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On the 1st of May, 2004, the UK was one of three countries including Sweden and Ireland, to open its doors to the newly accepted eight former socialist countries (Hungary, Slovakia, Poland, Czech Republic, Latvia, Slovenia, Lithuania, Hungary, and Estonia) who joined the EU, known as the EU8/A81Metcalf, H., Rolfe, H. & Dhudwar, A., 2009. Employment of migrant workers: case studies of selected employers in Wales and Scotland. National Institute of Economic and Social Research. P.6, P.12, . Malta and Cyprus also joined at the same time but were exempt from having to partake in the monitoring process of its workers in the UK labor market2McCollum, D. & Findlay, A., 2012. East-Central European migration to the UK: policy issues and employment circumstances from the perspective of employers and recruitment agencies. ESRC Centre for Population Change. .
To monitor the new migrant labour to the UK, the government introduced the ‘Worker Registration Scheme’ (WRS), it required every EU8 citizen to register in order to take up employment, which ran between May 2004 to April 20112McCollum, D. & Findlay, A., 2012. East-Central European migration to the UK: policy issues and employment circumstances from the perspective of employers and recruitment agencies. ESRC Centre for Population Change. . It essentially recorded the labour activity of each worker who registered (industry, occupation, age, nationality, hours worked, hourly pay, and gender) registration fee was £50 initially (rising to £90)2McCollum, D. & Findlay, A., 2012. East-Central European migration to the UK: policy issues and employment circumstances from the perspective of employers and recruitment agencies. ESRC Centre for Population Change. . Romania and Bulgaria (EU2/A2 countries) also joined three years later in 2007 but had seven-year restrictions placed on their workers to obtain work3Glossop, C. & Shaheen, F., 2009. Accession to Recession: A8 migration in Bristol & Hull. Centre for Cities. P.1, P.2, P.3, P.5, P.17, P.21, P.22 & P.31 [Online] Available at . They did not need to sign up to the WRS but had to obtain an Accession Worker Authorisation card upon taking up employment in the UK, with the exception of work on farms on a temporary basis, through the Seasonal Agricultural Workers Scheme (SAWS)2McCollum, D. & Findlay, A., 2012. East-Central European migration to the UK: policy issues and employment circumstances from the perspective of employers and recruitment agencies. ESRC Centre for Population Change. . The influx of EU8 and EU2 countries have been far higher than anticipated, with more than one million arriving since 20042McCollum, D. & Findlay, A., 2012. East-Central European migration to the UK: policy issues and employment circumstances from the perspective of employers and recruitment agencies. ESRC Centre for Population Change. .
This research will use the study of the WRS data between 2004 and 2011, to establish certain patterns and trends in UK salaries where EU8 workers are employed. Unfortunately, it is not the most accurate statistic, as some EU8 migrants refused to register on the scheme due to it being bureaucratic4Düvell, F. & Garapich, M., 2011. Polish Migration to the UK: Continuities and Discontinuities. The University of Oxford. P.6 [Online] Available at https://www.compas.ox.ac.uk/media/WP-2011-084-D%C3%BCvell-Garapich_Polish_Migration_UK.pdf [Accessed 9th May 2016]. . The report will use the statistics provided by the WRS (UK Border Agency) to investigate if UK salaries have been suppressed by the new migrants since 2004. The report will also use data from the Office of National Statistics (ONS) and Home Office.
Movement of human capital and taking up employment elsewhere is not a new phenomenon. The demand and supply for workers in certain economies are far greater than others. Neoclassical economics studies the demand for labour by firms and the supply of individuals5Slater, G., 2011. Doing Economics: People, Markets, and Policy. Part 1 ed. Book 2. Milton Keynes: The Open University. P.195 .
