The formation of the EU played a pivotal role in increasing the movement of people across Europe, resulting in increased migration of people from the less developed Eastern Europe countries towards the more developed Western Europe states such as UK. The goal of this paper was to determine the relationship between Polish immigration to the UK and the effects on unemployment in both countries, especially with regard to unemployment levels and wage rates. The findings reveal that Polish immigration, for the case of the UK, increased unemployment and lowered the wage rates. For the case of Poland, the findings indicate that outflow immigration results in reduced unemployment, increased labour shortages, and increase in the wage rates.
Table of Contents
Table of Contents. 3
CHAPTER 1: INTRODUCTION.. 6
1.1 Background of the Topic. 6
1.2 Historical Overview of Polish Immigration to the UK.. 8
1.2.1 Immigration Trends in the UK.. 8
1.2.2 Trends of Polish Immigration to the UK.. 10
1.3 Problem Statement 11
1.4 Research Objectives Questions. 12
1.5 Professional Significance of this Thesis. 12
1.6 Delimitations. 12
1.7 Research Structure. 13
CHAPTER 2: LITERATURE REVIEW… 14
2.1 Introduction. 14
2.2 Population Changes in the United Kingdom before the 21st Century. 15
2.3 Rise in Immigration to the UK in 21st Century. 17
2.4 Polish Immigration to the United Kingdom.. 20
2.4.1 Settling after the Second World War 21
2.4.2 Resettlement of Polish Solders. 22
2.4.3 First immigration law in the UK, PRA (1947) 23
2.4.4 Immigration after 1950. 24
2.4.5 Economic Migration of the 21st Century. 25
2.5 Impacts of A8 immigrants on Western European economies. 28
2.5.1 Immigrants Provide a Huge Bunch of Consumers. 29
2.5.2 Profiling the East European Immigrant Purchaser 31
2.5.3 New Opportunities for the Airlines. 32
2.5.4 Immigrants and the Banking Sector 33
2.5.5 Expansion of Brands and Businesses. 35
2.5.6 Government Gaining in Revenue from Immigrants. 37
2.6 Impact of Emigration on Source Nations. 38
2.6.1 Economic Impact of Migration on Source Country. 39
2.6.2 Impacts of Emigration on Unskilled Labour Market in Source Country. 40
2.6.3 Effect on Skill labour, Brain Drain. 41
2.6.3 Social Impacts on the Source Country. 43
CHAPTER 3: METHODOLOGY.. 44
3.1 Introduction. 44
3.1 Research Design. 44
3.2 Methods of Data Collection. 45
3.2.1Secondary Data Sources. 46
3.3 Analysis and Presentation of Data. 47
CHAPTER 4: RESULTS. 48
4.1 Introduction. 48
4.2 The Effect of Polish Migration to the UK on the Rates of Unemployment of both UK and Poland 49
4.2.1 Effect of Polish Migration to UK on the UK unemployment 52
4.2.2 Effect of Polish Migration to the UK on Poland’s unemployment 56
CHAPTER 5: DISCUSSION AND CONCLUSION.. 59
5.1 Summary of the Main Findings. 59
5.1.1 How Does Polish Migration to the UK Affect the Unemployment Rate in UK?. 59
5.1.2 How Does Polish Migration to the UK Affect the Unemployment Rate in Poland?. 59
5.2 Wider Implications for this Study. 60
5.3 Suggested Directions for Further Research. 60
List of Figures
Figure 1: Immigration in the UK 2003-2011. 9
Figure 2: Polish-born people employed in the UK.. 11
Figure 3: Population growth in percentage. 16
Figure 4: Distribution of Immigrants across the UK.. 27
Figure 5: Percentage of those in employment who are migrants. 51
Figure 6: Youth unemployment and immigration. 53
Figure 7: Migration and Labour market phenomena in Poland. 57
CHAPTER 1: INTRODUCTION
1.1 Background of the Topic
The establishment of the European Union (EU) gave individuals within its member countries the right to move freely within the region. Theoretically, the formation of a single market should help in creating extra earning opportunities and employment for workers found in the member countries of the European Union (Blanchard 2000). The underlying theoretical assumption is that immigration has positive impacts on a countries labour market, especially the receiving the country (Baumol & Blinder 2006). With baby boomers nearing their age of retirement and lesser youth cohorts ready to join the labour market, immigrants play significant role in contributing to the supply of labour, which helps in funding pension systems. Anderson & Winters (2008) asserts that an increased immigration to a country can play a significant role mitigating a rise in the dependency ratio. Nevertheless, a high rate of immigration by itself is not adequate to alleviate the negative costs of ageing populations. In the United Kingdom and other countries such as Poland, the question of immigration and its respective effects are a subject of contention. The concern raised by many natives relates to whether immigration has a negative effect on the rates of unemployment, implying that higher immigration rates might result in higher unemployment rates (Dustmann, Fabbri & Preston 2005). Such concerns are likely to result in a dislike of foreigners, which is a significant challenge in the integration of immigrants. Because of these concerns, it is essential to investigate the topic of immigration, especially the relationship existing between immigration and unemployment for the source and destination countries.
Several studies regarding this topic have been carried out although controversies are still present. For instance, the United Nations reports that, according to economic theories, immigration should not have a negative effect on the rates of unemployment. The Migration Watch UK published a report relating to the topic of immigration and youth reports and reported a positive correlation existing between immigration and youth unemployment; although this does not point out a casual relationship, it is not a likely concurrence (Anyanwu & Erhijakpo 2010).
Immigrants moving to other nations have varying motives, and permanent immigrants must be differentiated from guest or temporary workers. Schiopu & Siegfried (2006) defines guest workers as people moving to another nation on a provisional basis in search for better employment conditions and opportunities. The United Nations defines immigration as the process through which an individual sets up his or her typical residence in the territory of a member nation for a time of at least one year, having been a previous resident of another member country or a third country. Simultaneously, the classification of unemployment takes different fronts such as temporary unemployment, seasonal unemployment, frictional unemployment and structural unemployment (Borjas 2006). As a result, it is essential to define unemployment, which will be reviewed further in the following sections of this study. According to Devine (2004), individuals are considered unemployed if they lack work in the course of the reference week and are accessible to begin work in the course of the following two weeks, and have been actively seeking employment during the previous four weeks. Furthermore, unemployed individuals include people who have attained the working age and lack employment, but they are available work at the existing wage rates (Anderson & Winters 2008). The classification also includes people who have attained the working age and are unwilling to participate in the labour market. In view of the fact that, unemployment is represented as a percentage, its value is a fraction of the total labour force, which comprises of the number of both the unemployed and employed individuals (Devine 2004). The following formula is used in the computation of the unemployment rate.
Unemployment Rate = (Number of unemployed individuals / Total labour force) x 100
For illustration, if there are 2 million people lacking employment and 30 million employed individuals, the unemployment rate is computed as follows:
(2 / (2+30)) x 100 = 6.25 %
1.2 Historical Overview of Polish Immigration to the UK
Polish immigration to the UK denotes the permanent or temporary migration of the Polish people to the UK. A significant percentage of Polish migrants to the United Kingdom migrated to the country as economic migrants, especially after the enlargement of the EU in 2004 (The Migration Watch UK 2012). At present, a substantial number of Polish-born individuals reside in the United Kingdom, and there is a large population of British Poles together with the descendants of earlier immigrants.
