Impact of immigration on native wages ‘infinitesimally small’ says author of study cited by leading Brexiteers

Exclusive: Sir Stephen Nickell speaks out on how his work has been misrepresented by leading Brexiteers who want to slash immigration

Ben Chu
Economics Editor
Wednesday 25 January 2017 16:44 GMT
Sir Stephen Nickell says he ‘wasn't allowed to get cross’ about the misuse of his study when he was at the OBR
Sir Stephen Nickell says he ‘wasn't allowed to get cross’ about the misuse of his study when he was at the OBR

The author of an influential piece of economic research frequently heralded by leading Brexiteers as evidence that immigration from the European Union undermines native British wages has stressed that the negative impact is “infinitesimally small” and that his findings had been widely misrepresented.

In the EU referendum campaign last June Iain Duncan Smith cited research by Sir Stephen Nickell and Jumana Saleheen to argue, wrongly, that workers’ average wages are 10 per cent lower thanks to EU immigration over the past decade.

The same claim was repeated by two senior figures in the Vote Leave campaign, Boris Johnson and Gisela Stuart.

Sir Stephen’s research, originally published in December 2015, is still cited by Brexiteers when asked to provide evidence that immigration has had a negative effect on natives’ living standards.

The work is thought to have been behind the claim from Theresa May at the Tory party conference in October where the Prime Minister asserted that “I know a lot of people don’t like to admit this [but to] someone who finds themselves out of work or on lower wages because of low-skilled immigration life simply doesn’t seem fair”.

Yet the 10 per cent claim was based on a significant misunderstanding of the research’s findings.

As the immigration expert Jonathan Portes has pointed out, the actual results suggested only a 1 per cent fall in the wages of low-skilled workers due to immigration – and this impact was spread over a period of eight years.

There was no negative impact found from immigration on the wages of skilled workers and professionals.

And in an interview with The Independent Sir Stephen has confirmed that Brexiteers grossly misrepresented his findings.

“It’s very small,” he said of the wage impact.

“They [low-skilled workers] lose out by an infinitesimally small amount.”

Sir Stephen was until December a senior official at the Office for Budget Responsibility, the Treasury’s official forecaster, and says that he “wasn’t allowed to get cross” about the public bowdlerisation of his research findings by the Brexit camp and anti-immigration commentators.

He adds that his co-author Ms Saleheen, who works at the Bank of England, has also been unable to speak out publicly to correct misleading statements.

The Brexit vote has been interpreted by the Government as an overwhelming mandate to end freedom of movement for EU workers to come to the UK.

In a speech last week Ms May confirmed the UK will be leaving the single market – something economists almost unaminously argue will damage the British economy in the long run – since the rest of the EU has made it clear that it will not compromise on the principle of freedom of movement, one of its original “four freedoms” in the Brexit negotiations expected to begin in March.

Asked if he was concerned that ministers might continue to misrepresent his research to justify cuts to immigration in the wake of Brexit, Sir Stephen suggested there would probably be constraints imposed by the civil service.

“They won’t be able to misrepresent the data, our research findings, because when they introduce this policy the civil servants will produce a document that will say what the consequences are, an impact assessment. It’ll have to be right,” he said.

He also said the Government’s own Migration Advisory Council would act as a check on ministers.

“The MAC has also done work on similar lines [to our research on wages]. They’ll take the information they’ve got – not just mine,” he said.

According to the Office for National Statistics there are 2.35 million EU workers in the UK labour force, up from around 730,000 in 2001.

Research by the Resolution Foundation think tank last year suggested that any downward impact of increased immigration on native wages over the past seven years in some sectors has been dwarfed by the overall general pay squeeze on all workers since the global financial crisis.

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