The neoclassical framework is easily summarised, potential buyers attempt to increase the purchase of a good, so they can fully maximise their gains from goods. The gain from the extra unit balances by whatever they are having to give up in order for them to obtain it. This way, they will maximise “utility”, which in turn satisfies the consumption of goods and services. Similarly, individuals supply labour to firms that wish to hire them i.e. EU8 migrants, by offering their marginal unit of services for a balanced gain, through the offerings of their labour. This results in the theory of supply of labour and the demand for goods from buyers. Firms/producers usually attempt to produce a unit of a good, so the cost of producing the marginal unit balances the revenue it generates. This allows them to maximise profits. When firms hire workers, they do so up to the point that the additional hire cost is balanced by the output value that the additional worker would produce. Demand is from firms who wish to satisfy customer’s needs. The demand for goods and the supply of workers is also detrimental in determining the salary, the producer/firm is willing to pay to the existing and new employees. The over-supply of employees to a particular industry can also determine salaries, i.e. lower or increase them.
In 2004, when the UK opened its labour market to the new accession states, the demand for Eastern European labour by certain industries, such as hospitality, agriculture, construction, manufacturing and food processing was in dire need to fill ‘hard-to-fill’ vacancies which locals were not keen on filling 6Consterdine, E. & Samuk, S., 2015. Closing the Seasonal Agricultural Workers Scheme: A Triple Loss. The University of Sussex. Sussex Centre for Migration Research. P.15, P.14 & P.11 [Online] Available . Just to take one example, the agricultural sector employs less than 10% of the UK natives, and farmers often see migrant labour as crucial to their business6Consterdine, E. & Samuk, S., 2015. Closing the Seasonal Agricultural Workers Scheme: A Triple Loss. The University of Sussex. Sussex Centre for Migration Research. P.15, P.14 & P.11 [Online] Available . They have also favoured migrant labour force over the British workforce, due to their superior work ethic and other soft skills6Consterdine, E. & Samuk, S., 2015. Closing the Seasonal Agricultural Workers Scheme: A Triple Loss. The University of Sussex. Sussex Centre for Migration Research. P.15, P.14 & P.11 [Online] Available . The British workforce is also unwilling and therefore unlikely to fill seasonal labour market shortages, where work is seasonal, unpredictable and temporary 6Consterdine, E. & Samuk, S., 2015. Closing the Seasonal Agricultural Workers Scheme: A Triple Loss. The University of Sussex. Sussex Centre for Migration Research. P.15, P.14 & P.11 [Online] Available , 7Lipska, D. & Devereux, C., 2013. Call for evidence: Herefordshire Council response. Herefordshire Council’s Research and Equality, Integration & Partnerships Teams. P.6 [Online] Available at https://factsandfigures.herefordshire.gov.uk/media/17144/mac_call_for_evidence_hc_response.pdf [Accessed 12th May . Not to mention, poor working conditions and short employment time created by the sector also constructs a certain dependence and demand for migrant labour.
The construction sector is also experiencing a high demand for new labour. The Chartered Institute of Building estimates that 224,000 new workers will be needed between 2015 to 2019, on the other hand, it simply does not train enough local young workers and has to rely on the migrant workforce8Green, B., 2015. CIOB Perspectives: An analysis of migration in the construction sector. Chartered Institute of Building (CIOB). P.4, P.14 & P.20 [Online] Available at https://www.ciob.org/sites/default/files/CIOB%20research%20-%20Analysis%20on%20Migration%20in%20the%20Construction%20Sector_1.pdf [Accessed 12th May . However, the supply of workers from the EU8 countries are relatively young and highly educated, while age median is between 18 to 34 and possess on average higher qualifications than the UK natives1Metcalf, H., Rolfe, H. & Dhudwar, A., 2009. Employment of migrant workers: case studies of selected employers in Wales and Scotland. National