Benefits of Immigration on the Economy
This paper will focus on the relationship between immigration and the economy. By the term immigration, it is meant to travel into a foreign land with purposes like study, work, family obligations, marriage and others (Creighton, Fahey and McGinnity 2022). This essay will focus only on immigration for work; in other words, labour migration. In present times after globalisation, when the world economy is experiencing sheer growth, and the companies are expanding their operations globally, more labourers have become necessary. For instance, when there is a division between countries based on their economic standard of living, wealthy countries tend to hire labourers from underdeveloped countries as the labour cost is lesser in that way (Abdurakhmanova and Abdurakhmanov 2019). It has been argued several times that no matter what the economic ranking of a country is, immigration results in higher economic growth in the case of the receiving country. Sectors like the labour market, the public Purse And Government Budget, innovation, entrepreneurship and other economic facets received the positive effect of labour migration. However, the counterargument about immigration being a threat to the economies has also been debated for a long time. The upcoming segments will discuss the benefits and costs of immigration in a generic sense, and then the same will be analysed focused on the United Kingdom.
In the year 2018, the United Nations received 152 votes in favour of liberal migration across the globe; that is, 152 nations wanted to create a secure and regular atmosphere of immigration for workers worldwide (Pastore 2019). Labourers migrate to different countries due to fewer to no job opportunities in their home country. Moreover, according to the foreign exchange ratios, it was stated several times that the income and standard of living in a first-world country are nearly 70 times better than that of a third world country. Therefore, it is natural for third world country workers wanting to migrate to developed nations to attain a higher level of income. There are both positive and negative arguments in this scenario. The World Bank found that all the immigrants worldwide constitute only 3.4% of the total population, but their contribution to the global GDP is more than 9%. Moreover, due to immigration, labour forces worldwide have experienced a substantial improvement in the last decades. For example, the United States attained a 47% hike in their labour force and the same for Europe was 70% (Menjivar and Perreira 2019). Due to an increased number of workers, the sectors of receiving economies suffering from scarcity of labour started to gain back their previous strength.
Labour Market Contribution of Immigrants
Further, most of the immigrant workers are younger. Thus, if the ratio of young workers in a country’s labour force gets higher than that of the aged workers, productivity will surely be higher. As a result of high productivity, the total production increases, and immigrant workers start to earn more than when they used to be in their homeland. Now then, if an employee is residing in a host country, contributing to that country’s GDP and spending the wages earned in expenses made in that country, he has to pay taxes to the host country’s government (Noja et al. 2018). This consequently accelerates the government’s revenue accumulation, and the public budget improves further.
Not only labour force contribution and improving the public budgets but the operations of immigration is also crucial while addressing the growth in the innovation sector. It is frequently argued that the driving force behind the developed economies is mainly technological advancements and innovation. Implementation of these forces in business conduction results in higher productivity and economic expansion. Moreover, it has been observed that immigrant people have a higher desire and knack for entrepreneurship than the native people. All these together help build up a sustainable economy where updated business plans get generated, commodities’ qualities are improved, products get available to the clientele on a lower budget and further jobs are created in the economy. From empirical data, it was found that without foreign immigration UK would have accumulated a GDP of £175 billion less in the past 15 years. The same for Germany would have been €155 billion less (Goldin 2018). Therefore, it can be said that, despite many counterarguments about the negativity of the immigration program, which will be discussed in a later section of this paper, foreign workers do bring benefits to the host country and the economic growth levels up further than before.
For the past twenty years, the immigration of foreign workers to the United Kingdom has been consistently rising. This had direct consequences on the population, productivity, labour income, government budget, innovation and economic growth all over the country (Damstra et al. 2021). As mentioned earlier, people who migrate from foreign countries are usually younger; hence, they possess higher productivity. Apart from workers, many students have also been immigrating to the UK for higher study. In several cases, these students have to work somewhere to pay for their daily necessities. Although the remunerations from those jobs are not usually higher, these people are considered part of the national labour force, and the acquired wages get counted in the UK’s national income. Therefore, with this income, the market demand gets accelerated, and the entire economy’s aggregate demand increases further (Autor and Salomons 2018). To accommodate this increased demand, firms tend to increase their total production, and for that purpose, they hire more people. Hence, cyclically, this entire process runs, and the total GDP rises.
Improvement in Public Budget Due to Immigration
A more volume labour force does ensure not only higher GDP but also a flexible structure of the labour market. In other words, the UK is a first-world country with various types of goods and services sectors present where the immigrant workers can utilise their skills. For instance, during the middle of the last couple of decades, a significantly large group of people immigrated to the UK to fill up the job roles of builders and plumbers (Lenso 2021). Although when a country goes through a rough patch of unemployment, the host government does not encourage further immigration. However, in the case of the UK, it was seen that despite having a severe unemployment scenario between 2008 and 2012, immigration flow was consistent as during that period, the European Nations were in deeper despair.