1.2.1 Immigration Trends in the UK
The Great Britain has a lengthy record of immigration flow because of the country’s colonial past. In the late 1960s, there were concerns to formulate an immigration policy in order to regulate immigration flow from the increasing number of immigrants originating from previous colonies including Pakistan, India and Jamaica (Migration Advisory Committee 2010). With the drastic increase in the number of immigrants, there was the need to adopt immigration acts. During 1968, the government of the Great Britain enacted the Second Immigration Act in to restrict immigration for people who lacked birth connection with the United Kingdom. However, the policy relating to the asylum seekers evolved in the following years, and during the late 1990s, the immigration process was under the control of the British Government with the primary goal of limiting the rights of new immigrants. The Independent Asylum Commission criticized this move by the British Government as a form of violation of human rights.
During 2004, the United Kingdom was one of the first nations in the EU block to initially allow free movement of workers to EU member countries. The 2004 EU enlargement comprised of Slovenia, Slovakia, Czech Republic, Poland, Malta, Lithuania, Latvia, Hungary, Estonia and Cyprus. The EU enlargement lead to higher immigration inflow to the UK during the period 2004-2006 and the country witnessed one of the biggest shifts as shown in Figure 1 below. A similar effect was anticipated in the case of the 2007 EU enlargement. Nevertheless, the United Kingdom opted to establish restrictions on the new member nations, which included Romania and Bulgaria. This may perhaps be probable explanation for the fall in the number of immigrants for the years following 2008.
Figure 1: Immigration in the UK 2003-2011
Source: Eurostat, US Statistical Abstract 2006 and Health Statistics Quarterly, 32, (Schiopu & Siegfried 2006)
1.2.2 Trends of Polish Immigration to the UK
The immigration of the Polish people to the UK can be traced back to the 16th century when Britain imported substantial amounts of grain from Poland. During 19th century, after the fall of the November Uprising of 1831 in opposition to the Russian Empire, scores of Polish insurgents moved to the United Kingdom to look for political sanctuary. Following the World War I, Polish people made settlements in London, who were mostly from the London Polish prisoner of war camps situated in Felltham and Alexandra Palace (House of Lords 2008). During the World War II era, the Polish people played a significant role in the Allied war effort that resulted in the establishment of the Polish British Community that still exists at the present day. Most of the Polish people moved to UK as political immigrants after the Soviet Union and Germany occupied Poland. After the end of World War II, the enactment of the Polish Resettlement Act relaxed the travel restrictions to and from Poland, which led to a steady growth in Polish migration to the UK during the 1950s. The dawn of the 21st century saw an increase in economic migration of Polish immigrants to the UK. In the course of the 1990s, the Polish people made use of the freer travel limitations to migrate to the United Kingdom and seek employment in the grey economy. After the 2004 EU expansion, the United Kingdom allowed free movement of workers between the new member states of EU, which resulted in most EU member states (House of Lords 2008). The following Figure 2 shows the trend of Polish-born employment in the UK during the period 2003-2010.
Figure 2: Polish-born people employed in the UK
Source: Eurostat, US Statistical Abstract 2006 and Health Statistics Quarterly, 32, (Schiopu & Siegfried 2006).
1.3 Problem Statement
Immigration is one of the most contentious subjects relating to migration for the reason that native populations fear the possible competition on the labour market derived from foreign labour. Controversies still exist regarding the impacts of immigration on the rates of the unemployment for the host nation. In addition, the simplest theoretical models fail to provide a precise solution to this problem (Anderson & Winters 2008). A considerable portion of the existing empirical results point out that immigration pose a negative impact on the rates of employment; on the other hand, some studies indicate a positive impact. Several factors determine whether native populations can anticipate losses or gains because of increased immigration, and often depends on the size and structure of the immigration flow and the institutions of the labour market of the host countries. Furthermore, there is the need to investigate the effects on unemployment that immigration imposes for the source country, which in this case, is Poland (Barajas et al. 2009). Amidst the divergent results regarding to the relationship between unemployment and immigration, there is the need to undertake a study to determine the relationship between Polish migration to the UK and the effects of unemployment in both countries.
1.4 Research Objectives Questions
The primary purpose of this study is to investigate the effect of Polish migration to the UK on the rates of unemployment of both UK and Poland. The study assesses whether immigration rates has a significant influence on the rates of unemployment based on the data collected from UK and Poland. In an attempt to attain this objective, the following research questions were utilized:
- How does Polish migration to the UK affect the unemployment rates in the UK?
- How does Polish migration to the UK affect unemployment rates in Poland?
1.5 Professional Significance of this Thesis
This study is pertinent to economists and students in the field of labour economics, and local authorities engaged in the tracking of statistics relating to unemployment and immigration. This study should be helpful in making policy decisions relating to unemployment and immigration, In addition, this study will be helpful to students and professional entities in economic and global governance.
This study utilized data collected from two countries, UK and Poland, which served as source and host nations respectively. In addition, the study conducts an analysis using a limited period for the years 2003-2011 for both the UK and Poland. In this study, the immigration flow did not take into consideration the working experience and years of schooling; rather, the immigration flow was considered as a homogeneous group. This is because of the limited access to the data needed at the municipality levels.
There is a correlation between the state of affairs in the labour market and the migration flow of a nation (Anderson & Winters 2008). As a result, the rate of immigration is usually lower in nations with high rates of unemployment or during periods of economic recession. In addition, immigrants have a tendency of moving to geographic areas with higher probabilities of finding employment. This might lead to a possible bias in relation to estimations and the effect of unemployment on the rates of immigration. This feedback effect and non-economic variations are extremely hard to measure; as a result, they were omitted in this research. Furthermore, the study was limited only to one generation of Polish immigrants in the UK and did not take into account the labour input to the UK associated with the second and third generation of Polish immigrants in the UK.
1.7 Research Structure
The first chapter offered a detailed background of the topic, problem description, research objectives and questions, professional significance of this thesis, and research delimitations. Chapter 2, Literature Review, attempts to review current empirical research and literature regarding the relationship between unemployment rates and immigration for both source and host nations. The chapter also provides an overview of the theoretical framework adopted for this study. Chapter 3 provides a discussion of the research methodology adopted and their respective justifications in relation to attaining the purpose of this study. Chapter 3 also discusses the data collection and analysis method. Chapter 4 analyses and presents data collected taking into account purposes of this study. The discussion chapter interprets the data in an attempt to answer the research questions whereas the conclusion chapter summarized the findings and made appropriate recommendations on the topic.
CHAPTER 2: LITERATURE REVIEW
The European Union was formed with the theoretical basis that a greater economic integration would definitely benefit the member states in a wide array of aspects. Several essential agreements would provide the basis for which such economic integration would be achieved. For instance, the European Union agreed to the use of a single currency the Euro (Peri & Spaber 2009). Either, the European Union agreed to the free flow of both humans and goods within the trading bloc (Aggrawal, Demirguc-Kunt & Martinez 2006). This has since allowed nationals of different nations to immigrate to other more developed nations in search of employment opportunities and better working conditions. While this may have been one of the projected successes envisaged during the formation of the union, it has had its fair share of controversies.
The controversy emanates from the huge flow of immigrants from the Eastern European nations commonly referred to as the A8 nations. These nations include Slovenia, Poland, Hungary, Slovakia, Latvia, Czech Republic, Hungary and Estonia (Borjas 2006; European Commission 2006; Ortega & Peri 2009). Several immigrants from these nations have been seen to “flood” the workforce and labour markets of the more developed Western Europe nations. The influx of workers from these regions has been a debate in several nations such as the United Kingdom, France, Germany and Italy. The UK is one of the nations that have had a protracted debate on the impact of immigrants from east European immigrants on its economy. This section first reviews the population of the UK and its change over time. The second section of this review also analyzes the changes in the population over the past few especially since joining the European Union. The third section reviews the impacts of migrants of the economy of destination countries. This section will be concerned with the economic impact of immigration of national of the A8 nations on Western European nations. The final section reviews the impact of the immigration on the source nation paying attention to studies carried out on nations that have experienced huge emigrations.
