Another advantage of migration for the labour markets is that it will increase the number of entrepreneurs in the country benefitting the labour markets and is a supply side gain for the economy. In addition the additional aggregate demand as a result of migration may increase short term economic growth leading to a slightly faster trend rate of growth benefitting the economy in the long run. This will benefit labour markets in the sense that it will increase their sales/output since higher aggregate demand means more total demand for a country’s goods and services. Migration can also achieve this in another way, if in Scotland there was much unemployment because the skills of the workers did not match the available jobs, people in other remote areas such as Wales who posses these skills could move into Scotland and take up the jobs. Similarly those already in Scotland can move somewhere else to find these jobs. This will partly solve the problem of unemployment without importing foreign workers highlighting the great advantage of migration.
On the other hand migration carries many flaws for the labour market. For instance although most migrate to the UK to find jobs, many move in order to study and for relationships. This can be a negative impact because if, people immigrate to study and then leave the country after graduating there is no improvement for the labour market, in fact due to limited places the people migrating to study are arguably depriving the UK labour market of possible workers in this sense. Similarly if people come to the UK due to relationships , their incentive to find a job may be lower. Hence they may become unemployed and claim job seekers allowance etc. Similarly if there is net immigration and the immigrant have all the right skills for the available jobs, unemployment will increase due to the depression of real wages for domestic workers reducing their incentive to actively seek a job, another reason could be that the immigrants, since they more willing to do a job for a lower wage etc , may occupy most jobs reducing demand for labour ,resulting in increased unemployment. In turn this will increase pressure on the welfare state, which may be passed on to workers in the form of higher taxes, this may further discourage them to work since it essentially means that their wages would be decreased. This may cause a multiplier effect and put further pressure on labour markets and increase pressure on scarce resources, especially after a period of time in the form of higher demand for housing etc. This increased cost of living is bad for the labour markets because they may have to somehow compensate the workers , either in terms of higher wages or more non pecuniary benefits. Either way this would increase costs of production/average costs for firms and may in the long run create further unemployment because firms will have to make some workers redundant due to these increased costs.
Finally Migration may not benefit the labour markets because many firms will prefer to recruit domestic workers due to less potential risks. For example foreign workers may have a language or cultural barrier and their qualifications may not be recognised in the UK or may not be trusted as much. This will lead to less immigrant being employed resulting in more unemployment, that us assuming that the skills of the migrants match those that are demanded by the labour markets. Similarly this can be applied to emigration since people emigrating from the UK, to e.g Spain may not speak Spanish and will find it difficult to get a well paid job since employers will believe that they have less productivity than a local Spanish person.
In conclusion carefully regulated migration can have a very positive impact on labour markets. This is because it can be used as a tool to fill vacancies in the labour market , for which there are job shortages. For example if the UK only lets a certain amount of people in that want to enter the UK for reasons other than to seek work , and make sure everyone entering has to pass a test to certify that they speak English will make sure that people entering will be more productive and more likely to find a job and not be unemployed while bringing about more benefits to the labour markets. This can also be partly achieved by discriminating against certain immigrants. For example reducing the amount of elderly people entering the country will decrease the chances of an ageing population, for which there is a very limited labour market. All this will mean that only certain jobs are taken by immigrants leaving the rest to the natives. This will largely benefit the labour market because it won’t suffer much wage inflation and demand for housing etc will not increase significantly. Furthermore this will help keep inflation down meaning less expense for employers. An advantage for the labour markets in the migrants home country would be that, if the migrant is working in the UK in order to send money back home, then that will serve as an injection to that economy and might overtime help to create more jobs. An obvious disadvantage however would be that the labour markets would suffer there due to many people emigrating from that country resulting in high demand for labour. This will on the other hand be a benefit to the people in that country since they would enjoy higher wages and could mean that people would return to those countries from the UK in light of these improvements in economic prospects further reducing the chance of unemployment etc. Overall immigration, to a large extent brings about more benefits to a labour market then problems.
by
roman2011 (student)
