Immigration and the labour market

An influential House of Lords committee, which included two past chancellors, this week published its report 'The Economic Impact of Immigration'. This is the result of eight months consideration of the government's immigration policies. It rejected claims by ministers that a high level of immigration was needed to prevent labour shortages and also said that the new points-based system carried a 'clear danger of inconsistencies'. (The Times, 2 April 2008)

The report said that record levels of immigration have had 'little or no impact' on the economic well-being of Britons. It stated that the government 'should have an explicit target range' for immigration and set rules to keep within that limit. However, the Immigration Minister Liam Byrne said the report confirmed the government view that migration had added £6 billion to the economy in 2006. It also confirmed the government's belief that migration had to benefit the wider community and not just business. (BBC News 24 – 1 April 2008)

Gordon Brown lined up with leading business figures in rejecting the Lords committee call for a cap on non-European Union immigration and its suggestion that record numbers of immigrants have had little or no impact on the economy. He pointed out that most British businesses facing labour shortages had benefited from being able to recruit more widely for skilled labour. (The Times, 2 April 2008)

Mr Brown said that the new Australian-style points-based system being introduced would: ' restrict the numbers of people who come into this country from outside Europe. Most people who are proposing a cap, are proposing a cap of only 20% of possible migrants into this country. Many of these people are the highly skilled workers who are important to the economy.' (The Times, 2 April 2008)

Not all members of the House of Lords supported the suggestions in the committee's report. Lord Paul, a Labour peer and chairman and founder of the manufacturer Caparo, said: 'We have a strong economy, we have low inflation and that is because we are getting younger workers who are filling shortages. My company is short of people, skilled people. If we did not have the choice of migrants we would be closing factories and going overseas for production.' (The Times, 2 April 2008)

Any changes to immigration policies which placed restrictions on migrants entering the UK could be an unwelcome external influence on many businesses. Many firms have found it impossible in recent years to recruit sufficient staff numbers to fill vacancies and have also faced shortages of workers with appropriate skills.

See the Times 100 case study on Siemens, which has around 100 sites in the UK. Siemens places high importance on the role of people in the organisation. Having recruited staff, it aims to build a high performance culture. This means it makes sure all staff can use their talents, ensures career moves in the organisation develop people to provide more experts and trains managers through the Siemens Leadership Excellence Programme.


The Times, 2 April 2008 (print edition)

The Times 100 Case Studies – Siemens, Creating a high performance culture

The Times Online – Gordong Brown sides with business to reject peers' appeal for curb on migrants, 2 April 2008

BBC News – Immigration 'small benefit' to UK, 1 April 2008

BBC News – EU migrants relocating to the UK, 26 March 2008

The House of Lords – Publications, Committee on Economic Affairs Session 2007-08

Potential Study Questions:

  • Explain four ways a Human Resources Management department might assess the demand for workers within a business.
  • Describe three methods a HRM department could use to measure the potential supply of labour in their area.
  • Identify and briefly explain the differences between a HRM department and a traditional Personnel department.