2.2 Population Changes in the United Kingdom before the 21st Century
According to Abdih et al. (2009), the UK has had a less than average population increase in the last three decades of the 20th century. Official records at the office of National Statistics of UK has it that that between 1972 and 2006, the country’s population only increased by 8.2% (House of Lords 2008). In fact, Anderson & Winters (2008) assert that the population changed from 55.9 million to 60.5 million, much lower increase as compared to any of the developed west European counterparts. The population of the United States changed by about 44% over the same period registering an increase from about 208 million in 1971 to over 300 million in 2006 (Schiopu & Siegfried 2006; Anyanwu & Erhijakpo 2010). Similarly, other nations have had a higher population growth as compared to that of the UK. Nations such a Spain, Italy and France have had much higher population growths in the period between 1971 and 2004 (Azam & Gubert 2006; Mohapatra, Joseph & Ratha 2009). This can be illustrated by the figure below.
Figure 3: Population growth in percentage
Source: Eurostat, US Statistical Abstract 2006 and Health Statistics Quarterly, 32, (Schiopu & Siegfried 2006)
However, the long run indications of the charts have been found to mask some significant changes that took place along the way. Between 1971 and 1998, the UK registered extremely low levels of population growth with a much evened out proportion of birth to death ratios. Quartey (2006) reports that population in the UK grew by only 2.8 million between 1971 and 1999; this is just about 4.2 percent of the population growth. However, after 1999, the population grew by 3.2% within a span of 3 years. Anderson & Winters (2008) attribute this sudden change to immigration with inflows increasing at an unprecedented rate vis-à-vis unchanged outflows.
In summary, the UK population appears to grow at a much lower rate as compared to the rest of developed EU member states. By international standards, the UK has had its population very much under check over the past decades and this has contributed to low unemployment levels and higher per capita indices. Such good statistics has made the UK a very attractive destination for many immigrants seeking a better lifestyle and higher wages. The accession of the A8 nations has seen significant changes in the European labour market. Thus, the question remains as to why the UK seems to have attracted a high number of immigrants in the past decade.
2.3 Rise in Immigration to the UK in 21st Century
The changes in the UK population can be attributed directly to the accession of A8 nations on May 1st 2004 (Boeri & Brucker 2005; Mattoo & Mishra 2009; Ajayi, et al. 2009). The accession of the A8 allowed the free movement of citizens of the eight nations to work and live in the UK, Swede and Ireland. This was a concerted move by the UK to review its immigration policy and provide room for economic attractiveness. The move was seen as chance for the UK to open up its economy to the world by allowing works from different parts of Europe to settle and contribute to UK’s economy.
Literature on the concept of immigration directly focuses on economic factors that define migration. Agunias (2010) argues that the fundamentals of migration are based on the simple fact that an individual compares the economic condition and benefits that would accrue before moving to the new location. Agunias (2010) further illustrates that individuals also consider social costs of relocation before making the decision to emigrate. The benefits of migrating to another location can be easily calculated by considering the expected income in the new country in comparison with current location. The difference will be calculated upon consideration of chances of getting a job in the destination country by comparing the unemployment rate in the different economies. After a careful evaluation of the cost verses the benefits and the individual finds that the benefits outweighs the costs, then such a person considers emigrating to another country or location.
Changes in the probability to immigrate have been explored by different scholars and economics experts. Bracking (2008) estimates that an increase in the minimum wage by about 10% in the destination location increases the chances of individual’s immigration by 7 percent. In the same respect, increase in employment rate in the country of origin reduces the chances of immigration by about 2%. Schiopu & Siegfried (2006) further illustrate that the majority of those immigrating are young educated single males.
There are varied statistics indicating as whether immigrants eventually go back to their countries of origin. According to Barajas et al. (2009), about 13 per cent of all immigrants tend to go back to their countries of origins. Similarly about 15 per cent of immigrants move on to another locations still seeking better livelihoods. Bracking (2008) summarizes the flow of immigration within Europe to be majorly dominated by Central and East European population moving to the west. In this sense, Bracking (2008) argues that most of the immigrants in west Europe originate from eastern nations especially Romania, Bulgaria and Poland. Empirical evidence in different literature point to the trend most of east Europe population consider west European nations as better placed as working environments. Consistent immigration from the east to the west has been ascertained to a high degree (European Commission 2006).
Aggrawal, Demirguc-Kunt & Martinez (2006) further examine the reasons for the movement from the East (A8) nations to the UK. As earlier discussed, the reason that drives most immigrants from the A8 nations may be due to high probability of getting employment or the high standards of living that west European nations presents to these immigrants. To evaluate these issues, data from the UK’s Worker Registration Scheme is evaluated vis-à-vis home country population. This data is directly correlated with the home country’s GDP and unemployment rates.
Table 1: WRS applications between May 2004 and September 2006 as a proportion of home population
|Country||WRS registrations as percentage of home country|
(2004)GDP per head
Source: Eurostat, US Statistical Abstract 2006 and Health Statistics Quarterly, 32, (Schiopu & Siegfried 2006)
The table above is a clear indication of the flow of immigrant into the UK seeking employment. Lithuania leads in terms of the proportion of the home country to relocate to the UK. With 1.6% of total population, Lithuania also happens to be the nation with the highest unemployment rate. Similarly, Latvia, Slovakia and Poland have similarly high numbers of immigrants in the UK and equally lower GDP per capita in their countries f origin. Other nations with much less percentage as immigrants in the UK happen to have higher GDP per head in their home nations.
According to the above table, Poland has the highest number of registered immigrants as workers in the UK and this implies Polish immigration into the UK has existed for a much longer of time. Boeri & H. Brucker (2005) argues that Polish immigrants have been pouring to the UK for a long period. The history of east European immigration into the UK has been explored in several literatures and it is of great importance to review the history Polish immigration to the UK.
2.4 Polish Immigration to the United Kingdom
The history of Polish immigration to the UK dates back to the medieval era. Medieval Europe was characterized by wars between kingdoms and monarch of different origins. Bracking (2008) state that first instance of Polish presence in the UK dates back to the time of King Canute of the 15th century. There is evidence of such claim in inscriptions found in Hyde Abbey Winchester asserting that the sister to the King Canute had made headway to the land of Britain. There is also evidence of Polish invasion, where troops invaded the UK during the rule of King Canute. The presence of such evidence of invasion and inscription within the great landmarks in the UK provide evidence Polish.
At the turn of the century, Poland started to increase their presence in the UK due to the trade in grains that the UK imported from Poland. British imports of grains from Poland implied that merchants and diplomats would flow from Poland to UK in order to do business. Dustmann, Fabbri & Preston (2005) singles out the flow of migrants from Gdansk through trading in the Eastland Company. These immigrants settled in London and soon become part of the London community. In fact, Poles in the Britain soon became integral to the community that the great play writ, William Shakespeare mentions about them in his play Hamlet.
Polish immigrants would increase in numbers to a point that they would be sought after for employment. Eade & Garapich (2006) state that the Polish immigrants were enough to be hired by shipping company in order to sail to the United States. The Virginia Company hired Poles to in 1608 to sail to the US and recapture the colony of Jamestown. The 18th century saw much of Polish movement into the UK with evidence setting up of pubs and streets named after the Poles. For instance, a London Street was name ‘Poland Street’ and a pub name the ‘King of Poland’.
