to work for less. If I was a heating engineer or bricklayer living in the South East the next wage of EU migration is about as welcome as a hole in the head.

      It also seems reasonable to me that if say Costa coffee or Tesco can hire competent migrant workers at minimum wage it will do so – it will only offer better pay if it has to attract better quality applicants from a smaller pool of labour.

      I agree lower wage rates do create new jobs.. ghastly hand car washing stations, cheap nannies, more and more fast food outlets, big issue sellers. But my guess is these add little or nothing to the economy.

      • alan jutson
        Posted January 9, 2014 at 8:11 pm | Permalink

        Kenneth

        Your first paragraph sums up exactly what has happened within the construction industry in the last 10 years as I also posted today, yet they continue to allow ever more to arrive.
        Just like people climbing into a sinking boat, it will sink even quicker.

  35. Denis Cooper
    Posted January 8, 2014 at 5:10 pm | Permalink

    Interesting that you refer to that acronym coined by Mervyn King in 2008, “NICE”, standing for “Non-Inflationary, Consistently Expansionary” economic conditions.

    There was another acronym in vogue earlier, “NAIRU”, standing for “Non-Accelerating Inflation Rate of Unemployment”.

    It’s possible that the decline in trade union militancy led to a reduction in NAIRU, in other words it would be possible for the UK economy to come closer to full employment before excessive wage demands kicked off accelerating inflation, which would then have to be countered by the Bank of England raising interest rates.

    However I’m not sure that we’ll ever know, because the Bank of England admitted at some point during the NICE period that it no longer had any accurate statistics even for the size of the workforce in the UK, and therefore it would no longer be possible to assess what percentage of that workforce was unemployed.

    And the reason for that was the mass immigration that was being allowed and encouraged by the government, with uncontrolled immigration, both legal and illegal, leading to ever increasing uncertainty about how many people were available for work in the country and how many were actually working, legally or illegally.

    But I think there can be no doubt that mass immigration depressed wage levels, leading to the Bank setting interest rates too low, leading to unfortunate consequences, and I think there can be no doubt that it is still depressing wage levels now.

    Then last night I watched a load of rubbish on the BBC telling me that mass immigration is good for the economy and indeed we cannot afford to do without it, but I had to watch it in several chunks with cooling off periods in between.

    • alan jutson
      Posted January 9, 2014 at 8:26 pm | Permalink

      Dennis

      I thought BBC2 programme “The hidden World of Britains Immigrants” showed exactly why more immigration is absolutly not required, and why illegals should be returned immediately

      What it did also show was the Governments total inflexibility to ALLOW people to return to their own country when they wanted to go back through the repatriation scheme through delay, delay and more delay.

      I thought the interviewer did a good job in gently exposing and teasing out what actually goes on.
      The illegal immigrants he was talking to were doing Ok on £60,00 a day paid in cash when they could find work, whilst living in a squat and paying no
      Tax in the Uk, and sending money out of the country.

      When they could not get work, they then resorted to crime using the money to purchase drugs, being then incapable of work, and so the cycle continues, now in jail, one of them is taking his case (paid by legal aid) to stay, on the grounds of human rights.

      Difficult to make it up how we have got in this state of affairs.

      Politicians have a lot to answer for.

  36. Bazman
    Posted January 8, 2014 at 6:17 pm | Permalink

    Like the emperors clothes everyone on this site fails to see is that wages are in the case of big business not set by the market. You are seriously telling me that Tesco’s wages are set by the market? They are set by Tesco. Ditto for banking as when they where making profits beyond belief we still had the situation of low wages within the banking sector being a problem. They are an extreme case, but strong evidence that companies in no way want to share their profits and are not market sensitive to wages unless you have very specialised skills and even here they try to circumvent this in many ways such as by using immigrants instead of paying for training or just dealing with bad workmanship. The skills shortage was not as shortage of skill, but a shortage of money. If you advertised for 10 pipe fitter welders at £50 an hour you would have to many. However this only applies to the working classes as the MCSSS and their unions looks after their interests. At least for now, but that looks like going down the pan for them. As more immigrants come in. Whether they should come in is another question, but stopping them is not realistic so like cleaners they will have to live with it or not. The entitlement is for more people now or at least working people. The financial aristocracy is just that and thats where all you doffing and deference has got you. Bowing to big business and rich individuals who you laughably think are on your side. I fully expect to find calls for special housing for middle classes and the like. Ram it.