Moreover, in recent years, it has been observed that a bigger portion of the UK population falls under the higher aged segment. Therefore, the dependency ratio was predicted to rise further in the future. However, due to an increased rate of immigration, there are more people who belong in the active working force, and the dependency ratio is in the process of decreasing (Yu et al. 2021). As a result, the UK government’s revenue accumulation through taxes is higher than the spending on old-age benefits. Again, these revenues help the government develop infrastructure and asylums to accommodate migrants. Over the past years, many European citizens have shifted to the UK either for education or job. 2016-17 data have shown that, annually, an average European immigrant alone contributes £2300 in the government fund. If calculated for their entire staying period, the number reaches an average of £78,000 (Edo et al. 2018).
Not only in the labour market and economic production but also UK’s healthcare sector, immigration has had positive effects. The NHS and social care of the UK were dealing with a staff shortage during 2019. There were nearly 100,000 posts available for hire but not enough supply of medical aspirants in the domestic population. Thus, these establishments started to look out for international workers. The Healthcare industry is a delicate and necessary part of any country’s operations. It is the only industry where the constant availability of employees is a necessity. Furthermore, as discussed earlier, the current domestic population strength in the UK is tilted towards the old-age ones. Thus, the demand for healthcare facilities is much higher. Additionally, the viral outbreak of the covid-19 pandemic has taken a major toll on the medical industry worldwide (Nyashanu, Pfende and Ekpenyong 2020). Initially, it was heavily argued that foreign immigration would further diminish the quality of medical care. Nevertheless, evidence is showing a different result. Immigrants in the healthcare industry have efficiently delivered first-class services to those in need, and the deficiency in the same has been lessening over time.
Innovation Sector Growth
From the above discussion regime, many people objected that immigrants are taking up jobs that belong to domestic citizens. If not for them, the unemployment rates would have been lower; however, the reality is the opposite. Many of the foreign immigrants in the UK had either set up their own businesses or were in the process of doing so (Chen et al. 2019). Initially, they migrated to either study of gather experience in UK corporate firms. After gathering the necessary insights, immigrants started to develop their own ventures and quite successful ones, for that matter. As a result, more employment opportunities were created, and these entrepreneurs started to hire domestic people of the UK, and the unemployment rates started to experience a downfall. Previously, mainly EU citizens used to migrate to the UK for their job or higher studies. However, in present times, the higher portion of foreign immigration to the UK is accounted for non-EU citizens.
Despite all the positive impacts of foreign immigration to a receiving country, there are few arguments according to which there are certain negative influences of immigration in the host country. Firstly, the economic theory states that natural resources are scarce; therefore, their allocation must be done optimally so that none gets wasted. Hence, when more people are immigrating, the population density rises, and the competition for resource allocation is also getting intense (Ren et al. 2020). Not only that, but commodities produced with natural resources are experiencing higher demand than before when there is no way the supply could be accelerated. For instance, the land is a fixed natural resource, and when more people cluster in a specific region of land, building house becomes difficult, and the area becomes congested. Secondly, although the immigrants contribute to the revenue generation of the host country, sometimes the cost of building additional infrastructure is higher for the government. More roads and freeways get created, but the traffic congestion also gets high. Then there are additional government benefits provided to the immigrants after their stay of more than a decade. Thirdly, it is true that the labour force volume increases due to immigration, but also after a certain point, when the labour supply exceeds the labour demanded, the wage level is bound to fall (Friberg and Midtboen 2018). Along with it, a higher labour force volume is equivalent to a higher level of competition. Sometimes it is seen that more proactive immigrant workers get the job rather than domestic workers. Although the jobs are distributed based on efficiency in these cases, some experts argue that the domestic citizens get missed out on earning their bread and butter. Lastly, sometimes it is observed that due to lifestyle and perception differences, the environmental health of the host country gets degraded by the immigrants. Even sometimes, due to scarcity of land for housing, people tend to deforest nature to access more lands. This, as a result, harms the host country’s ecological balance (Gerber and Viallon 2018).
Immigration and Economic Growth in the United Kingdom
Among all these arguments, some are pretty valid points, although the debates are open-ended and subjective. Moreover, apart from a few segments in most of the cases, there is no strong evidence present to back these arguments up. Henceforth, it is pretty much difficult to come down to a neutral ground while assessing the negative impacts.
Therefore, in conclusion, it can be said that immigration is a vital topic of discussion while addressing the economic growth in any country. Immigrants bring more jobs, skilled labour, innovative ideas, increased government revenue and higher potential in any countries’ economic activities. The UK is one such country that has benefitted from immigrant workers for the last few decades. Several of its social and administrative sectors are getting benefitted from international people. Immigration is taking place from both the EU and outside of it. However, there are several counterarguments about how the immigrating people are depreciating the operational dynamics of the host or receiving country. Although some arguments have credibility, they do not possess enough evidence to support them. Hence, it can be said that along with some negativities, the immigration system has resulted in positive outcomes for most of the receiving countries worldwide.
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