The 19th century still saw several numbers of Poles flowing into the country. The failed political uprising of 1831, that looked to eliminate Russian rule over Poland, forced thousands of Poles into the UK seeking refuge and asylum (Peri & Spaber 2009; Anderson & Winters 2008). The same trend would continue after the First World War. After the First World War, Polish prisoners of war from several camps would be released and end up settling in London.
2.4.1 Settling after the Second World War
The Second World War was one perhaps one of the most important eras in the migration of Poles to the UK. The United Kingdom considered Poland a great ally in the war against the axis. After the Germans occupied Poland, several Poles would immigrate to London to seek refuge. In fact, Beine, Docquier & Schiff (2009) assert that after the fall of France to Germany in 1940, the Polish Prime Minister and the almost the entire government would lead the first wave of tens of thousands of immigrants into London. This first wave of emigrants was mainly composed of ground solders and air men.
As earlier mentioned, the Poles made a big contribution to the war against the Axis in the war. Borjas (2006) illustrates that the Polish regiment contributed the fourth largest contingent to the allies. In the Battle for Britain, the Poles were biggest non British army to participate in the war. The Polish army also played a very instrumental role in other several battles such as Siege of Tobruk, the Battle of Monte Cassino, the liberation of Bologna, the battle of the Falaise Gap and the liberation of Breda (Boeri & Brucker 2005).
Perhaps, the most important contribution from the Polish army to the Second World War was in the field of intelligence. The Polish army provided the British army with the necessary grounds to break the encryption code used by the Germans to pass messages in the field of battle and to the frontlines (Bracking & Sachikonye 2008). The code breaking mechanism, commonly referred to as the ‘Ultra’ was later hailed by King George and the then prime Minister Sir Winston Churchill as the most important weapon at the nick of time.
Towards the end of the world war, Polish troops in Britain were estimated to well over 200,000 (Dustmann, Fabbri & Preston 2005). These troops served under British command and would later resettle in most part of London and other cities. Most of immigrants originated from eastern cities of Poland that were occupied by either the Germans or the soviets as agreed in the Nazi-Soviet pact. The region that was mostly affected by the occupation was the Kresy regions. The Poles from these regions would later be inducted into the several army regiments that played a key role in the liberation and wars in North Africa and other southern regions of Europe, Italy, and the Middle East.
2.4.2 Resettlement of Polish Solders
After the Second World War, Britain had so many Polish solders who had considered the United Kingdom as their home for several years. Thus, these troops needed a smooth transition from a military form of livelihood and be demobilized to become productive civilians. The British authorities had the challenge of getting these troops resettled in an orderly manner that would not cause much disruption to the rest of the civilians. The British government decided to come with the Polish Resettlement Corps (PRC) where Poles who wished to be resettled into the UK would enlist during the demobilization process (Cortes 2010). After full demobilization of the troops in 1949, the PRC was disbanded as it had achieved its goals.
2.4.3 First immigration law in the UK, PRA (1947)
The result of the Second World War was a resounding victory for the Allies who included the Soviet Union and the British in collaboration with the United States and other nations within Europe such France and Belgium. However, after the victory over the Axis, the Soviet Union would restore control over Poland. What followed as a strong dictatorship that gripped the Polish state as communism pelted its command (Card 2005). The Polish had lived through soviet era between 1939 and 1944, and these times were terrible for the Poles. The soviet occupation of Poland experience political turmoil and upheavals. The Warsaw uprising of 1944, the death sentence of the liberal Poles and the Trial of the sixteen at Warsaw were just but a few of the known oppressions schemes that were used by the soviets during the occupation (Portes 2009; Adams 2005).
Therefore, the communist takeover of Poland after the Second World War was perhaps the greatest betrayal of the Poles by the Allies. The UK felt strong responsibility and therefore tried to reverse the situation. The possibility of liberating Poland from the Soviet Union would have implied another war that Britain could neither fund nor get the political support for the war. The only option left for the British was to allow Poles to resettle in the United Kingdom. Towards this end, the United Kingdom passed legislation, the first ever immigration law referred to as the Polish Resettlement Act of 1947. The majority of the Poles who would be inducted into the resettlement program were stationed at Swindon, a region that hosted most troops. This lagre group of Poles would later resettle in London and start seeking work in the city. According to Quartey (2006) the Poles would later increase in numbers and by 1951, the census counted the Poles to be around 162, 000.
2.4.4 Immigration after 1950
The 1950s was an era that saw large numbers of Poles moving into the UK. The UK government relaxed most of its travel constraints and thus a good number of Poles would flow into the UK. This group mainly settled in London in neighbourhoods such as Lewisham, Brixton and Earls Court (Boeri & Brucker 2005). The large numbers of the Poles who settled in London were mainly Polish Catholics and naturally, the issue of religion would soon become intricate. Catholic hierarchies would soon realize the need to have Polish catholic priests to minister to the large number of Poles that had settled in the UK. For these reasons, several polish parishes would be established in the United Kingdom. To date, several polish parishes exists in the United Kingdom spread all over the country. Black & Skeldon (2009) states in London alone, there are over ten polish parishes.
The creation of the Polish parishes was a major milestone in the settlement of the Poles in the United Kingdom. The churches provided a central point or a social form of identity and centre for the Poles. Polish shops, cultural centres and gymnasiums where developed in locations close to the churches. In addition, the Poles that were resettled in the 1940s and early 1950s provided hubs for incoming Poles. Poles would find ground to settle before getting stable and moving out on their own. In the same regard, several polish groups emerged in the UK in order to maintain their cultural identity. Some of the groups that would emerge included the Polish Youth Group (KSMP), Polish Scouting Movement (ZHP pgk) and the Ex-Combatants. These groups played key role in receiving the rest of the Poles that made it to the UK and transferred the polish culture to the children.
The polish government that had immigrated to London would remain intact through the period of communist occupation of Poland (Peri & Spaber 2009). The polish government in London would enhance international effort in fighting communism in all its aspects. During the entire period, the United Kingdom government would allow the Poles to run their business without much disruption. Thus, when the Soviet Union was dissolved in 1989, Poland participated in its first ever democratic election that produced a president and legitimate government in 1991 (Aggrawal, et al 2006; Borjas 2006; Anderson & Winters 2008). The polish government in the London would be dissolved. However, both the British and the polish government would insist on maintaining close ties due to in order to foster business and commerce between the two nations.
2.4.5 Economic Migration of the 21st Century
The dissolution of the Soviet Union was accompanied by a negative effect to the economies of the breakaway regions. Moscow had concentrated most of the economic powers and resource in the centres that were now in Russia. Poland was left with a dilapidated economy with collapsing industries and poor infrastructure (Eade & Garapich 2006). To assist the Poles, during the hard the economic times, the UK government would further reduce travel and working restriction on Polish nationals. Several Poles would travel to the UK to find work and better economic conditions. Through the 1990s, Poland would see many of its citizens immigrate to the UK to seek employment.
The recent creation of a single economic bloc, the Euro Zone, started a new era of polish immigration into the United Kingdom. The accession of the A8 nations that includes Poland, allows free movement and working permit in the rest of Europe. According to Mattoo & Mishra (2009), most Poles consider the UK as the pristine destination in seeking better working conditions and higher pay. The United Kingdom has sought to have a registry of all Poles living and working within the United Kingdom. In the year 207, the Home Office under the Worker Registration Scheme had recorded about 430,000 Poles working in the UK (European Commission 2006).