    • Edward2
      Posted January 9, 2014 at 10:18 am | Permalink

      Actually Baz, you are agreeing with the rest of us that there is a market for labour and the rates in many sectors has fallen due to oversupply.

      Tescos and the other supermarkets they compete with, have no problems in recruiting staff to work for them.
      Banks also have waiting lists of people wanting to work for them at the salaries currently being paid.
      Until they are finding they are becoming short of labour, it is unlikely they will radically alter their wage rates.
      Their other option at this point is that they may decide to do without the extra staff and invest in automation and other efficiencies which may be more profitable for them.

      Your welders on £50 per hour will encourage others to train up and come into the industry and that will reduce the rate in the long term assuming the industry continues to need loads of welders and that new designs or investment in automation does not reduce demand.

      Just for a moment Baz, consider where wage rates might have been in the UK today if 5 million new arrival had not come here recently.

      • Bazman
        Posted January 9, 2014 at 9:06 pm | Permalink

        As you say there is an oversupply of labour, so telling everyone there is paying work is wrong. Now because there is to much labour, at least low skilled, then the companies should be forced to pay more wages such as a living wage as the state is having to subsidise these employs to give them a wage they can survive on this is in turn subsiding companies and we know how much the right wing hates any subsidy. They are often receiving this and many other subsides from the state and at the same time not paying the correct tolls for the services provided by the state that they use, such a infrastructure, education and security. How would you have stopped the East Europeans is a better question than what would the wages be? Maybe not five million or whatever it is, but a lot and alot of illegals. Employed by dodgy employers the reason they would be here. Remind yourself of that.
        Automation as ever is difficult to predict. Cheap labour may slow it down a little.
        http://www.theguardian.com/technology/2014/jan/04/robots-future-society-drones
        Until the Terminator robot comes along many jobs will be safe. Automation is ongoing in the metal trades and long may it continue. The problems with it paid for my house.

        • Edward2
          Posted January 10, 2014 at 11:15 am | Permalink

          I assume Baz if businesses had to pay “proper tolls” they would be in return be able to charge their proper tolls ie the costs of administration for acting as unpaid tax gatherers of ni vat paye maternity pay and sick pay admin and costs of training and education of staff instead of the state just as a few things we do for free on behalf of the state.
          Its a two way street
          Careful what you wish for.

          • Bazman
            Posted January 10, 2014 at 3:57 pm | Permalink

            These are the activities of running a business. It’s like asking a toll road to put towards the running costs of your car.

          • Edward2
            Posted January 11, 2014 at 3:19 pm | Permalink

            No they are costs added to companies by Government done free of charge by businesses on their behalf.
            And it is a time consuming costly burden put onto businesses.
            However it is understood that in return for doing this and paying taxes and huge amounts of business rates the state provides certain things for businesses and its employees.
            If you also want to charge businesses even more for using these things then you would find businesses saying we therefore need to charge you for the things we currently do for free for you.
            Take using the roads
            Companies buy vehicles and pay car tax and vat, they then pay excise duty and fuel duty and pay tax on the insurances they have to have.
            So to say they do not already pay towards these things is a fantasy.

          • Bazman
            Posted January 11, 2014 at 10:51 pm | Permalink

            Large companies do not pay the correct tolls as small companies do. They are toll dodgers. Any company has to keep books and pay taxes how they do this is their own business. Many employ agencies and self employed to avoid just that and accounting costs are tax deductible like cars and their taxes.The training that they do carry out is for their own benefit not the states.

  37. Denis Cooper
    Posted January 8, 2014 at 6:25 pm | Permalink

    We have storms and floods and cold and snow is being forecast for next week, so this is an ideal moment for the Prime Minister to tell us where he stands:

    http://www.telegraph.co.uk/earth/energy/10559114/David-Cameron-very-much-suspects-climate-change-causing-abnormal-weather-such-as-floods.html

    And just to make it absolutely clear:

    “He also insisted he was supportive of Britain’s climate change targets, saying the Climate Change Act of 2008 would not have been passed without Conservative support.”