Institute of Economic and Social Research. P.6, P.12, ,3Glossop, C. & Shaheen, F., 2009. Accession to Recession: A8 migration in Bristol & Hull. Centre for Cities. P.1, P.2, P.3, P.5, P.17, P.21, P.22 & P.31 [Online] Available at , 9Wadsworth, J., 2015. Immigration and the UK Labour Market. The London School of Economics and Political Science & Centre for Economic Performance. P.7 & P.10 [Online] Available at http://cep.lse.ac.uk/pubs/download/EA019.pdf . Although the supply of workers initially between 2004 and 2010 was in abundance, it started slowing by the end of 2007 and then a steep drop from late 2010, while it was also filling low skilled rather than highly-skilled vacancies2McCollum, D. & Findlay, A., 2012. East-Central European migration to the UK: policy issues and employment circumstances from the perspective of employers and recruitment agencies. ESRC Centre for Population Change. ,10Gilpin, N. et al., 2006. The impact of free movement of workers from Central and Eastern Europe on the UK labour market. Department for Work and Pensions. P.5, P.8, P.11, ,
With this supply of highly educated migrants filling low skilled vacancies, comes the fear that it will suppress the salaries of UK natives. Although the construction sector needs more workers as pointed out earlier, there is a real fear that in the long run, it will suppress low-end wages, especially for other migrants already working in the sector8Green, B., 2015. CIOB Perspectives: An analysis of migration in the construction sector. Chartered Institute of Building (CIOB). P.4, P.14 & P.20 [Online] Available at https://www.ciob.org/sites/default/files/CIOB%20research%20-%20Analysis%20on%20Migration%20in%20the%20Construction%20Sector_1.pdf [Accessed 12th May . Some evidence does suggest that, abundant of EU8 workers, would most likely lower wages for other earlier resident migrants who compete in the same low skilled space for work11Lemos, S., 2010. Labour Market Effects of Eastern European Migration in Wales. The University of Leicester. P.16 [Online] Available at https://www.le.ac.uk/ec/research/RePEc/lec/leecon/dp10-03.pdf [Accessed 12th May 2016]. ,12Vargas-Silva, C. & Ruhs, M., 2015. The Labour Market Effects of Immigration. The University of Oxford. P.2 [Online] Available at http://www.migrationobservatory.ox.ac.uk/sites/files/migobs/Briefing%20-%20Labour%20Market%20Effects%20of%20Immigration_0.pdf [Accessed 14th May 2016]. .
However, previous research suggests there is little or no evidence that EU8 migrants would lower the salaries of UK natives:
“On balance, the evidence on the UK labour market suggests that fears about adverse(Wadsworth, 2015).
consequences of rising immigration regularly seen in opinion polls have not, on average,
materialized. It is hard to find evidence of much displacement of UK workers or lower wages 9Wadsworth, J., 2015. Immigration and the UK Labour Market. The London School of Economics and Political Science & Centre for Economic Performance. P.7 & P.10 [Online] Available at http://cep.lse.ac.uk/pubs/download/EA019.pdf “.
“The majority of empirical evidence suggests small or no overall effects on the earnings of resident workers. Dustmann et al. (2005) looked at immigration to the UK between 1983 and 2000 and found similar results 13Gov.uk, 2008. The labour market impact of relaxing restrictions on employment in the UK of nationals of Bulgarian and Romanian EU member states. Migration Advisory Committee Report. P.41 [Online] Available “.(Gov.uk, 2008).
“We find no evidence that migration from the A8 countries has had any adverse impact on native workers 14Lemos, S. & Portes, J., 2008. The impact of migration from the new European Union Member States on native workers. University of Leicester & Department of Work and Pensions. P.3 “.(Lemos & Portes, 2008).
Also, it is the fear of unemployment from the mass supply of workers which tends to contain wage growth, rather than the migrant workforce itself15Blanchflower, D. G. & Lawton, H., 2008. The impact of the recent expansion of the EU on the UK labour market. Institute for the Study of Labor. P.13 & P.17 . The key debate is whether the demand from producers and the oversupply of EU8 workers have suppressed UK salaries for the locals, in the last twelve years since accession.