Agunias (2010) further states that it is not a mandatory requirement for all immigrants to register with the Home Office. The agreement under the accession of the A8 nations requires that immigrants carry either passports or identity cards from their home countries. In addition to these requirements, most employers only require a national insurance scheme registration in order to offer employment to these immigrants. This implies that the number of Poles in the country could be much higher. The chart below indicates the location of settlement of new immigrants in the UK.
Figure 4: Distribution of Immigrants across the UK
Borjas (2006) provides a slightly differentiated view of the flow immigration after the accession of the A8 nations. The accession of the nations into the Euro Zone as since spelt good economic tidings got these nation. Card (2005) argues that Poland has had a reputable economic growth and the unemployment has since fallen. The IT industry, the construction sector and financial services have since led as the economic sectors fostering growth in Poland. A new wave of more Poles retuning to Poland has been spearheaded by a campaign dubbed ‘Come Back to Poland’ in trying to encourage the Poles back home. This coupled with the rise in Poland’s economy has reduced the economic incentive for immigration into the UK. However, there is general agreement that immigrants from East Europe have been flowing into the more developed economies in Western Europe. It is without doubt that this migration must have some sought of impacts on the destination economies as well as the source countries.
2.5 Impacts of A8 immigrants on Western European economies
Undoubtedly, the accession of the A8 nations and the enlargement of the Euro Zone have seen an unprecedented rise in the immigrants to the more developed nations in west Europe such as Germany and the UK. Statistics indicate that Austria is the leading nation in terms of immigrants to Germany while Poland is the leading nation among the A8 in the number of immigrants to the UK (Abdih et al. 2009). According to the Polityka, one of the most respected publications in Poland, about 1 million Poles have immigrated to the UK since 2004 (Beine, Docquier & Schiff 2009). The UK government puts these estimates at much lower figures. However, the government agrees that between half and two thirds of all immigrants from the Eastern bloc of the Euro Zone are Polish (Department of Trade and Industry 2006). In general, the deduction that can be drawn from this plethora of statistics is that a good number of Poles have immigrated into the United Kingdom.
Cortes (2010) asserts that this huge influx of young energetic workers has had a significant impact on the West European economies. There two possibilities of such an influx of employees: Cortes (2010) argues that such a large group of immigrants could over flood the labour market increasing pressure on resources and thus bringing the economies to their knees. On the other hand, the influx could inject new breath in terms of a motivated workforce, revitalizing a stagnating economy. There is considerable evidence suggesting that majority of the industries within the EU are finding it hard to expand and increase output. On the contrary, countries that have received a high number of immigrants have their industries experiencing a renewed path of growth vis-à-vis the controversy that surround the massive ‘invasion’.
Card (2005) argues most of the emigrants from the A8 nations are mainly young men of working age seeking higher pay. Such a profile of immigrants has several theoretical advantages. According to the World Bank (2009), working immigrants especially from the eastern bloc provide the much-needed blue-collar labour force and this injection of a new workforce should allow the advancement of industries and the economy. Therefore, there are several facets of the economy that east European immigrants are playing significant role in fostering and enhancing growth. Several scholars have reviewed the different sectors of the economy that immigrants have significant influence.
2.5.1 Immigrants Provide a Huge Bunch of Consumers
The introduction of millions of working immigrants in the destination country produces a bunch of consumers that industries and different marketers can now target. Schiopu & Siegfried (2006) explain that immigrants in the destination country now earn wages disposable in nature and therefore provide a new spending population. As earlier mentioned, statistics indicate that most immigrants from the eastern bloc of the Euro Zone are male between the ages of 18 and 34 (Aggrawal, et al 2006). Additionally, a big proportion of these immigrants are single with extremely few responsibilities. Their modes of settlement have been found to be lean with the aim of limiting the cost of living. To this end, most of the immigrants have lots of their earning as disposable income. With this income, most of the immigrants will provide new bunch of consumers that did not exist in the past.
It is apparent that a significant percentage of immigrants have a significant amount of disposable income. While several firms and producers of consumables within Europe were initially, slow to react, they have now found new enthusiasm in marketing to this huge bunch of consumers. The pursuit for reporting sales to this new demographic has gone beyond London, and other bigger cities within the continent (World Bank 2007). Other cities such as Manchester, Nottingham, Edinburgh and Glasgow have since experienced a rise in marketing targeted at East European immigrants. With this demographic in mind, questions abound as to how many immigrants directly contribute to the consumer faction of the economy of the destination country.
Several organizations have sought to establish the expected theoretical value of disposable income that can be associated with eastern European immigrants. According to Portes (2009), the Centre for Economics and Business Research has since estimated that the average East European immigrant working in the blue collar division earns an average of £20,000 per annum. The trusted think tank further estimates that about 40% of this income is disposable, that is about £6,000-7,000. However, due to the unknown number of immigrants from different countries, Portes (2009) argues that only estimates of total disposable income from immigrants can only be vastly estimated. According to the think tank, the total disposable income from this group is about 4 billion Euros per major West European economy.
However, concerns may abound regarding the sustainability of the market presented by Eastern European immigrants in the destination country such as the UK. Adams (2005) argues that the future of the rapid growth in the number of consumers is subject to debate. Anderson & Winters (2008) instead assert that the recent increase in the number of consumers is set to increase further with increased economic integration that is now taking root in Europe. The addition of immigrant consumers in western European economies is perhaps the best part of recent economic success that the region has reported. Young vibrant workers that the A8 nations have provided go a long way in increasing consumption of new products. New product lines are expected to appear on supermarket shelves. Such introduction of new products will increase consumption thereby increasing tax returns. The expected result is that additional taxes from the labour sector will reduce the pension burden on the destination economy allowing governments to invest in other sectors such as infrastructure.
2.5.2 Profiling the East European Immigrant Purchaser
Barajas et al. (2009) argue that the reasons that drive most immigrants out of their own nations can be directly attributed to lack of jobs or better pay. Therefore, most immigrants seek employment and better pay regardless of the kind of work performed. This perhaps explains the reasons why while most immigrants may have above average education and graduate degrees, still consider working at low-level jobs. Additionally, these immigrants seem to have taken it upon themselves to make home o the destination country. Barajas et al. (2009) asserts that evidence points to the fact that fewer and fewer immigrants from east Europe are going back to their home countries. Thus, these immigrants appear to stay put for the long haul.
However, it is inconvincible that these immigrants will not find a means of seeking better jobs and going up the ladder vis-à-vis the educational levels. Inevitably, these immigrants will find a means of moving out of the low paying jobs and finding better employment. The implication is that the low paid consumers will now have much higher earning to spend in the economy. This perhaps explains the recent trend among most manufactures maintaining an east European product line. Some firms have developed marketing strategies such as “Go Polish” (Agunias 2010). This concept then brings to the fore the idea of producing goods that fit immigrants thereby expanding the industry.
Azam & Gubert (2006) argue that, whether the immigrants have moved to the destination for the long haul or just for a short period enough to make enough pay, their presence is a great chance for companies in the destination country. For instance, several firms in Western Europe that appear in the directory of call firms offering competing call rate services to Eastern Europe indicate a myriad of companies (Eade & Garapich 2006).
There are also several firms offering services such as obtaining insurance and other requirements for employment within Western Europe. Therefore, the need for intermediary services to immigrants creates a huge opportunity for firms in different countries that the immigrants end up. Services such as languages, learning driving rules of the new nation and other crucial services are some of the leading fields of opportunities for these firms.