  38. waramess
    Posted January 8, 2014 at 6:30 pm | Permalink

    Companies that do not reduce their employees in line with production decreases generally go bust.

    The UK is run as a Ponzi economy where little run or controlled by government is self sustaining. Whether it be NHS, State pensions, education or balance of payments deficit all require the principle of new and increasing subscribers to survive.

    And so we encourage immigrants into an aging economy. How daft can our politicians get?

  39. Alan Wheatley
    Posted January 8, 2014 at 6:47 pm | Permalink

    On BBC1 yesterday I watched “The Truth About Migration”: a misleading title, but it did seem to present some truths. One point the programme made was that the Blair government opened the doors to migration because they were afraid the UK did not have a “native” workforce sufficient for the expected rapid growth. This reasoning appals me.

    For an advanced county with a population of 60M there should be no reason to need immigrant labour to be able to achieve good growth, other than in a limited number of specialised circumstances which can be covered by work permits. What I read into this is that government had produced a country with too many ill-qualified and ill-motivated people, so instead of trying to fix the inherent problem they took the short-term easy option of rampant migration.

    Further, it has been obvious for many years that the longer we live the older we will have to be before we are entitle to receive a state pension. So the “native” workforce will be increasing in any event.

    • APL
      Posted January 9, 2014 at 10:44 am | Permalink

      Alan Wheatley: “For an advanced county with a population of 60M there should be no reason to need immigrant labour to be able to achieve good growth”

      Exactly!

      Now if the State Education sector is turning out people who are ignorant, and ill educated, that would be the fault of the people who have been in charge of the state education sector, the political class.

      Is there nothing these people touch that doesn’t shrivel up and die?

    • alan jutson
      Posted January 9, 2014 at 8:31 pm | Permalink

      Alan

      You should have viewed BBC2 @9.30pm about The Hidden World of Britains immigrants.

      You would have seen some truth about real situations and real people.

  40. Boudicca
    Posted January 8, 2014 at 6:47 pm | Permalink

    Wages – particularly in low skilled roles – haven’t just been depressed by immigration although it is undoubtedly a major factor.

    Thanks to Gordon Brown’s massive expansion of Tax Credits, Employers learned very quickly that they didn’t need to increase wages or switch to a living wage: they could continue with their low wages and the taxpayer would top it up to make a reasonable income.

    We need to scale back Tax Credits so that only the very needy get them – and then only Brits, not immigrants.

    If Tax Credits were scaled back AND immigration was tackled so that there wasn’t an unlimited supply of cheap labour from the EU, Employers would have to (a) pay a decent wage and (b) innovate and improve productivity.

    Lib Lab CON – because of its obsession with the EU – has built a low-skilled, low wage jobs market, underwritten by taxpayers. It’s absolute madness.

    And Nigel was right yesterday (as usual). Some things ARE more important than another 1% or two on GDP. Our Nation, our Sovereignty, our Democracy, our culture, our history, our social cohesion, our sense of national pride, our own young people’s life chances are ALL more important.

    Lib Lab CON know the price of everything and the value of NOTHING.

    • uanime5
      Posted January 8, 2014 at 9:39 pm | Permalink

      Thanks to Gordon Brown’s massive expansion of Tax Credits, Employers learned very quickly that they didn’t need to increase wages or switch to a living wage: they could continue with their low wages and the taxpayer would top it up to make a reasonable income.

      Brown’s choice was either to raise minimum wage to a living wage or use the taxpayers money to allow businesses to continue paying low wages. Guess which one businesses approved of (especially businesses that avoid most of their taxes).

      We need to scale back Tax Credits so that only the very needy get them – and then only Brits, not immigrants.

      Given that the very needy are those working in low wage jobs and tax credits can only be claimed by working in low wage jobs how exactly is your plan going to scale them back?

      Also many immigrants don’t claim tax credits because they don’t know how to claim them (which is why HMRC saves billions in unclaimed tax credits).

