Migration - Address to Institute of European Affairs

9 Nov 2006

Address by David Begg to the Institute of European Affairs, 9 November 2006

I propose to focus primarily on labour market aspects of migration and to outline the broad principles influencing ICTU policy.

During the Nice Referendum Congress campaigned on the 'Yes' side of the argument. Mainly because of our role in the economy and society, I suppose, we took on the burden of refuting the arguments of those who said that Eastern Europeans would come here in huge numbers to take our jobs. We were wrong in our estimates about the numbers but the strength of the Irish economy has otherwise mitigated the downside effects, although it has not prevented them completely.

Since accession of the ten new EU member states in 2004 over 450,000 people came to the UK but a proportionately higher number in terms of our population of 100,000 came to Ireland. Empirical experience of earlier enlargement suggested that the number overall should have been no more than 15,000 - 35,000. These higher numbers were probably influenced by the fact that only Ireland, Sweden and the UK opened their labour markets fully from day one. Population increase in the UK and its effect on wages, employment and public services is much more openly discussed in the UK than here. It is rare for a week to pass without some treatment of the subject on 'Newsnight'.

When Ireland decided to open its labour market of 2 million to a wider European labour market of 70 million it was inevitable that somebody would abuse the situation. For a period there was an increasing level of anecdotal evidence of exploitation of people engaged in work such as mushroom picking. Most of this was below the radar screen. But then the GAMA and Irish Ferries cases came along and became the catalyst for a campaign to improve labour standards.

The countrywide rallies organised by Congress towards the end of last year under the banner 'Equal Rights for All' attracted crowds of up to 160,000. An invitation from the Government to engage in a new round of social partnership talks was put on ice pending clarity on whether the political will existed to go against long standing practice and start to seriously regulate the labour market. It took three months to get to a point where talks were possible but even when they began it quickly emerged that the employers were not willing to countenance any change in the legislative framework. In other words - no more regulation! We made it clear that open labour markets and minimal regulation, and no enforcement, were mutually exclusive options. The rest, as they say, is history. We eventually reached what I think is a good deal embracing a robust legislative framework, good standards for employment protection and a new enforcement agency in the form of the Office of Employment Rights Enforcement.

One further aspect of the agreement worth mentioning is the arrangements for monitoring the labour market. The case for evidence based policy making is now widely accepted and we need up to date data on every aspect of the labour market if we are to make sound judgements in the future. We are currently in discussion with the CSO about how to accomplish this most effectively. In the last year many confident assertions about migration, wage depression and displacement were made by commentators on the basis of information which was at least two years out of date.

In many respects the existence of a strong economy has mitigated many of the negative aspects of immigration. Monitoring done by ESRI suggests that low skilled wages could be affected by a minus figure of 6 per cent. The 'Economist' has suggested that immigration can affect low skilled wages by 4 per cent. However, the biggest impacts are almost certainly experienced by the immigrants themselves being employed indirectly through agencies, and even when directly employed, being in an extremely vulnerable situation. A person signing on for a construction job with an agency in Poland being offered the minimum wage of €7.65 per hour will hardly be aware that there is a legally binding registered employment agreement in force paying €13 per hour.

This phenomenon of migration, which is worldwide, has to be located in the broader context of globalisation. Joe Stiglitz, writing in the 'Financial Times' on 8 September, 2006 said this:

"Full economic integration implies the equalisation of unskilled wages throughout the world. Although this has not (yet) happened, the downward pressure on those at the bottom is evident. Unfiltered globalisation actually has the potential to make many people in advanced industrial countries worse off, even if economic growth increases"

Subsequently, Samuel Brittan, writing in the same paper, made the case that wage depression consequent upon the addition of 1.5 billion new workers from China, India and Eastern Europe would continue until convergence occurred. He estimated this would take 40-50 years.

Another feature of globalisation is outsourcing. The relocation of manufacturing from high cost to low cost countries is having a major impact. Manufacturing has always been reasonably paid and a route into the middle classes for many working class people. It is instructive to look at what has been happening in the US. The income of median householders in real terms has not moved since 2000. This is one reason, perhaps, why the Republicans got no credit for the state of the economy in the elections this week.

The fact is that many workers in developed countries in lower skilled employments are caught in a pincer between migration and outsourcing. Adair Turner, former head of the Low Wage Commission in the UK, recently observed that illegal migration was even undermining the minimum wage. The net result of these pressures is growing inequality in circumstances of increasing wealth. It needs to be understood that this causes ambivalence at best, and hostility at worst, towards migration. The fact that this is often misdirected towards people who are even more vulnerable does not make it any less a reality.

So, what can be done to mitigate these conditions and maintain a society that is tolerably just for everyone? Well we are not powerless to act. We can, for example:

  • Operate an effective employment standards regime;
  • Ensure that the minimum wage is kept above the threshold of decency;
  • Ensure that people coming from abroad get jobs commensurate with their qualifications - in justice to them and to prevent congestion in the lower end of the labour market;
  • Invest in integration, I will return to this point;

And

  • More importantly, avoid a two tier labour market.

