Immigration: A Potential Solution for the UK Job Market

By Sanwar Ali:

UK Immigration

In the current UK job market scenario, the topic of immigration has been a hotbed of debate. A fresh perspective brings to light the potential benefits of increasing immigration, particularly in relation to the UK's economic health and reducing the inflation rate. This article explores the benefits and challenges of immigration in the UK job market. Since Brexit many workers will need to be sponsored for a Skilled Worker visa with an employer with a sponsor licence.

The Role of Immigration in UK Employment

The UK job market has been under considerable stress, with huge numbers of vacancies across multiple sectors like accommodation, food, health and social work, and professional scientific jobs. According to the Office for National Statistics, the UK had over one million vacancies from January to April 2023. These shortages have been exacerbated by the impact of Brexit on the flow of European Union workers and the effects of the Covid-19 pandemic.

The International Monetary Fund's (IMF) deputy head, Gita Gopinath, argues, "with inflation as high as it is… there are benefits to having workers come in." In her interview with BBC Newsnight, she further emphasized that immigrants could fill these gaps, thus potentially helping to control inflation.

Inflation and Immigration: The Connection

UK's inflation rate has been a concern, with the headline inflation falling to 8.7% year-on-year in April. However, core inflation, excluding volatile food and energy prices, rose to 6.8%, the highest in the G7. This surge has led to speculation about the Bank of England possibly raising interest rates higher than previously thought, from their current 4.5% to above 5%.

Ms. Gopinath pointed out that the influx of workers could assist in controlling inflation. Ms. Gopinath highlighted that more workers filling the job vacancies could help control wage pressure, which in turn would stabilize the inflation rates. She downplayed the idea that the UK has significantly worse core inflation than other developed economies, stating, "I wouldn't make a big difference between small differences in numbers in core inflation."

How Immigration Can Benefit the Economy

Immigration can be beneficial for the economy in several ways:

1. Filling up Job Vacancies: As mentioned earlier, several sectors are facing a severe shortage of workers. Immigrants can help fill these gaps.
2. Boosting Economic Productivity: Immigrants, particularly skilled workers, can contribute to the overall productivity of the economy. They bring in diverse skills and creativity, leading to innovation and economic growth.
3. Addressing the Aging Population Problem: The UK, like many developed nations, faces the issue of an aging population. Young immigrants can contribute to the workforce, balancing the demographics and ensuring sustainability of public services.
4. Enriching Cultural Diversity: Immigrants bring in new cultures, perspectives, and ideas, enriching the social fabric of the society.

However, levels of immigration remains controversial. The UK’s points-based immigration system is designed to flex to the needs of the economy, ensuring the country attracts the skills it needs.

The Brexit Effect

Brexit has significantly impacted the UK's labour market and trade intensity with the EU. According to Ms. Gopinath, the IMF's 2018 forecast that Brexit would reduce the long-term growth potential of the UK economy by 2.5% to 4% of GDP, equivalent to £900 to £1,300 per person, still holds. The government needs to carefully evaluate these effects and consider the potential benefits of immigration.

The Way Forward

There is no easy answer to issues of immigration in the UK. Increasing immigration may be unpopular amongst certain groups in the UK. On the other hand, having tough immigration controls may cause serious problems with the economy.

How Workpermit.com Can Help with Sponsor Licences

If you need help with employing Skilled Workers and help to apply for a Sponsor Licence, including complying with your Sponsor Licence obligations, Workpermit.com can help.

For more information and advice, please contact us on 0344 991 9222 or at london@workpermit.com(link sends e-mail)