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Banks (Finance)

Bank of England Warns of Wage Suppression from Mass Immigration

Strategic Insights

— 2 min read

The Bank of England's head, Mark Carney, has sounded a warning on the impact of mass immigration on the UK economy, citing high rates of foreign workers as a key factor in subdued pay rises over the past few years. The comments come as official figures reveal a record 4.8 million foreigners work in Britain, making up one-sixth of the labour force, with almost two million coming from the European Union.

Key Takeaways:

  • The UK's labour force has expanded significantly in recent years, partly due to an increase in older workers and a willingness to work longer hours, but also due to strong population growth driven by net migration.
  • The Bank of England has stated that the increase in the size of the workforce has contained wage growth in the face of robust employment growth.
  • The Chartered Institute of Personnel and Development's Gerwyn Davies noted that the increased supply of workers, particularly older workers and EU migrants, means employers are under little pressure to boost pay growth.
  • Alp Mehmet of MigrationWatch UK highlighted that the Bank of England report shows that immigration exerts downward pressure on wages, and that this impact is not limited to low-paid workers.
  • The Bank of England is now factoring in higher levels of population growth for the coming years, based on higher net migration, which it recognizes as highly uncertain and dependent on various factors, including the UK's economic performance and government policy.
  • Workers from Poland and other former Eastern Bloc countries have taken 942,000 jobs in the UK.

Statistics:

  • 4.8 million foreigners work in Britain, making up one-sixth of the labour force.
  • Almost two million EU migrants work in the UK, an all-time high.
  • 942,000 jobs have been taken by workers from Poland and other former Eastern Bloc countries.
  • The UK's labour force has expanded by 898,000 in the past year alone.
  • Pay rises have been subdued for several years, with average earnings growth at 2.5% per annum.

Sources:

  • "Bank of England governor says high immigration has held down wages," The Times, citing The Telegraph
  • "4.8 million foreigners at work in Britain," The Telegraph
  • "Mark Carney warns of economic risks from strong immigration," BBC News
  • "Inflation Report, June 2015," Bank of England
  • "The impact of immigration on the labor market," Chartered Institute of Personnel and Development, Gerwyn Davies
  • "Mass immigration holds down wages, says Bank of England," MigrationWatch UK, Alp Mehmet

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