Migration … a political hot potato

Migration.

Migration, particularly economic migration, is a political hot potato. We look for free entry to other markets to provide outlets for our own surplus production. This implies globalisation, and globalisation, when taken to the nth degree, implies equalisation of wages and living standards around the world. Only once this equalisation is achieved will the pressure for economic migration diminish.

The EU in many ways is a microcosm of globalisation, the common market which many believed is all we signed up for, is indeed only a common market, which grants to all the right to sell their labour wheresoever they like within the EU. Just as businesses sell their products, so we as individuals sell our labour. The movement of labour around the EU is simply a natural consequence of a "globalised" economy.

While Britain is an Island Nation and cannot accomodate an unlimited influx of people it needs to recognise that as a member of the EU, if it wants the benefits of a Common Market it must also accept that the citizens of other EU members have the right to sell their labour in the UK. The freedom of movement within the common market plays an important regulatory role. For example, if wages in one sector of the economy rise excessively in relation to those in the rest of the common market, we will see people from other countries moving in and dampening the upward pressure, created by a skills shortage, within a particular economy. 

Examples of this effect abound. Consider the number of non UK citizens making up the care industry, or the number of Eastern Europeans in the hospitality, building and heavy labour industries. Without these migrants these industries would either collapse or there would be a sharp escalation in prices. Naturally the driving down of wages in certain sectors creates resentment in the population, particularly at the lower end of the wage scales. In the first instance we should not object to economic migrants who come and fill vacancies, however competition from migrants will tend to drive down wages, particularly at the lower end of the labour market. To a degree this can be countered with higher minimum wages, but once again this might only shift the competition in the labour market to the intermediate skill level

The concept of minimum wages, seemingly flying in the face of capitalist or free market systems, is partially to prevent the exploitation of workers but also to provide an incentive for escaping the social security net. To be effective this needs to be at a level higher than subsistance. Correctly set minimum wages have a secondary effect, not only do they provide an inducement for people to leave the social security net, they act as a brake on migration, by limiting the number of vacancies. (Migration is influenced by the perception of work being plentiful within a country). We should not object to migrants with specialised skills entering the market place, but, we should be concerned if our economy is not providing jobs for the weaker members of our society at wage rates that give a clear incentive to escape the social security net.  .

The UK operates a circumstance based social security net (benefits). This becomes problematic when we are part of the EU, where in terms of the broad agreement we are expected to treat EU citizens who become resident in the UK on the same basis as our own citizens. In probability the only solution to this quandry will be a total ovehaul of the benefits system, away from a circumstance basis to a contribution based system.

I do not intend going into detail over a contribution based benefits system, however our system of tax credits, automatic child benefits and the like are not fit for purpose. It should be easy to move unemployment benefits and pension rights into a clear contribution based system that treats each according to the contributions actually made. Consideration could also be given to adopting a coupon based system that is not transferable or convertible into normal currecy, for cases of long term unemployment, or other cases where society considers it should top up peoples income (this system would exclude the disabled).  

Possibly the most important step in discouraging migrants, would be for us to correct our exchange rate. Our business sector tells us that the exchange rate is hampering the growth of exports, it is also making competition against imports difficult for our manufacturing industry. On all economic grounds Sterling should be devalued, we are operating a current account deficit in the region of £100 billion … and sooner or later that will need to be repaid or the ownership of UK assets will gradually transfer to the rest of the world. To equalise the interest, rent and dividends going out of th UK with those coming in requires an exchange rate of £1 = $1.28, which would go a long way toward correcting our imbalance in trade and services. 

We think that we can solve the problem through renegotiating our deal with the EU, but we fail to see that the problem on a far bigger scale is around the corner. The pressures of economic/illegal migration from the third world, because of globalisation, will become greater as this 21st century progresses. Short of a big comitment to major investment in the less developed areas of the world, globalisation will bring about a collapse of society as we know it.

It is time our politicians took the hot potato out of their mouths, it is just making their garbled sounds more unintelligible.

 

 

 

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