      If Tax Credits were scaled back AND immigration was tackled so that there wasn’t an unlimited supply of cheap labour from the EU, Employers would have to (a) pay a decent wage and (b) innovate and improve productivity.

      No chance of this happening. As long as there’s more people in an area than there are jobs available wages won’t increase. Also many innovations reduce the number of jobs available, such as replacing people on tills with self-service tills, so this will further depress wages.

      • Edward2
        Posted January 9, 2014 at 6:02 pm | Permalink

        Tax credits need to be scaled back Uni.
        You can have a situation where tax credits can be paid to people earning levels of income which put them into higher rates of income tax.
        Why not just reduce income tax levels and save everyone like this having to apply for tax credits.
        Its the same as some people on minimum wage having to pay income tax.
        How stupid is that?

        • uanime5
          Posted January 9, 2014 at 11:15 pm | Permalink

          You can have a situation where tax credits can be paid to people earning levels of income which put them into higher rates of income tax.

          Tax credits are a form of non-taxable income, so they can’t put you into a higher rate of income tax.

          http://www.hmrc.gov.uk/incometax/taxable-income.htm#2

          Also higher rates of income tax are only charged on income that is in this higher band. So if you pay a 20% tax rate on all income over £10,000 and you earn £11,000 you’ll only pay income tax on the £1,000 over the £10,000 limit, not the whole £11,000. Thus even if tax credits did push you income into a higher band you’d still be better off.

          Why not just reduce income tax levels and save everyone like this having to apply for tax credits.

          Because most of the people claiming tax credits would lose more than they would gain due to the increased personal allowance.

          • Edward2
            Posted January 10, 2014 at 11:22 am | Permalink

            Youve misunderstood me as usual Uni.
            You can qualify for tax credits when earning incomes which place you in a higher tax bracket.

            You pay income tax and then claim tax credits, why not just reform the system so this extra admin isn’t needed.

      • Narrow shoulders
        Posted January 9, 2014 at 7:28 pm | Permalink

        Also many immigrants don’t claim tax credits because they don’t know how to claim them (which is why HMRC saves billions in unclaimed tax credits).

        I think we can file that unfounded claim along with the “immigration is a net contributor to the economy” soundbite unless you can provide statistics (with source) that define many

        • uanime5
          Posted January 9, 2014 at 11:28 pm | Permalink

          Channel 4 investigated whether immigrants claim more in benefits or tax credits that the average UK citizen and found that on average migrants claim less.

          http://blogs.channel4.com/factcheck/factcheck-immigrants-pay/16332

          Narrow shoulders you don’t automatically get tax credits, you have to call the HMRC and ask for them, which is why so many people from the UK aren’t able to claim them because they don’t know how to. So unless someone tells these immigrants how to claim them and these immigrants know enough English to ask for them it’s likely that many immigrants don’t claim tax credits. Especially if they’re in the UK illegally.

          • Narrow shoulders
            Posted January 10, 2014 at 8:09 am | Permalink

            Immigrant communities are generally more close knit than the English who form cliques. What one immigrant knows others will also know. Show me statistics or stop using your soundbite please.

  41. Alan Wheatley
    Posted January 8, 2014 at 7:14 pm | Permalink

    Re the last paragraph, I do not agree that “the issue is one of balance”. “THE ISSUE” is not limited to the supply and demand for labour, but also about the quality and character of life in OUR country. With a fixed landmass you can not keep on letting more and more people into the country without there being many consequences well beyond the number of working people.

    We are, of course, ALL immigrants; it go back far enough some of our ancestors were able to walk here in the days when there was still a land-bridge to the rest of Europe. For a long time it did not matter how many people came because the numbers, and in particular the impact they made, was small in relation to the landmass.

    That situation is no longer true. You only have to look at HS2 for an example. The argument goes that the new highest priority use of the Chilterns is to provide a high-speed rail corridor between London and Birmingham so as to meet the planned future demand for travel. Irrespective of one’s views on HS2, it does illustrate the competing claims on a limited natural resource.

    I do not accept that if business says it can not recruit the workforce it needs from UK citizens then we MUST let in foreigners to fill the shortfall.