For this report, secondary data was sourced from the ONS, the UK Border Agency (WRS schemes), and the Home Office. Due to the sheer size of the project, the report will only analyze the annual earnings rather than the weekly and hourly wages. The reason is to focus on a whole 12-month cycle of earnings, rather than on the average weekly/hourly, which can change all too frequently if employment is on a temporary basis. In certain sectors, short term contracts of a few months can pay higher than taking long term employment in the same occupation/sector. This should provide us with a better idea by concentrating research on the long term rather than the short term effects of migration. There are industries such as in agriculture, which can purely only offer seasonal work anywhere between a few weeks to twelve months. Some workers will be employed the whole year, but they are most likely in temporary full-time work16Dawson, C., Veliziotis, M. & Hopkins, B., 2014. Assimilation of the “Migrant Work Ethic”. The University of Bath, University of the West of England & Aberystwyth University. P.10 [Online]
The data analyzed and used is the median full-time salaries, as the research and analysis would not provide us with sufficient conclusions, if we segregate workers into full time, part-time, or casual. Also, the data will purely look at the years between 2004 to 2015, even though data available from the ONS spans all the way back to 1997. Since EU8 countries only joined in 2004, the previous year’s data has no relevance to the research at hand. The research therefore would be inconclusive, as it would include a period of seven years where the EU8 were in relatively low numbers in the UK, approximately 14% of the total that arrived after 200410Gilpin, N. et al., 2006. The impact of free movement of workers from Central and Eastern Europe on the UK labour market. Department for Work and Pensions. P.5, P.8, P.11, .
The data from the ONS provides the annual salary in each sector and region for the past decade. The ONS data sets are also the most accurate and reliable source that could have been used to analyze salary suppression in the UK. It is the biggest government-owned data authority in the UK, and potentially the least biased of all the sources as it operates as an independent body17ONS, 2016. About the authority - Office for National Statistics (ONS). No pagination [Online] Available at: https://www.statisticsauthority.gov.uk/national-statistician/producers-of-official-statistics/a-z-of-organisations/office-for-national-statistics-ons/ &https://www.statisticsauthority.gov.uk/about-the-authority/ [Accessed 18th May 2016]. . The WRS scheme data (2004-2011) will provide us with an approximate figure to analyze in which sector and region the majority of the EU8 migrants have been subsequently registered in the UK. By grouping the two data together, this should provide a clear analysis of where salary growth has occurred, and where it may have been suppressed depending on the numbers of EU8. The data has also been broken down manually into several tables and graphs so that it is easy to find a pattern of growth or suppression of the salaries. By purely looking at overall salary data, it would not provide sufficient conclusions to the research. Certain groupings include regions in the UK where EU8 workers work, overall salary, sectors where they work in and digressing the data further down into smaller chunks to establish a better salary growth pattern.
Research and findings
Overall wage growth since 2004 in all industries
Overall median wage growth since 2004 (see table 1 – graph 1 & 2 below) has grown at 2% on average per annum in the last twelve years. Breaking it down shows a healthy growth between the years of 2004 and 2009, but salary growth contracted in 2010, which we could safely assume was due to the world recession. After 2011, salaries began showing growth, but the growth was relatively small at 1% to 2% per year.
In graph 1, the growth stagnation of salaries is less apparent than in graph 2 for the years after 2010. Graph 2 clearly shows the big salary growth enjoyed by the UK economy from 2004 to 2009. The peak time of EU8 immigration into the UK, 2004 to 2009, yielded an annual salary growth from 2% to 5%. Looking at the overall salary growth in the last 12 years, we can safely say that EU8 migration has not had a negative effect on the overall wage growth, in fact, it had shown strong growth in the subsequent accession years leading up to the recession.
Which industries do EU8 workers work?
This is important to establish, so that we can see in certain sectors where there is a high number of EU8 workers, and whether it has any bearing on salary growth. According to the WRS scheme data, EU8 workers have been particularly concentrated in specific labour markets (see table 2 & 3 -graph 3 & 4 below) such as hospitality, agriculture, manufacturing, food processing, and construction. In the top ten, there were also retail and health and medical sectors, but the bulk of the top ten industries are manual labour.