2.5.3 New Opportunities for the Airlines
The formation of the European Union and the subsequent creation of a single market the Euro Zone were to lead to an increase in movement of both humans and product. Today human and vehicle traffic between west and east Europe has drastically increased. Cortes (2010) argues taking a walk in any east European city such as Warsaw, Bucharest or Zagreb; one sees unlimited numbers of advertisements by big west European airlines dominating most of the billboards and electronic advertisement sites. Companies such as Germany’s Lufthansa Airline, British Airlines and France’s Air Frances have taken the bold step to capture the huge numbers flowing into west Europe.
However, low cost no-frills airlines have since made headway in capturing the immigrants flowing into west Europe (Yang & Choi 2007). Budget airlines such as Ryanair, Jet2, EasyJet, SkyEurope and Centralwings have provided low cost cheaper light into the UK and Germany for a considerable period. Most of these low cost airlines provide two basic advantages to the immigrants. One main advantage is that low cost airlines fly to less significant important cities in the destination countries. For instance, low cost flights have the advantage of landing in smaller cities away from the more expensive cities such a Berlin, Stuttgart or Frankfurt. Similarly, low cost flights in the United Kingdom fly to smaller cities away from London, Manchester or Glasgow.
Card (2005) provides a much different view of the flight industry for immigrants who have settled and made headway in the destination country. According to Card, after some period, established East European immigrants tend to enjoy increased earnings and therefore disposable income tends to increase. This group therefore travels to and from their home countries at an average of three times per year. Initially, immigrants are more concerned with the cost of flight and therefore prefer cheaper flights to comfort. However, this trend seems to be changing for immigrants flying back and forth. Evidence indicates that this group tends to shift from the low cost flights to more comfortable and convenient service offered by the big companies such a British Airways. With such shift in flight consideration, issues such a brand loyalty and flight familiarity come to the fore. Therefore, advertising and competition create grounds for defining the flight industry.
2.5.4 Immigrants and the Banking Sector
The introduction of hundreds of thousands of workers with a huge amount of disposable income has a huge impact on the banking industry. Once the immigrants in destination countries and have managed to secure some work, the next obvious issue is finding an institution that would provide financial services such as banking. With combined earnings in the tens of billions of Euros, East European immigrants provide the next frontier in the competitive banking. The World Bank (2009) states that the biggest banks and other providers of financial services have to make the effort to find a means of providing services to these groups. Ortega & Peri (2009) further state that Poland, Lithuania and Latvia provide the highest number of immigrants to the UK. Other economies such a Germany and France receive most of their immigrants from Austria and Romania. These demographic should then provide banks and other financial service institutions with a means of marketing their products.
Anderson & Winters (2008) asserts that British firms such as Lloyds TSB, HSBC and Barclays have since taken noted of east European immigrants in the country and have made conceited effort to secure the immigrant market. These banks have undertaken several measures including intensive marketing in the countries of origin of the immigrants. Targeting immigrants and potential immigrants in their home countries is the aim of most banks in Western Europe.
Additionally, most banks in the more developed nations in Western Europe have gone further to include native speaking staff to allow immigrants feel catered for. For instance, several banks across Germany provide the staff with Austrian speaking staff. Barclays has also taken the effort to hire Polish speaking staff to cater for Polish immigrants. All these are effort directed at wooing immigrants from the A8 nations. HSBC is also one of the major conglomerates that have taken measures towards wooing east Europeans immigrants. HSBC considers the bunch of immigrants from east Europe as a big market and thus the financial services giant is seeking to open branches in regional cities and large communities across Eastern Europe. The polish cities of Poznan, Wroclaw and Katowice have been singled out as pilot regions for expansion.
Martinez et al. (2006) further argue that banks have more than just banking reasons for the immigrants. History indicates that most immigrants have a ‘natural’ entrepreneurship spirit. Portes (2009) asserts that most immigrants are natural risk takers in pursuit of success. These immigrants have left the comfort and security of their home leaving with a virtually no possession and no resources with them. Therefore, immigrants are more motivated to make it any aspect. In this regard, immigrants exploit every business opportunity that presents itself no wonder great entrepreneurs such as Michael Mark of Marks and Spencer was immigrants. Other great entrepreneurs across Europe were immigrants and hence banks present the best means for such success of immigrant entrepreneurs.
2.5.5 Expansion of Brands and Businesses
The theoretical concept of immigrants suggests that most of the immigrants will later go back to their countries of origin. Therefore, the potential benefits from immigrants to both the source and destination country are virtually unlimited. In the case of Eastern Immigrants heading to the west of the continent, Bracking & Sachikonye (2008) argue that most of the immigrants from the A8 nations have a ‘boomerang effect’. In description, this implies to a situation where the immigrants continually move back and forth between their home nations and destination country. Immigrants from the Czech Republic, Lithuania, Poland and Slovakia have exhibited a continual back and forth motion splitting their time and resources between the two nations.
The World Bank report of 2007 explain that such a situation presence unlimited opportunities for firms that can do business in both nations. Businesses and organizations with known brands and products that can meet demand in both markets have the advantage of taking the big bunch of such immigrants. In general, consumers prefer to use brands with which they are familiar with. This allows consumer to utilize the same brand while in both countries enjoying the benefits of both consumer loyalty and increased consumer and service provider relation.
Consumers tend to develop affinity to particular products or services such as milk, beer or cell phone services provider. Immigrants from east Europe have since developed product familiarity largely. Cross border, brand recognition has since taken the lead in providing to the consumers the product of choice.
Several firms in Europe have taken the advantage of cross border brand recognition and expanded business to Eastern Europe (World Bank 2009). One such firm is the leading French telecoms firm Orange. Orange telecom has expanded to several European markets such as Lithuania, Slovakia, Poland, Slovakia, Romania and Latvia. The brand announced that it would provide similar products for all consumers both in Western and Eastern Europe. This new shift of brand, generally referred to as the international friendly brand, was expanded to several nations such as the Czech Republic, Poland and Lithuania. Other Western European firms in the telecoms industry would follow suit in expanding into the A8 nation. O2, a UK firm owned by Telefonica successfully expanded into the Czech and Slovak markets offering similar services as those offered in the UK (Boeri & Brucker 2005). The firms went all out in the marketing strategies employed in marketing their products to the natives of the immigrant nations.
The basis for such expansive strategies is based on the theoretical fact that once these immigrants have successfully made it to Western Europe, the first order of business is to find a means of communicating with their relatives back home. This means that international call cards become the next frontier of competition among the telecom firms. However, if a brand has presence in both nations implies that brand loyalty as well as ease of using the same service provider becomes the edge of competition. O2, Orange and other brands that have presence in the A8 nations provide means of simple communication along making huge sales attributed to the immigrant community.
Supermarkets and other superstores have also take the lead in ensuring dual presence in source and destination countries. Several chain stores have sought to expand into East Europe. UK’s giant retrial store Tesco, has had a massive expansion into several A8 nations. Tesco has expanded into Slovakia, Czech Republic, Hungary and Poland (World Bank 2007). Tesco has managed to open hundred of stores across Eastern Europe. Tesco has led in expanding into the recently accessed nations with one ideology in mind. Naturally, once citizens of the A8 nations are used to the Tesco brand in their own nations, they are likely to maintain loyalty while in the destination country such as the UK.
