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Non-EU migrant workers now earn more than EU counterparts

New research shows that non-EU workers in the UK are now earning more than their EU counterparts and that concerns over high migration figures are misplaced.

Non-EU migrants are now earning more on average than EU workers in the UK, according to analysis of data by The Migration Observatory at the University of Oxford.

Research by the think tank shows that since 2018, non-EU new entrants have been entering the workforce higher up the pay scale than EU-origin ones and that new EU-origin workers were entering at significantly lower relative wages in 2022 compared to before the pandemic.

Average monthly earnings for the overall workforce in 2022 were £2,162. For non-EU workers they were £2,098 and for EU workers the figure was £1,936.

Report authors Madeleine Sumption, Jonathan Portes & Ben Brindle wrote: “This could mean that the post-Brexit immigration system has failed to attract a higher skills profile of new EU migrants, as it was intended to do.”

They acknowledge however that it is too early to say as the 2022 figures for new entrants’ wages only cover one year of the new points-based system.

The report, tilted Upward mobility? Earnings trajectories for recent immigrants, uses data taken from HM Revenue and Customs (HMRC) Pay As You Earn (PAYE) Real Time Information (RTI) system data cross-referenced with the HMRC Migrant Worker Scan, which uses input from the Department for Work and Pensions (DWP) which issues National Insurance numbers to those arriving in the UK aged over 16 years.

The data also suggests that non-EU origin employees may be progressing up the pay scale faster than EU citizens. While it took non-EU entrants who arrived in 2015 around six years to reach the overall median wage, 2019 entrants had already exceeded it after two years.

Although this was a particularly turbulent period for wage growth the authors conclude the data suggests that recent non-EU arrivals, as well as earning more immediately on arrival, are also seeing strong earnings growth relative to the overall workforce while EU-origin workers in the same cohort experienced a ‘less rapid improvement in earnings.’

The data also shows that around half of employees from the EU who registered to work in the UK in 2015 had left the workforce by 2022. While some may have stopped working to care for children, or become unemployed or moved to self-employment, the authors state that ‘return migration’ is likely to be the major reason over the longer term.

The number of EU workers entering the workforce has fallen steadily since 2015 and dipped significantly during the pandemic but has stabilised since at between 122,000 and 105,000.

The jump in non-EU workers employed by British firms has been significant however, leaping from an average of around 180,000 a year between 2015 and 2019, during which time numbers were relatively even, to 546,063 last year.

Although work visas for people outside the EU rose sharply after the pandemic, the rise between 2020 and 2022 is so significant that work visas cannot account for the entirety of the spike. Instead, the figures will include people who were already resident in the UK but had not worked before as employees, plus working students and dependents of those arriving on student and work visas, as well as Ukrainian refugees and new arrivals from Hong Kong.

“Even though most non-EU migrants coming to the UK in recent years have not been on work visas, they have nonetheless made a substantial contribution to the size of the labour force,” the report explains.

Analysing the report, visa expert Yash Dubal, director of A Y & J Solicitors, said: “While we would expect to see the number of EU entrants drop after the end of free movement the wage disparity between EU entrants and non-EU entrants is surprising and suggests that EU workers are starting jobs further down the pay scale than their non-EU counterparts. Possibly this is because the non-EU origin group includes more skilled workers than in the past, but salary requirements are lower and reduced further by the extension of the Health and Social Care visa to care workers.

“Overall, however, the study suggests the migrant workforce continues to earn more and to contribute positively to the economy.”

In a report in August the think tank also revealed the British concerns over high immigration figures are misplaced and that levels of net migration in the UK remain broadly similar to other high-income countries.

The briefing showed that the percentage of foreign-born people in the UK was the same as in the US and Spain and less than Germany, Belgium, Ireland and Australia.

The report explains: “By the beginning of the 2020s, the UK’s foreign-born population was approximately 14%. The UK has a smaller foreign-born population than Australia, Canada, and New Zealand. The foreign-born population in Australia, for example, is roughly double that of the UK as a share of the population.”

The figures contradicted current government messaging and policy, which asserts that immigration is too high and needs to be reduced.

Although net migration was at a record 606,000 last year, the report confirmed the rise was an anomaly caused mainly by global circumstances. For example, there were 114,000 long-term arrivals from Ukraine on the Ukraine Schemes in 2022 and 52,000 long-term arrivals on BN(O) visas, mostly from Hong Kong.

In the report the Migration Observatory suggested that the political tendency to focus on net migration figures was misleading. Immigration will continue to be a hot topic at this week’s Conservative Party conference.

The Migration Observatory stated: “The net migration measure has many flaws. For example, it tells us little about who is arriving and leaving or what their impacts are. It can also produce counterintuitive or misleading figures when migration patterns change substantially in a short period. The UK is unusual in its choice to use net migration in policy debates as the main measure for discussing migration levels.”

The percentage rate of foreign-born people in a population is accepted as a more reliable indicator of how much immigration a country has experienced.

Indeed, the report stated that the 2022 figures do not represent the ‘new normal’ and predicted that figures will fall from this year onwards as recent non-EU migrants are not expected to stay indefinitely, and emigration is expected to increase in coming years because most work and student migrants do not remain in the UK permanently.

Mr Dubal, said concerns ramped up by government rhetoric are misplaced.

He said: “The report shows that there is no need to panic or get hysterical over the figures for legal migration. While it might be convenient for politicians to scare people in an election year with the suggestion immigration is at rampant levels, this report shows the opposite. Seen in an historical and international context, levels of migration are average.”

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