It is worth noting that, although the admin business and management sector had 485,104 or 42.75% workers registered, it is misleading. Most seasonal/temporary workers who work for an agency would have been registered in a recruitment agency, which is registered under business, administrative and management sector, therefore EU8 workers are masked and could be working in any sector1Metcalf, H., Rolfe, H. & Dhudwar, A., 2009. Employment of migrant workers: case studies of selected employers in Wales and Scotland. National Institute of Economic and Social Research. P.6, P.12, , 3Glossop, C. & Shaheen, F., 2009. Accession to Recession: A8 migration in Bristol & Hull. Centre for Cities. P.1, P.2, P.3, P.5, P.17, P.21, P.22 & P.31 [Online] Available at . Therefore, the hospitality sector would best represent the leading industry where EU8 migrants (196,153 or 17.29%) are employed. Not far behind would be agriculture (108,392 or 9.55%) and manufacturing (72,836 or 6.42%).
It could be said that majority of the migrants work in low paid jobs, due to having language skill difficulties, lack of UK work experience and EU8 qualifications not being recognised1Metcalf, H., Rolfe, H. & Dhudwar, A., 2009. Employment of migrant workers: case studies of selected employers in Wales and Scotland. National Institute of Economic and Social Research. P.6, P.12, ,2McCollum, D. & Findlay, A., 2012. East-Central European migration to the UK: policy issues and employment circumstances from the perspective of employers and recruitment agencies. ESRC Centre for Population Change. ,3Glossop, C. & Shaheen, F., 2009. Accession to Recession: A8 migration in Bristol & Hull. Centre for Cities. P.1, P.2, P.3, P.5, P.17, P.21, P.22 & P.31 [Online] Available at . In this case, agriculture, hospitality, manufacturing and food processing occupations are the perfect vehicle to provide relevant UK work experience, before they can move off to a better more ‘desirable’ area of the labour market.
Salary Growth According to Industry
Now that we have established which sectors EU8 workers are most likely working in, it is now time to analyze more concrete data and whether any negative salary growth has occurred. We can clearly see growth (see table 4 – graph 5 below) in all industries. Interestingly, the lowest average annual growth was observed in real estate, renting, and business activities sector, at an annual average growth of just 0.44%. It is interesting because this sector has one of the lowest numbers of EU8 workers at 0.70% (see table 3 – graph 4 above).
Another point of interest is, that all the sectors which directly employ a large number of EU8 workers, all showed relative growth on average above 1.5% (agriculture 2.35%, manufacturing 2.13%, hospitality 1.66%, construction 1.74%, health, and medical 1.67%), much higher than the real estate sector for example. Although hospitality and agriculture showed decent growth, the salaries are relatively low compared to other industries. As these industries are relatively unskilled, whether EU8 workers would be present or not, it would not necessarily have yielded greater growth in salaries. In-fact, looking at the salaries in 2004 at the time of EU8 accession, both of these sectors were well below the annual earnings compared to other industries (hospitality at £14,339 and agriculture at £16,258). We can again safely say, that EU8 migration has had no initial bearing on overall salary growth on sector pay.
Which regions do EU8 Workers work in?
Since we established what sectors the majority of the EU8 workers are working in, it is also important to establish which regions they work in. Some regions with a higher number of EU8 migrant workers may experience salary suppression, while others experience growth. It also further establishes whether the demand by firms and the supply of EU8 workers affects salary growth in specific regions with high migrant workers.
The three main regions with 100K+ registrants, is Anglia, Midlands, and London (see table 5 & 6 – graph 6 & 7 below).
The Anglia region by far had the highest number of registrants 141,140 or 14.96%). Farming is a major employer in the region with around 39,000 people employed directly, along with three-quarters of the land in the region used for agriculture18NFU, 2016. Farming in East Anglia. National Farmers Union (NFU). No pagination [Online] Available at http://www.nfuonline.com/about-us/our-offices/east-anglia/east-anglia-key-content/farming-in-east-anglia/ [Accessed 18th May 2016]. . Midlands also has a sizeable agricultural sector, while London was third surprisingly with 113,155/11.99% registrants. As we have also established, the majority of the newcomers take up low skilled work in the secondary sector. London has almost a non-existent agricultural sector, but rather a busy hospitality industry. Clearly the first two regions attracted the agricultural workers, while the third attracted hospitality workers to its booming travel industry. Scotland, Northern Ireland, and Wales were in the bottom four. Also interesting to note that, the combined three regions attracted fewer workers by 0.6% (14.9%) than the small region of Anglia (14.96%).