2.5.6 Government Gaining in Revenue from Immigrants
It is without doubt that governments in Western Europe have hugely benefited from the influx of employees from Eastern Europe. Defining the exact manner through which these governments have benefited may quite difficult to ascertain. One of the methods that developed nations in Western Europe may have drawn great benefits from the immigrants is referred to as the ‘China Effect’ (Peri & Spaber 2009). The China effect is an economic ideology where by big firms and economies have enough capital to invest in labour intensive business such as factories. Thus, the large numbers of workers willing to work for less pay has assisted China become the fasted growing economy in the world. The Peoples Republic has managed to report double digit growth while the rest of the world was undergoing a recession.
In a similar application, Peri & Spaber (2009) argue that the flow of immigrants to Western European economies has produced an influx of hundreds of thousands of workers working for a low pay. This provides the economy with the much needed boost that ensures flow of capital to an economy and therefore stem the flow of companies to China and the rest of rising Asian economies commonly referred to as the ‘Tiger Economies’. Industries that had stagnated and faced closure now have a new workforce that leads to increased production and increased earnings.
Additionally, immigrants have been found to have a huge portion of their pay as disposable income. Such increased expenditure has lead to increased cash flow thus stemming off inflation. The impact of reduced inflation ensures that the Euro and the Pound remain rather stable allowing economies in Europe to fare well in world trade.
2.6 Impact of Emigration on Source Nations
With considerable evidence pointing to the fact that more and more immigrants within Europe come from the A8 nations, there is need to evaluate the impact and subsequent extent on the source economies. The fact is that immigrants emanate from a community and thus their departure has a huge influence on the source community. With several members of several communities leaving for other destinations, there is collective impact of such migration. Ajayi, et al. (2009) argues that migration has huge impact on the welfare of the source community and hence the entire nation. According to Anyanwu & Erhijakpo (2010), there is always an assumption that such migration has several positive impacts on the source economy. Immigration presents several advantages for the source nations. For instance, remittance from the immigrants abroad alleviates poverty providing the much needed resources for investment. Reduced poverty levels in remote locations of an economy allow the government to invest in other sectors of the economy such as health care and education. In addition, immigrants in the developed nations get valuable knowledge and information so that when they return they will apply such information to improve the livelihood of the community.
However, while plausible results may seem to be enjoyed by the source nations, there are other more demeaning results of sending so many citizens to other economies. Unscrupulous and corrupt employment agencies exploit the desperate situation in the weaker economies and send citizens to inhuman working environments abroad. Widespread emigration also has the challenge of sending properly educated citizens to foster economies of other nations. In addition to these, separation of families and close ties to tradition and culture adversely affects the national identity of a people and thus the sovereignty of a country. This section explores literature that reviews the impact of emigration on the source nation, paying attention to the emigration in the past twenty years.
2.6.1 Economic Impact of Migration on Source Country
Yang & Choi (2007) argue the most positive tangible benefits of emigration are the economic benefit that source countries enjoy. Remittances and other aspects of economic development has been the most recorded positive aspect of migration. According to estimates by the United Nations, immigrants for developing nation sent back home over $ 315 billion (World Bank 2009). This figure is perhaps the second largest source of economic assistance to developing nations besides grants and loans from developed nations. Ortega & Peri (2009) further argues that this figure might much higher due to undisclosed remittance and other forms of financial assistance.
Remittances from immigrants have both direct and indirect impacts on the economic state of the source nations. Anyanwu & Erhijakpo (2010), state that several studies have indicated credible results on the positive aspects of remittances by immigrants. The particular study, carried out in over 70 nations, established that international remittances from all migrant has the potential of increasing per capita earnings by 10% reducing a nation poverty index by 3.5% (World Bank 2006). Either, evidence points to the fact that remittance to Asia and Africa considerably reduced the severity and the depth of poverty (Abdih et al. 2009). Remittance also tends to inject the economy with new-found breath and thus stimulates a stagnating economy. Yang & Choi (2007), state that nothing proves the economic advantages of migration better than the Nepal case. In Nepal, remittance from Nepalese in different parts of the world was responsible for the reduction in poverty index between 1995 and 1996. Rapid increase in remittance provided half of the income that reduced Nepal’s poverty index from 42% to 31%.
Remittance also has the effect of stabilizing economies. Evidences point to the notion that remittances tend to increase in times of economic recession, natural disasters and financial crises. There is general agreement that immigrants in foreign nations find it necessary to send remittance back home to help their relatives back home during harsh times. Anyanwu & Erhijakpo (2010) illustrates that Ethiopia received high remittance during the long drought of 2003 so that locals would avoid selling livestock.
There is increasing evidence indicating the support that education is receiving from immigrants in foreign nations. Evidence suggests remittance has been employed to develop schools and education centres as opposed to day to day expenditure (World Bank 2009). Immigrants from South Africa and Ghana have been found to support several schools thus there is increased enrolment in both primary and secondary schools (Abdih et al. 2009). In Pakistan, immigrants in foreign nations have sought to increase enrolment of girls to schools (Mohapatra, Joseph & Ratha 2009).
2.6.2 Impacts of Emigration on Unskilled Labour Market in Source Country
The shift by several citizens to other countries will definitely affect the labour market. Abdih et al. (2009) argue that the impact of a withdrawing a huge chunk of the labour force can be reviewed from two basic perspectives. The first perspective views the unskilled labour market that is rather tight and therefore unemployment is on the lower indices. Therefore, in a case where there is rampant emigration of workers to other nations, employers in the source nation have the challenge of increasing wages in order to stem the flow of workers. In the short run, it is expected that optimum output levels will be affected. In this sense, employers and skilled labourers get low value for their investment. Conversely, unskilled labourers will enjoy wages and high employment rates, at least in the short run. However, in the end, production levels and wages will even out to meet target however short of optimal production.
The second perspective within which emigration impacts the unskilled labour force can be reviewed is in cases where the economy experiences high unemployment rates and thus replacements are available. In such cases of ‘surplus’ in supply of labour, effective under employment gives the employers the right to offer extremely low wages. In this scenario, immigration rarely affects the unskilled labour market; however, in the end better wages might be instilled on employers due to fear total loss of the unskilled labour market. This has been the case in Philippines, where a long history of emigration to other economies has forced employers to review their wages for fear of losing the biggest chunk of unskilled labourers (Yang & Choi 2007).
2.6.3 Effect on Skill labour, Brain Drain
The concept of brain drain is perhaps the greatest negative effect that emigration has on source nations. Empirical evidence points to three particular kinds of losses of that the home country suffers due to brain drain. First, the presence of highly educated personnel within an economy has several advantages. It is commonly expected that contribution to innovation by scientists and engineer will definitely benefits big portion of the citizens within the economy. Besides innovation benefiting the locals, Agunias (2010) asserts that when several experts and intellectuals continually interact, there is greater chance of exchanging ideas and thereby reducing production cost increasing productivity. Either, the presence of elites in the country may instil a form of efficient governance and civil performance in a country. Naturally, highly educated persons tend to earn high incomes and this effect spills over the rest of the community. Therefore, the departure of skilled personnel implies that all these benefits will be lost to the destination country. The source country losses the competitive edge in the skilled labour market and therefore the economy exhibit extremely slow growth.
The second loss that is associated with brain drain is the loss of human capital. The process of educated an individual to high levels is a rather expansive process that is viewed a form of investment. Therefore, losing such skilled personnel to another country amounts to losing crucial human capital that has nation has taken both time and resources to invest in. either, Borjas (2006) argues that the source country losses in tax revenues that the skilled personnel would have paid to the states due to earning and other forms of income.
