Polish builders filling skills gap and helping to hold down inflation

Almost 400,000 people have applied to move to Britain from the eastern European Union countries since they joined the single market in May 2004.

Figures published by the Home Office yesterday showed 45,660 people applied from the 10 accession countries in the first quarter of the year, a 6 per cent increase on 2005.

"Accession nationals are continuing to come to the UK to fill gaps in the UK labour market," said Liam Byrne, the newly appointed minister of state for nationality, citizenship and immigration. "The UK economy continues to thrive, with one of the highest rates of employment and lowest rates of unemployment in the EU." It brings the total of people accepted under the Workers' Registration Scheme to 375,000, 96 per cent of the 392,000 who have applied to work.

While Polish builders and plumbers have become tabloid legend, the Bank of England has repeatedly highlighted net immigration as a factor in keeping a lid on growth in wage levels despite record levels of employment. In its quarterly Inflation Report a fortnight ago, the bank said: "In recent years non-UK nationals have played an increasingly important role in the jobs market and the rise in labour supply has probably helped to hold down the rate of wage growth and inflation."

Official figures last week showed average earnings excluding bonuses in the three months to March were growing at 3.8 per cent annually, compared with 4.4 per cent at the start of 2005.

Michael Saunders, at Citigroup, said: "The inflow of low-cost migrant labour continued to spread across the country. This is a powerful deflationary factor that is capping pay growth - and will probably continue to do so."

He said the UK had benefited as one of just three of the 15 "old" EU states that opened their borders two years ago - the others were Sweden and Ireland.

"Migration inflows clearly will not keep rising for ever but with a continued massive disparity between pay levels in the UK and eastern Europe, the UK's openness to migration and the development of job agencies to facilitate the process, we suspect the inflow will stay high - perhaps for years to come," he said.

My Byrne highlighted the construction, agriculture, hospitality and catering and food-processing industries. However, there are growing concerns among unions that migrant workers in these low-wage sectors are being taken advantage of.

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