Salaries in the different industries by region
Having further broken down our analysis to specific regions, we need to also establish whether regions with a high number of EU8 migrants have suppressed pay on a regional basis. All regions on average showed salary growths of 1.5% plus (see table 7 – graph 8 below).
In 2010 as expected on average, all salary growth stagnated for all regions. Salary growth over the twelve years however grew by up to £7000 in certain regions. Most notably Scotland, with £7112 and Northern Ireland with £6225. The three main regions with EU8 workers were in the top five, London with £6583, Anglia with £5057 and Midlands with £5014 of median salary growth over 12 years. Further evidence that salary suppression on a regional basis has not occurred. Good growth from 2004 to 2009, apart from the year 2010 and beyond, when slower growth can be observed.
In the next sections, we will break down into each region and analyze the top ten industries EU8 workers work in. Unfortunately, no data on sector pay was available for Northern Ireland.
Industry Salaries in Anglia
Agriculture is the largest employment sector in Anglia, accounting for over 81,000 jobs and 12.7% of total employment (New Anglia, 2013). In this analysis, the agriculture sector showed the third-highest growth in salary at 2.57% (see table 8 – graph 9 below) on average per year. No sign of salary suppression/stagnation due to the large influx of EU8 workers in the agricultural sector.
It is also interesting to note that, the top four sectors with EU8 workers, hospitality, agriculture,
manufacturing, and food preparation trade all showed 2% plus growth in salaries on average per year in Anglia. Also, all other sectors which employ EU8 workers showed 1% plus growth, but
the salaries in agriculture and hospitality are relatively low. Another notable industry with the highest growth was leisure at 3.76% on average per year, although it employs a low number of EU8 workers nationally. Despite the most EU8 workers working in the region, the average annual overall salary has increased by 2.14%. No sign of salary stagnation or suppression by EU8 workers in the region.
Industry Salaries in Midlands
Food preparation and processing showed nearly a 4.5% overall growth on average per year (see table 9 – graph 10 below).
Whilst, hospitality, and manufacturing showed 2% plus growth, with agriculture 1.95%. The only negative growth so far in the entire report, has been the leisure sector with a negative -1.42% growth overall. This is relatively a sector that employs a small amount of EU8 workers at 16,460 or 1.45% (see table 2 & 3 – graphic 3 & 4 above) in the entire UK. On another note, the transport sector was the other low growth at 0.28%, but still positive. Midlands with the second-highest number of EU8 workers, showed positive growth in the four main EU8 sectors, with the exception of leisure. The annual overall wage growth was the lowest here at 1.56%.
Industry Salaries in London
The Hospitality sector showed a slower salary growth in London than the first two regions analyzed, with less than 1% growth (see table 10 – graph 11 below).
Agriculture and manufacturing showed good growth but less than in the previous two regions. The food preparation sector showed the best overall growth with 3.68% annual average salary growth, but workers had a relatively low earning potential in 2004 at £13,470 per annum. This was by far the lowest annual salary among the top EU8 worker’s sectors in London.
In London, the leisure sector did not show negative growth as in the Midlands but had the slowest growth in annual average salary at 0.80%. We can again safely say that EU8 workers in the capital had no major impact on preventing salary growth. Interestingly, London had a lower annual average salary growth (1.80%) than Wales (1.86%).
Industry Salaries in North East
Agriculture in the North East region has shown the least salary growth at 0.08% (see table 11 – graph 12 below).
The basic annual salary is also the lowest and stagnated for three years from 2004 to 2006 at £15,192. In 2007 it showed a growth of £1858 from £15,192 to £17,050. Interestingly, the following year in 2008, it dropped down to the £15K’s again and has stayed in that earning bracket since. Also, since 2012, the salary has stayed constant at £15,340. This is the first region where one of the major EU8 employment sectors has shown significant stagnation. All other sectors showed good growth, anywhere from 1% to 4.5% plus. The overall salary growth in all sectors was 2.16% in the past twelve years.
Industry Salaries in Central Region
Agriculture showed a good average annual salary increase of 2.89% (see table 12 – graph 13 below), with food preparation having second-best growth amongst the sectors at 3.39% per annum on average.
