Nice to welcome Migrationwatch to one of the better known ideas in economics:
The report says more effort should be expended on getting our own population into work rather than encouraging immigration.
But this becomes more difficult with generous benefits and means testing.
The report shows that:
* A family with two children is just £30 a week better off working on the minimum wage than not working.
* A single person under 25 on the minimum wage of £193 per week is only £10 a day better off than a non-working person.
* A family with two children and one working member receives £79.50 a week of Working Tax Credit. However, after means testing he keeps only £6.77.
* Working families with children and one working member on the minimum wage are slightly worse off than the same family receiving the maximum Incapacity Benefit.
* A single person on the minimum wage would be £3 a week better off than a single person on the highest level of Incapacity Benefit.
Sir Andrew Green, chairman of Migrationwatch, said: \’\’We keep hearing that we need immigrants to do the jobs that the British won\’t do.
\’\’It has been suspected for some time that benefit levels are a real disincentive to take work that is on offer and our research spells out why this may be so."
He added: \’\’An important factor is that wages are now so close to benefits that there is very little financial incentive for unskilled British workers to find a job.
\’\’By contrast, Poles have very strong financial motivation.
\’\’On the minimum wage in Britain they are earning four to five times what they would earn at home.
You can have open immigration or you can have a welfare state. Having both will necessarily cause this sort of problem.
As to what we can do about it, well, while we\’re in the EU, we can\’t change the open immigration part. So we\’ll have to change the welfare state part. Which is, I think, an interesting idea. The EU is based upon the idea, at least as far as welfare is concerned, on cementing the social democratic ideal. But as we can see, other parts of the mission make this difficult.
As to quite what we should do about the welfare state part, that again has problems. For what we need to do is "make work pay" and we can do that in one of two ways. Either lower benefits or reduce the amount of means testing (or, the same thing but different language, raise the taper rate, ie withdraw benefits more slowly as people earn more). Neither of which will really fly politically.
Which leads us to a citizens\’ basic income, something which has no taper rate at all (although some versions have it being reclaimed at high tax rates, say around where the current upper tax rate starts), which rather neatly solves the problems of those working seeing such high marginal tax rates. And thus, as is complained of, not actually working, having been (rationally) persuaded that working at 90% marginal tax rates isn\’t worth the candle.
However, this solution also requires leaving the EU, as we cannot pay such a benefit only to citizens, we must pay it to all, including the immigrants.
So, first step is to leave the EU, then we can decide which of the two solutions we\’d like to employ. But leave the EU we must.