Who Comes to London and How do They Fit in the Labour Market ? Ian Gordon LSE London research centre, London School of Economics LSE London HEIF5 Roundtable: ‘Migration and the transformation of London’ 5 th October 2012

Outline London Migration over past 25 years Significance of Irregulars PBS – Highly Skilled Tier 2 Entries Impacts of Migration on Bottom of LM

1. London Migration Via 2 upsurges, in late 1980s and late 1990s overseas migration has turned around trends in London’s adult population –Net inflow peaking at c. 100k around 2000, but still c. 40k Overseas born population risen from 1.1mn to 2.8mn –Share of pop doubled (18% to 36%) – partly due to 50% displacement of others And cosmopolitanism grown enormously: –56 national communities with 10 K plus residents – more non-anglophone/ex-colonies –as many Poles as Irish or Indian, and large West European groups too Large inflows from both poor and rich countries – but former stay more London gains disproportionately –except perhaps from A8s – with just 15-20% share Possibly effect of agency activity in steering to e.g. food processing centres Not salient in London – where more independents and self-employed (esp. constr.) –cf. 80% + of asylum seekers – before dispersal policy introduced c –around 30% for other groups Migrants are young and with as much education as young Londoners

Net Migration

2. The Role of Irregulars Irregulars = illegal migrants + over-stayers + ‘failed’ asylum seekers –on our (2009) estimation preponderantly the last of these: the (substantial) remnant of the (poorly managed) influx around 2000 We suggested UK total of c. 600k in 2007 with c.70% in London –building on Home Office (Woodbridge) estimates for 2001 –and allowing for c 170k regularised cases UKBA’s case resolution / legacy programme ( ) should have eliminated this group (except for recent arrivals) –either by deportation or regularisation – mostly latter (c. 70%) in practice –but half the expected cases (files) were determined to be mistakes i.e. already gone, legal or dead ! Though evidence on this is quite unclear Quite unclear where this leaves: – our estimate of who, and how many, irregulars there were –number who are still ‘irregularly present’ (beyond the admitted 124 k?)

Why Would This Matter ? Until quite recently regime accommodated a wide spectrum of effective degrees of regularisation among the formally ‘irregular’ –cf our estimate that 50% of adults in work and irregularity responsible for only c. 6% in employment rates (though 30% in pay) –and that far from all being in the ‘black’ they probably paid 50% of due tax Under a more tightly policed regime, this is increasingly ceasing to be the case So, it seems that we need to know a lot more about how many people are in this situation (beyond the hope of regularisation from which most of the visible benefitted) – and where they are –as well as about how they got lost, and how far UKBA are to be held responsible for this

3. Highly Skilled (Tier 2) migrants under the Points Based System Includes both: –(quota-ed) general migrants and –(unquota-ed) ‘intra-company transfers’ (for 1 year or 2+3) In total could involve 50k visas in 2011/12 –roughly 60% ICT, 40% general (almost all under £150k p.a.) –but many (40%?) for periods below 1 year (i.e. not ‘migrants’) –Say 30k primary migrants + 15k dependants –Maybe 36k left after 5 years and 27k after 10 ? Main origins: India (55% overall, 75% among ICT), US (13%), Australia, Canada, South Africa, China, Pakistan, Phillipines (2-3% each) Strong GSE esp ‘City’ concentration because of concentration of IT and financial services – the key drivers of demand (+ some international HQs) – some bias also to bigger centres – but not specifically London

Concentration of Tier 2 in Greater South East

Notably in City / Canary Wharf

4. Impacts of Migration at the Bottom End of the London Labour Market The research consensus is that in-migration does not lower average earnings or employment rates –But that it might have negative effects at the bottom end much among earlier migrants One mechanism for this would be the crowding of new arrivals from poor countries into the bottom tier of jobs –Comparing London with other regions, we have evidence that: The boom of such migration from lowered wages in the bottom quintile by c. 15 % That this is turn stimulated a growth in jobs in this segment – possibly by shifting demand for locally traded services between London and its regional neighbours And (to be confirmed) that lowering expected wages for those only likely to get such jobs depressed participation rates (with more ‘not wanting’ a job) A regressive and controversial aspect of the process – though issue may be the under-employment of able new migrants

London Migrant Jobs by Type and Quintile 2008 Migrant OriginYears in the UK Bottom quintile 2nd quintile 3rd quintile 4th quintile Top quintile Non-Migrant..11.3%16.0%17.4%24.0%31.3% High Wage countries %11.6%10.2%24.3% 40.5% HWC>39.5%12.6%9.8%24.3% 43.8% Low Wage countries % 19.7%9.0%9.1%21.7% LWC>3 23.9% 21.3%17.7%17.3%19.8%

Relation between Years in UK and Working in Bottom Quintile Jobs for Migrants from Poor Countries

Bottom Quintile Real Earnings

In-migration from Overseas (per cap)

Bottom Quintile Share of Regional Employment

Trends in London Worklessness Relative to RGSE

Summary International migration has been key to London population growth and transformation over last 25 years Character at least of this has been shifting as policy starts to get a grip Needs much more open discussion Substantial uncertainties about key aspects A starting point for work and discussion in the series

Sources Gordon, I, Travers, T and Whitehead, C (2007) The Impact of Recent Immigration on the London Economy. City of London 2007, Gordon, I; Scanlon, K; Travers, T and Whitehead, C. (2009) Economic impact on the London and UK Economy of an earned regularisation of irregular migrants to the UK. GLA. Whitehead, C; Edge, A.; Gordon, I.; and Scanlon, K. (2012) The impact of migration on access to housing and the housing market. Migration Advisory Committee., UKBA/Home Office, January. Gordon, I and Kaplanis, I. (2012) ‘Accounting for Big City Growth in Low Paid Occupations: Immigration and/or Service Class Consumption’, Spatial Economics Research Centre FP106, April