Although it can be said that, food preparation/processing along with leisure, had by far the lowest annual income in 2004 with £11,714 and £10,086 respectively. Obviously these needed to be brought in line with the other sectors, and the leisure sector had 4.01% annual average salary growth. The only notable low growth was the construction industry with a 0.71% average annual salary growth. This was the lowest sector pay growth in the Central region. Although, all sectors showed growth and the overall average annual salary growth in all sectors was 2.14%.
Industry Salaries in North West
The North West region has shown the best overall percentage annual growth among all the sectors, with an average growth of 1.5% plus (see table 13 – graph 14 below).
The top four EU8 worker sectors of hospitality (2.11%), agriculture (3.31%), manufacturing (2.17%), and food preparation/processing trade (3.93%) all showed exceptional growth, all averaging 2% plus. Although again as with previous regions, food preparation/processing trade had a relatively low annual salary (£11,457) in 2004, before rising to £18,370, by 2015.
The leisure and transport sectors also had good growths at 2.28% and 2.67% respectively. Leisure just like food preparation/processing trade also offered a relatively low annual salary (£11,832) in 2004, before rising to £16,307, by 2015. The annual average salary growth in all sectors was 2.34%.
Industry Salaries in South West
Just as in the North West, again, strong overall annual salary growth was observed among all the sectors with 1.5% plus (see table 14 – graph 15 below).
The three out of the top four sectors by EU8 workers showed very good growth in hospitality 2.10%, agriculture 2.33%, and food preparation trade 2.42% on average per annum. Manufacturing showed good growth at 1.87%, while the construction sector showed healthy 2.35% annual average salary growth.
Apart from leisure (£9,310), the salaries at around 2004 were relatively high for most sectors compared to other regions analyzed so far. Not surprisingly, leisure just like in many other regions had the highest annual average increase in salaries with 4.93%. The South West region had an overall salary growth of 2.33%.
Industry Salaries in Scotland
Thus far, we have analyzed the majority of the English counties where EU8 workers are working. Scottish regional analysis was not available, only Scotland as a whole, but nevertheless, it provides us with a good idea of the salary growth. Scotland out of all the regions so far has had the highest overall per annum average salary growth per sector at close to 2% plus (see table 15 – graph 16 below), with the exception of construction at 1.98%.
The food preparation had the second-highest growth at 3.54%, while leisure as in some of the previous regions, showed the greatest growth at 3.61%. Hospitality, agriculture, and manufacturing all showed 2% plus growth on an annual average basis. Overall, Scotland as a region had a 2.60% annual salary growth for all sectors.
Industry Salaries in South East
Good salary growth is shown, although slightly less than in other regions. All sectors where above 1% plus (see table 16 – graph 17 below) annual average salary growth. Agriculture (2.36%), manufacturing (2.05%), and food preparation (2.80%) all showed good growths above 2%.
The construction and transport sectors also showed good growth, above 1.5% on average. The overall regional salary growth was close to 2% (1.93%). Another region which has not been affected by EU8 workers, but continued showing growth, albeit, slightly less than other English regions.
Industry Salaries in Wales
Agriculture in the Welsh region had the highest annual average salary growth among all the sectors, at 2.91% (see table 17 – graph 18 below).
Manufacturing was not far behind at 2.57%, while the transport sector showed the smallest growth at 0.43%. Nevertheless, all sectors showed growth with no negative sectors. The construction sector also showed a 1.76% average annual salary growth.
The average overall regional salary growth was 1.83%, not much lower than in other UK regions.
Just as with the majority of the other regions, there was no real negative wage growth/suppression of salaries by EU8 workers.
