Response To Scottish Government Report On Immigration

Employment, European Union, Policy, Population

  1. A Scottish Government report, published on 7 February, claims that cutting immigration could ‘cost’ Scotland’s economy £10bn per year from 2040. Firstly it should be pointed out that what is characterised as a potential ‘cost’ is not based on a claim that lower immigration would lead to an actual shrinkage in the economy but rather an estimate that it could lead to a lower rate of future economic growth. The assumptions on which this calculation have been made are questionable. Furthermore, the suggestion that the end of free movement after Brexit could ‘cost’ the Scottish economy £5bn per year from 2040 does not accurately reflect the likely effect of a policy of restricting numbers of lower-skilled and lower-paid migrants who contribute the least. In reality, such plans could well be positive for GDP per capita and the public finances.
  2. The Scottish Government model is based on the assumption that each new migrant would have the same economic characteristics (and would thus make the same contribution from the day they first arrived) as those of similar age and gender in the existing population and also that any reduction in immigration would apply equally to those contributing and those who do not. These assumptions are not plausible when a major plank of the policy to reduce net migration is to curb the numbers arriving from the EU to do lower-skilled and low paid work. This type of migration has formed the bulk of EU migration into work in Scotland over the past decade, and a realistic model would at least take some account of this.
  3. The report claims to have undertaken ‘sensitivity analysis’ but in the relevant section merely models different levels of immigration while holding all its assumptions about economic characteristics and fiscal contribution constant. A more useful and appropriate sensitivity analysis would instead have varied these assumptions if its intention was to give any estimate of the result of what likely post-Brexit immigration policy might be – to curb the flow of workers into less highly-skilled work.
  4. This is particularly important bearing in mind the academic research referenced in the report. For example, the findings of Ottaviano and Peri, (who are prayed in aid as saying that migration improves productivity) looked at a period ending in 2006 and characterised by highly-skilled migration before the inflow of large numbers of EU workers to lower-skilled jobs in the UK. As the academics specifically noted this to be the case, it seems poor that the Scottish Government report does not appear to take account of it.
  5. Further, the report says “In the worst case scenario of low migration, Scottish real GDP is lower by 9.3% (£10.2 billion)”. While this scenario projects a drop in international immigration from 35,000 a year to 26,000 a year it should be obvious that even if policy constrained inflows to 26,000 a year over the long term by restricting entry for lower-skilled work that would not in any way require any reduction from present levels of entry for highly-skilled work, and would in fact still allow for a considerable increase. There is no evidence that this would have any negative impact on GDP per capita or the fiscal position. On the other side of the equation this scenario projects an increase in people leaving Scotland for abroad from 22,000 a year to 28,000 a year over the long term. While it might be true that long-term increases in Scottish emigration would reduce GDP compared with what it would otherwise have been, the ability of Scotland to retain its own people is not as such anything to do with immigration policy.
  6. It is increasingly recognised that GDP growth is not a very good measure of improving national well-being. Notwithstanding this, whereas the report claims that ‘There is some evidence that migration boosts long term GDP per capita’ and while theoretically it is possible that immigration can increase GDP per person, there is no evidence for the UK that immigration does increase GDP per person to any significant degree. The academic research on other parts of the world has to be placed in their specific contexts and has questionable relevance for the UK.
  7. The report undermines its own argument for continued high levels of EU migration when it acknowledges that, even if EU migration were reduced to half its current level, the Scottish population is projected to continue to grow by nearly 4% (increasing by nearly 200,000 people) by 2041. This is greater than or equal to the projected population growth over the same period in 17 EU countries, including Finland, Spain and Germany.
  8. The Scottish Government is also being disingenuous when it notes that ‘all of the projected increase in Scotland’s population over the next 25 years is due to migration’. As it well knows, National Records of Scotland have projected that a very significant portion of population growth by 2041 will be the result of cross-border migration from other parts of the UK (according to NRS). It is strange therefore that the report is silent on whether more could be done to persuade UK students from others parts of the country to remain in Scotland following their studies (and the degree to which greater job opportunities or more competitive tax rates might help this), or whether more could be done to attract to Scotland as a final destination a greater number of the international migrants who already come to the UK but choose to go elsewhere (presently only 6% of international migrants to the UK choose Scotland as their destination).
  9. The Scottish Government says that ‘a central feature of Scottish migration policy would be to restrict migrants to living in Scotland as a condition of entry for the duration of the time they are under immigration control’. However, many Scottish businesses have condemned this proposal as likely to lead to a vast increase in bureaucracy and uncertainty as well as potentially distorting fair competition. As one Scottish food and drink manufacturer has put it: “A devolved migration system with different entry requirements would be a nightmare to navigate for firms operating on both sides of the Scottish border” (see source).In addition, 63% of Scots also think the entire UK should have the same immigration regime after it leaves the EU.
  10. The Scottish Government points to Canada and Australia as possible models for its proposed regional visa scheme. However, these are not the best comparator countries for Scotland. Both have vast land areas with a population density of between two and four people per square kilometre. Scotland’s population density is many times that. She is already more crowded than Sweden, Norway or Estonia.
  11. The Australian and Canadian regional visa systems are also highly problematic and far from flawless even in their respective jurisdictions. They are dependent on the migrant’s stated intention and employer’s cooperation, usually have only short-term application and have proven difficult to monitor and enforce.


21st February 2018

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