    It is obvious we have a large number of unemployed who could fill any of the unskilled vacancies. Some, it seems, would rather be unemployed than pick strawberries in Kent; so be it, but not with the government (taxpayer) funding their unemployment. Technological advances will mean we will require fewer unskilled people, so the last thing we need to be doing is importing more of them.

    For skilled and semi-skilled jobs we need to get education and training right so we can meet all the job vacancies.

    There is no happy future in achieving growth through an ever expanding population. Employees need to look to receiving higher wages by increasing their value to their employer, and employers need to look to improving their business methods so as to be able to pay higher wages to more beneficial employees.

    We should be on a race to the top, not to the bottom!

    • uanime5
      Posted January 8, 2014 at 9:41 pm | Permalink

      Given that only the employers know what skills they need I’d place more emphasis on employers training employees so they’ll have the skills employers need, rather than requiring the employee to try and figure out what skills other people want.

    • Mike Wilson
      Posted January 9, 2014 at 12:12 pm | Permalink

      Technological advances will mean we will require fewer unskilled people, so the last thing we need to be doing is importing more of them.

      ‘They’ have been saying that all my life. I remember back in the 1960s being told to prepare for everyone working a 20 hour week by 2000 – as all the drudge work would be done by machines. Invest in golf courses was often heard – we’ll all be playing golf all the time.

      • Edward2
        Posted January 9, 2014 at 6:08 pm | Permalink

        I remember it well Mike, as well as being regularly told that all these new computers would herald a paperless office with hardly any admin staff being needed by 2000.

  42. Trevor Butler
    Posted January 8, 2014 at 8:23 pm | Permalink

    My wife and I are ‘getting out’ this year – I work in a niche sector of R&D and she is a teacher, both of us with over 35 years experience.
    That’s OK though because with only nett migration figures we’ll be replaced by a car washer and a Big Issue seller and everything will be fine:)

    • Rob
      Posted January 8, 2014 at 9:34 pm | Permalink

      I’ve been saying for years now that the UK will eventually consist of an untouchable extremely wealthy “elite”, and very poor people to polish their boots. Everyone in between will eventually be crushed financially.

      Not a bad idea for you to get out!

  43. uanime5
    Posted January 8, 2014 at 9:44 pm | Permalink

    This was bad for the last two years under Labour and has continued at a lesser pace under the Coalition.

    Actually the economy was recovering under Labour but growth dramatically fell after Osborne’s austerity cuts.

    Part has been the loss of high end profitable activities from the City as people have diverted high earning areas of their banks and businesses to lower tax jurisdictions in Asia, Switzerland and the low tax islands of the world in response to 50% Income Tax and 28% CGT rates.

    Perhaps Cameron should start clamping down on tax avoidance, rather than rejecting an EU anti-tax avoidance measure that would have resulted in the UK getting an extra £7 billion in tax revenues.

    That is the decision of the past government to invite in up to 5 million new people to the UK over little more than a decade.

    Something the Conservatives haven’t done much to reduce despite their promises to reduce net migration.

    Employees of UK companies already settled here need income levels that sustain a reasonable lifestyle in one of the dearer locations in the world.

    Perhaps the government should introduce a living wage, rather than a minimum wage and tax credits.

    Over the last decade the UK has had an unprecedented expansion of its labour supply, which is part of the background to stagnant wages.

    Then why were wages increasing at a time when the labour supply was also increasing? Shouldn’t wages have fallen throughout this decade?

    In any case as long as employers are able to hire immigrants instead of training their workforce we will continue to have skill shortages and high levels of unemployment. Forcing the unemployed to work in jobs that won’t provide them with any useful skills won’t change this.

    • Edward2
      Posted January 9, 2014 at 6:12 pm | Permalink

      Come on Uni, stop teasing us, what is this all about, do tell:- “Cameron….rejecting an EU anti-tax avoidance measure that would have resulted in the UK getting an extra £7 billion in tax revenues”.

    • alan jutson
      Posted January 9, 2014 at 8:36 pm | Permalink

      Uni5

      You mean we still have tax avoidance after 13 years of Labour rule.

      Whey did they not stop it when in power !

