Immigration and wages

Interesting article by Don Flynn (formerly director of Migrant Rights Network) arguing that immigration does not suppress wages. He cites OECD data on GDP and wages since the 1970s (but he doesn’t provide any links to the source; and doesn’t make it clear if he is referring specifically to the UK; or what year the dataset ends on – OBS will ask him for this info).

According to Don, the OECD data shows that as a proportion of overall wealth created (he uses GDP as his measure) wages have been declining – from a high of 64 per cent in the mid- 1970s to a low of 52 per cent in 1998, when a slight recovery began.

If true, this is very significant. It means that the decline in proportion of GDP going to wages actually began AFTER tighter immigration controls were enacted (in the 1960s and 1970s). If true, this is a powerful argument against the idea that immigrants are suppressing wages, and points to employers and government policies as responsible for suppressing wages. If true, it suggests – as Don Flynn puts it – a working-class case for freedom of movement. It is employers and politicians, not immigrants, who are driving down the wages of ordinary working people. Immigrants and ordinary working people have a common interest in combining to resist wage restrictions. (And there are groups – like the Independent Workers Union of Great Britain – organising in this way).

This is worth investigating further. Some initial questions I have.

If wages have been declining as a proportion of GDP, what has been increasing? Has there been, for example, an increase in proportion going to pensions, or capital investment, or national debt payments? If the decrease is entirely accounted for by the increase in proportion going to pensions, then this may reflect an aging population, rather than an attack on the living standards of the working-class.

Wages overall as a proportion of GDP have not been evenly distributed across the workforce. There is significant income inequality in the UK. Has the decline in wages been concentrated in sectors where immigrants are concentrated, rather than in sectors where they have not (as some academic research suggests)? If this academic research is correct that does not mean that there cannot be a working-class argument in favour of free movement, but it does appear to invalidate Don Flynn’s argument.


One thought on “Immigration and wages

  1. Thanks OBS – appreciate your comment. The most accessible crib for the source of the OECD statistics if the TUC’s pamphlet, ‘How to boast the wage share’ –…/files/HowtoBoosttheWageShare.pdf The graph on p.6 plots the relevant data.

    The issue gets more thorough discussion in John Smith’s stimulating book ‘Imperialism in the 21st Century – pps 145-55…/imperialism_in_the_twenty…/ The convention in considering the share of GDP that falls to stakeholders is usually simplified to the share due to labour (wages and the social wage) and the share due to capital (dividends, rent, etc) Pensions therefore figures as a part of the ‘labour share’ and, despite the rise in the number of pensioners, still produced a decline up until 1998, when New Labour partially reversed the trend, up to the point of the 2007-8 recession.

    My interpretation of this is that all the major features of contemporary capitalism – globalisation, financialisation, etc – have worked to reduce the share of value going to labour. This does not rule out the possibility that migration is a contributory factor, though quite certainly one of much less significance than all the other elements at work which have held the living standards of the mass or wage earners in check.

    The more important point is that the movement of people does not in itself bring about wage competition, but only the way in which migration takes place under capitalism. A socialised system of production, in which labour no longer figures as an abstract commodity with the gift of bestowing new value in other commodities, but as the capacity of human brain and muscle to produce useful goods and bring about change, would eliminate economic competition between workers and hence any tendency to erode living standards. The transformation of the reality of today into what could exist in the future is the real purpose for advocating the freedom of labour to move.

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