The Discussion of the finding in relation to theory
This project aimed to see if there is a correlation between demand/oversupply of EU8 workers on suppressing UK salary growth. As the research had shown, in the case of the EU8 workers, there was no conclusive evidence that the supply of EU8 workers had any major effect on the local salary growth. In-fact, the accession years between 2004 to 2008 showed the greatest growth in salaries for the past twelve years at 2% to 5% per annum. Of course, we now know that from 2008 onwards, the first great recession had hit the 21st century 19Letica, B., 2010. The first global financial crisis in the 21st century. South-East European Foundation pp.3-4 [Online] Available at
http://www.southeast-europe.org/pdf/03/DKE_03_A_E_Bartol-Letica_GFC.pdf [Accessed 18th May 2016].
. This was the cause of the majority of the stagnation of salaries we observed in many of the sectors and regions after 200820Blundell, R., Crawford, C. & Jin, W., 2013. What can wages and employment tell us about the UK’s productivity puzzle?. Institute for Fiscal Studies. P.36 [Online] Available at http://www.ifs.org.uk/wps/wp201311.pdf . We also saw in this research that the salaries after 2010 grew at a much slower rate than between 2004 and 2008 at 1% to 2% per year.
Also in the report, we had established that only a handful of sectors in certain regions were affected such as the leisure sector (only 0.70% of EU8 workers in the sector) in the Midlands with minus 1.42% average salary growth. The agriculture sector in the North East had only 0.08% average salary growth, or perhaps the construction sector in the Central region with just 0.71% average salary growth.
We do have to take into account, that the report analyzed 10 regions X 10 sectors with a combination of 100 sectors analyzed in total. Yet, only one sector in the Midlands showed minus 1.42% growth in annual salary. This again dispels the argument that large demand and supply of EU8 workers drives down the salaries of UK natives. Yes, the report observed slower growths in certain sectors such as construction in the Central region, but overall, research dispelled the main debate that EU8 workers have driven down salaries since accession.
The limitations of the research
There were certain limitations to this project, one of them being the unavailability of the Northern Ireland regional pay data. Therefore, no data analysis was carried out for that particular region in the UK. Although the region is relatively small in population, it would have been great to see the salary growth in the past twelve years since the EU8 accession, and what effect it had on Northern Ireland.
Another limitation was that many more different data variables could have been analyzed such as weekly pay, hourly pay, and overall pay within each major town or city, sector pay within in town or city, and so forth. So the limitation here was that only one data set could be analyzed as opposed to many different data variables to get better accurate research results. Also, the Workers Registration Scheme (WRS) data is quite outdated. The two data sets which were officially obtainable from the government website was from 2004 and 2011. Although as we know, the WRS scheme ran between 2004 and 2011. No recent registration data/survey exists on which regions and sectors EU8 workers work in. Obviously that data gave us a good idea of roughly which sectors and regions they work in. This allowed us to bring together the data set from the ONS with the data from WRS. Nevertheless, the report had looked at the full time, median annual pay to get the best conclusion.
Whilst we see the majority of the media scaremonger the UK workforce with Central/Eastern Europeans suppressing UK salaries, this research and report show that it has not been the case.
Professor Blanchflower went as far as saying the following positives on EU8 migration:
“The fact the UK opened its borders to a flow of highly skilled, motivated, educated, low cost and mobile workforce upon enlargement of the EU was a stroke of genius, for which the UK government should be given credit. The enlargement of the European Union has benefited the UK enormously15Blanchflower, D. G. & Lawton, H., 2008. The impact of the recent expansion of the EU on the UK labour market. Institute for the Study of Labor. P.13 & P.17 “.(Blanchflower & Lawton, 2008).
There was only one sector in the Midlands which showed negative growth for the past twelve years out of 100 sectors in total, across 10 regions. It can safely be concluded that the EU8 migrant workforce had no overall major impact on suppressing the salaries of UK natives. The report also showed that it is the migrants who are already here who are the most vulnerable to new EU8 migration and suppression of salaries. The new migrants compete with the old migrants in the same space for work, while the UK natives and immigrants are not close substitutes on average9Wadsworth, J., 2015. Immigration and the UK Labour Market. The London School of Economics and Political Science & Centre for Economic Performance. P.7 & P.10 [Online] Available at http://cep.lse.ac.uk/pubs/download/EA019.pdf . Nevertheless, it is possible to conclude that no major impact on salary suppression in the UK has occurred due to EU8 migrants.