      Black, Pot, Kettle me thinks.

  44. sm
    Posted January 8, 2014 at 11:26 pm | Permalink

    Surely the inflation(loss of purchasing power) was caused by QE money or printing it to save the banks. Surely that’s how we are re-capitalizing the banks. This squeeze on purchasing power is causing wages to stay low and demand from interest rate dependent income spenders.

    Wages rises by powerful interests don’t seem to me to cause inflation but point to either rising costs or low competition. Juxtapose highly paid bankers or others sectors and their rewards and ask did that cause inflation. Also was it mer with cartel probes/anti racketeering laws to break vested interests? History shows how the mining industry was dealt with?

    We have competition in the labour market but i am not sure about anywhere else?
    How about competition in money? (Bad money is driving out good)
    How about Politics and rights to vote and remove sitting MP’s by recall powers?
    How about the BBC and its preferred status?
    How about taxation laws that discriminate against labour particularly PAYE.
    Why not tax all income the same? (with a taxfree allowance).Simple, pragmatic, competition enhancing?
    Why can’t taxes paid be clawed back if you don’t earn in the following tax year? Particularly if you are entitled to zero benefits?

    If QE was directed at individuals we would have inflation pdq, but probably also more real demand. But would the banks benefit?

    When will bonuses in subsidized benefit dependent banking end?

  45. Lindsay McDougall
    Posted January 9, 2014 at 3:00 am | Permalink

    The economic objective should be to maximise GDP per capita growth and I believe that zero immigration, or as close to it as is practically possible, will deliver that. I really don’t accept that we can’t control immigration from the EU; simply legislate to restore our sovereignty and withdraw recognition of the EU court.

    In Hook, we are in the situation where our Local Plan has been rejected because Hart District Council failed to justify its population projections and failed to consult its neighbouring Councils sufficiently. Meanwhile, the proposed Sainsbury development has attracted competition from Tesco, who want to double their existing floor space. They obviously know something that we don’t. It’s clear enough that Nick Boles and his cronies are planning to dump development on Hook that it doesn’t want in order to provide for immigration that it doesn’t want.

    If we don’t put our foot down, Mr Boles will pull this trick throughout the Home Counties. I’ve got news for Mr Boles. He’s not going to be allowed to turn the Home Counties into the sort of overcrowded (words left out ed) mess that London has become.

    • alan jutson
      Posted January 9, 2014 at 8:39 pm | Permalink

      Linsay its happening all over by Government decree.

      Wokingham is being developed way, way beyond its ability for the infrastructure to cope.

      Local Councillors did not have the courage to say NO, NO, NO.

  46. Mike Wilson
    Posted January 9, 2014 at 12:09 pm | Permalink

    The job and salary expectations people have always intrigue me. Just watched (while working!) an episode of some ghastly program where they take people to Australia or New Zealand for a week to see if they want to move there.

    Case in question – bloke is an account manager for some organisation that import or distribute wine. She is some sort of office manager.

    The thing is – what skills do they have? Do they have any skill you couldn’t teach someone else – a school leaver even – in a few months in the job? Yet, one gained the impression, they expect someone to pay them 40 thousand pounds a year. They just turn up, sit at a desk (a nice desk with a comfortable chair, and, of course, a nice warm office etc.) tap away at a computer, make a few phone calls, send a few emails and expect their work to generate enough profit for their employer that their employer can afford to pay them 40 grand a year, pay them to take holidays, pay some of their pension etc. etc.

    I don’t know when people are going to realise, if you want good money, if you have to be able to do something that sets you apart.

  47. Richard Calhoun
    Posted January 10, 2014 at 5:41 pm | Permalink

    Disappointed to see my comment has not been approved for publication.
    Not sure why, it was polite !

  • About John Redwood

    John Redwood has been the Member of Parliament for Wokingham since 1987. First attending Kent College, Canterbury, he graduated from Magdalen College, and has a DPhil from All Souls, Oxford. A businessman by background, he has been a director of NM Rothschild merchant bank and chairman of a quoted industrial PLC.
    Published and promoted by Thomas Puddy for John Redwood, both of 30 Rose Street Wokingham RG40 1XU
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