Employ migrants in jobs that match their qualifications to boost economy by £7bn, says IPPR

Investing in integration would boost productivity by using the untapped skills of migrant workers

A third of migrants in the UK are currently employed in jobs they are over-qualified for and not reaching their full economic potential. IPPR calculates that reducing migrant over-qualification rates to match UK born levels would generate an additional £7bn in economic output per year.

The whole UK workforce has a problem with over-qualification which is contributing to the UK’s persistently low productivity. However, the problem is heightened for migrant workers and particularly acute for workers from Central and Eastern European states, of whom 40 per cent are over-qualified.

The new IPPR report demonstrates that using migrants’ untapped skills would bring significant economic benefits through higher wages and productivity. IPPR says that better integrating the existing skills of migrants into the workforce is a low-cost way to immediately boost the UK’s stagnant productivity. The report also argues that successfully integrating migrants into the labour market can help build public consent for migration and improve working conditions for migrant workers.

Data analysis shows that whilst the EU migrant workforce’s employment rate is higher than the UK-born employment rate, the quality of employment is vastly different. Central and Eastern European migrants’ wages and hours are on average notably worse than for UK born workers, who also tend to be more unionised.

Full migrant labour market integration would mean equal quality of employment, conditions and pay, not just employment status. The report identifies English language proficiency as one of the major barriers to full labour market integration. IPPR found that funding for the provision of English language courses had fallen by over half since 2010.

The IPPR report Measuring the Benefits of Integration makes the following proposals for a proactive approach to integration to end the mismatch of skills and fully integrate migrant workers into the labour market and society:

• Boost English language - Reintroduce full funding for English language (ESOL) courses for those on means-tested benefits and end the restriction on ESOL funding in the workplace. IPPR estimate this would cost in the region of £200m annually. This could help to address migrant over-qualification and significantly boost overall economic output.

• Recognise Skills– Support pilot projects for skills recognition and accreditation to correctly identify international qualifications and skills. These projects could focus on sectors facing skills shortages, such as construction, IT, and social care.

• Devolve integration funds – devolve funding for integration to local authorities via ‘local integration funds’ that prioritise skills matching. Funding should be coordinated to align with local economic agendas. Local residents must have meaningful input in setting these agendas – such as through local citizens’ panels.

The report argues that the government’s laissez-faire approach to integration in recent decades has failed to sufficiently improve outcomes for migrants. A proactive integration policy is needed to improve outcomes for migrants and the whole UK economy.

Marley Morris, IPPR Senior Research Fellow, said:

“We are currently wasting the qualifications and skills of hundreds of thousands of migrants working in low-skilled jobs.

With the spending review on the horizon, investing in initiatives to match these skills to the right jobs should be an easy win for the government. By focusing on bringing down barriers to migrants succeeding in the workplace, the government could help to boost productivity, increase tax revenues, and support migrant integration.”

ENDS

NOTES TO EDITORS

1. The IPPR paper, Measuring the Benefits of Integration: The value of tackling skills underutilisation by Marley Morris and Dean Hochlaf, will be published at 0001 on Tuesday 18 June. It will be available for download at: http://www.ippr.org/research/publications/measuring-the-benefits-of-integration
   
2. Advance copies of the report are available under embargo on request

3. Figure 2.5 demonstrates the share of overqualified workers by country of birth. EU14 (Austria, Belgium, Denmark, Finland, France, Germany, Greece, Republic of Ireland, Italy, Luxembourg, the Netherlands, Portugal, Spain, Sweden), EU10 (Bulgaria, Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, Romania, Slovakia, Slovenia), RoW (Rest of the World).

4. The increase in annual economic output of approximately £7bn is calculated using the Annual Population Survey. We estimate the hypothetical economic benefit of improving the skills distribution of jobs taken up by highly qualified migrant workers so that it matches the skills distribution of jobs taken up by highly qualified UK-born workers. We use estimates from the Annual Population Survey on the number of highly qualified UK, EU and non-EU born workers in jobs of different skill levels, as well as data on average hourly wages and average number of hours worked per week. A full description of the methodology is contained in a spreadsheet accompanying the report.

5. IPPR is the UK’s pre-eminent progressive think tank. With more than 40 staff in offices in London, Manchester, Newcastle and Edinburgh, IPPR is Britain’s only national think tank with a truly national presence.