With respect to this latter point we have to understand that immigration is not a tap to be turned on and off to suit our economic needs. Even if this first generation of immigrants is willing, for reasons of expediency, to stay at the bottom rung of the ladder, their children will expect to be treated equally with all Irish citizens. If they are treated unfairly, in the manner of France and the UK, then we cannot expect other than to have the same kind of race relations problems.

In conclusion let me present you with three points to consider about the future.

First, let us acknowledge that in the short term Irish business has benefited hugely from first mover advantage in opening the labour market to the 10 new EU states. In the longer run, however, we may come to regret aspects of it. The demographic profile of the Eastern European states is worse than ours. There is perhaps a 7 to 10 year period or even less in which people of an age interested in migration will come to us. The incentive to bypass the non active citizens here or to fail to provide the infrastructure of caring necessary to allow women to remain in the labour force or to increase our productivity through upgrading skills - in favour of drawing on immigrant labour supply as the easier option - may lose us the demographic advantage we have over the rest of Europe. In other words the danger is that immigration will be taken as a panacea for longer term structural problems in relation to labour supply which it is not.

Second, the legacy of our high unemployment years has left us with a mantra that maximising growth is good in all circumstances. The population increase which is a consequence of this mentality will continue to overheat the housing market - with a current inflation rate of 12.2 per cent - and with a continuous loop in which Irish people invest in houses to rent to immigrants who come here to build houses!

Whatever it is this does not look like a formula for sustainability. Would we not be better to try to optimise rather than maximise economic growth in a manner which addresses all of the foregoing issues in a more sustainable way. Should not the objective and purpose of our migration policy be that of sustainable development of our economy and society?

Let me acknowledge that it is no easy matter to achieve this desireable equilibrium. One cannot calibrate our system to a predetermined level and rate of economic growth. Neither can one easily stop immigration. The push-pull factors are too powerful.

This difficulty in managing migration highlights the importance of standards. Standards can act as automatic stabilisers within the economy. Properly enforced they can reduce the incentive to competitiveness based on the availability of large numbers of workers - cowed, undemanding and easily exploited. Standards can force business to choose instead competitiveness based on high skills, high productivity and high levels of participation. Standards can force society to choose to invest in Life Long Learning and public services necessary to support this activity. And if we choose this model it also implies that we will invest in integration. This is crucial. We must not allow a situation to develop where newcomers, by virtue of their circumstances, become engaged in competition for housing and public services with people who are already deprived and struggling. The tension this causes is sometimes dismissed as racism rather than as reflections of genuine problems in dealing with sudden social change.

Thirdly, the approach to integration is very important. Diversity and multi-culturalism must be considered in the context of the need to preserve social cohesion. There is a danger that the doctrine of multiculturalism, if taken to extremes, could produce a group politics to trump the politics of social solidarity. If that happens it opens the way to increasing inequality and falling social mobility such that it becomes impossible to articulate any sense of social contract or common purpose once group rights overwhelm the belief in collective effort and collective responsibility.

But this does not necessarily mean assimilation. There is no need to abandon all ties to a country of origin or to fall in with every aspect of the Irish way of life. It is though important that newcomers acknowledge that Ireland is not a random collection of individuals; they are joining a society, which, although hard to describe, is real enough. It is not enough to point out, as many multiculturalists do, that there is no simple moral consensus anymore. Perhaps this is true but then it seems to me that the political challenge is to create and sustain a minimum degree of moral consensus and solidarity in an otherwise pluralistic society. Diversity in itself is neither good nor bad, it is fairness that matters placed within a human rights framework.

Indeed we do not all have to like each other, or agree with each other or live like each other for the glue that holds society together to work. As the philosopher David Miller has written:

"Liberal states do not require their citizens to believe liberal principles, since they tolerate communists, anarchists, fascists and so forth. What they require is that citizens should conform to liberal principles in practice and accept as legitimate policies that are pursued in the name of such principles, while they are left free to advocate alternative arrangements. The same must apply to immigrant groups, who can legitimately be required to abandon practices that liberalism condemns, such as the oppression of women, intolerance of other faiths and so on."

So the point is that a liberal state has the right to outlaw things that challenge its core values - such as the emergence of separate legal - political enclaves that would be implied, for example, in the acceptance of Shari law for Muslims in areas of high Muslim settlement if they existed here.

This, of course, is an extreme example. But how would we handle say demands for faith schools and faith based ethics in hospitals beyond the delicate balance between Catholic and Protestant that currently exists? Our experience of immigration, and the fact that so many of the people who come here are culturally and ethnically so compatible means that we have not yet had to confront some of these complexities.

If we take time to analyse the forces behind immigration we would have to acknowledge that it is both vital to our society and, in today's world circumstances, inevitable. But we also have to accept that its costs and benefits are very unevenly spread, and that we don't do enough to ensure that the people who are most affected by it, either as immigrants or as hosts, can manage the change being forced upon them. Upon our ability to engage with this reality will rest our future as a society.