Thirdly, and perhaps the greatest loss of brain drain is the lack of experts to offer crucial services to the citizens. According to Mattoo & Mishra (2009), most skilled labourers are drawn from crucial sections of the economy such as education, health and public works. The withdrawal of such skilled personnel implies that the health sector might be faced by an acute shortage of personnel leading to poor delivery of health services in the country. Similarly, exodus by the elite to different economies implies that none will be left to train students at tertiary or institution of higher learning. Absence of professors and scientists will mean that students will lack the necessary motivation and competence to inspire growth.
Aggrawal, et al (2006), states that in all, the flow of elites for a particular economy has a denting effect that may last several decades. Several developing nations have failed to attain desirable development due to lack of experts even though the nation has highly trained personnel. Poor pay and a bad political situation have forced several elite of the nation. Lack of enough experts in the country is recipe for poor governance and in the process poor development records. In similar stead, Schiopu & Siegfried (2006) asserts a nation with fewer numbers of literates is associated with high poverty rates, disease and high crime rates. The extent to which brain drain affect an economy can never be fully explored.
2.6.3 Social Impacts on the Source Country
Reviews into the economic impacts of emigration on the source nation have been explored with empirical evidence explored in a wide array of aspects. However, Adams (2005) argues that there is myriad of social impacts on the community sending several of its members to another state. Social impacts of the migration on the source country depend on the economic impacts of the migration and the migration cycle that the country is experiencing. In terms of the migration cycle, the stage of migration that sends mostly young single men to seek work creates much gender imbalance and therefore the society experiences a huge difference in the male female ratio.
Either, there is sufficient evidence to support positive social impacts on the children of the source country. Anyanwu & Erhijakpo (2010) argues that remittance and financial support from the emigrants to their home nations, increases household income allowing families to send children to school. Such a process ensures that literacy levels in the country improves and this reduces risk of child labour. On the other hand, there is a view that emigration may alter family composition changing the roles of the family members. In most cases one member of the spouse leave the family leaving the other to fend for the family. Azam & Gubert (2006) asserts that in most cases, males leave the family and thus single mothers have to lead the family. Empirical evidence proves that the shift to single parent families has adverse effects on the children. Studies in the United States has pointed out that children from single mother families are less motivated and thus performs poorer than the rest of eh students (Anderson & Winters 2008). In other countries, especially Sub-Saharan Africa, single mother have difficulties in fending for the families and therefore children may be forced into child labour and the result is a less educated society (World Bank 2009). Among adolescence, migration may be viewed as the ultimate goal for the locals and therefore instead of pursuing education, young people start looking for means of getting out of the nation to seek unskilled labour abroad.
CHAPTER 3: METHODOLOGY
The effects of immigration on unemployment is a significant area of policy focus for many countries including both the destination and source countries, especially with the emergence of regional organizations such as EU that facilitate free movement of people among its member states. The methodology section of this thesis provides an overview of the research design adopted and the corresponding data collection methods and justification. The data collection and analysis methods will be discussed in the light of the objectives of this research.
3.1 Research Design
Fisher (2007) asserts that the research design can take the form of either qualitative or quantitative research design, or combine both research approaches according to the topic under study and the corresponding research questions. Ruane (2005) points out that qualitative research designs focus on the analysis and evaluation of qualitative data with the main intent of answering the study questions and inferring a conclusion. On the other hand, quantitative research designs focus on the analysis and evaluation of quantitative data by making use of statistical techniques and measures to infer conclusions from the data. Fisher (2007) asserts that qualitative research design helps in the explication of concepts, descriptions, characteristics, metaphors, symbols and definitions associated with the topic under study whereas quantitative research design makes use of numerical statistics with the goal of attempting to find solutions to the research questions. As per the nature of the study questions and the context of this research, this study utilized a combination of both qualitative and quantitative research designs with the data being analyzed collected from secondary sources.
Ruane (2005) infers that a qualitative research design is an instance of an inductive process that involves the categorization of data into groups and determining the relationships and patterns existing among the various data sets. For the purposes of this research, the qualitative research design did not depend on data collected by primary research, but instead depended on qualitative data documented by other researchers and scholars in the same topic under study. The collected played an integral role in the derivation of ad hoc conclusions. Furthermore, the research made use of an inductive technique of inquiry because it was explorative and devoid of a firm hypothesis, and relied considerably on answering the research questions. This research used a grounded strategy, wherein the existing theoretical models detailed in the literature review section were anticipated as part of the study findings. Apart from qualitative data, this research made use of quantitative research design to gather data related to the impacts of Polish immigration to the UK on both countries. According to Nardi (2003), a research question comprises of variables arranged in a systematic manner and can be analyzed by deploying statistical techniques. Quantitative data relating to this study were obtained from secondary sources collected by other authors and scholars in published journal articles, manuscripts, books, and reports from EU, Poland and UK.
3.2 Methods of Data Collection
According to Nardi (2003), data collection is an essential prerequisite for any study because of the pivotal role it plays in ensuring that the study achieves its objectives and finds answers to the research questions. There are two main forms of data collected for the purposes of this study, which included primary and secondary data. Nardi (2003) defines primary data as “data collected by the researcher through direct interactions with the respondents” whereas secondary data refers to “data documented and published by other researchers and scholars in the same topic being studied. For the purposes of evaluating the theoretical models discussed in the literature review section, this study made use of secondary data sources.
3.2.1Secondary Data Sources
As mentioned previously, secondary data sources refer to data documented by scholars and publishers that are relevant in answering the research questions and ensuring that the objectives of the study are met. The collection of secondary data involves primarily library and internet research for scholarly sources. Commencing with the keyword “Polish immigration to the UK” it is relatively easy to trace books and several materials that are relevant to the topic under study. The main sources for relevant books included Athens, Google Books, Questia and Amazon. Furthermore, national and international databases were helpful in sourcing published journal articles and manuscripts that were relevant in answering the study questions. Some of the online databases searched for secondary data included Hub pages, government websites for census records, and Accession monitoring reports, The Annual Macroeconomic database (AMECO), WebEc and EBR Database online. An internet search was also conducted in order to complement the data collected from online libraries and internet searches. Some of the online databases used included Sage Pub, Wiley Online Library, and Office for National Statistics, Journal of Ethnic and Migration Studies, and Labour Market Trends.
Various search items were used when sourcing for secondary data using both inclusion and exclusion criteria. The criteria for inclusion included: Polish immigration to the UK, effects of Polish immigration to the unemployment in UK and Polish, the relationship between Polish Immigration and unemployment in the UK, and impact of Polish immigration on the unemployment levels in Poland. There were no exclusion criteria basing on date because of the need to establish the relationship between unemployment and immigration over a span of time in order to come up with a trend.
In relation to guaranteeing the quality of this study, the research made use of both qualitative and quantitative data in order to gather broader perspectives regarding the topic under study (Fisher 2003). Quantitative studies included the effects of immigration on the various microeconomic variables affecting unemployment levels such as the consumer base, purchasing power and government revenue, which were done for both the case of source and host country. Qualitative data gathered included the patterns and trends of Polish immigration and unemployment; all these data were essential in assessing the relationship between polish migration to the UK and the effects on unemployment in both countries.
3.3 Analysis and Presentation of Data
Data analysis involves examining, modelling and converting the gathered data with the main goal of coming up with any useful information, reaching at conclusions and supporting the process of decision-making (Fisher 2007). With regard to this study, data analysis had the main purpose of reaching at conclusions that attempt to answer the aforementioned research questions and achieving research objectives. This research utilized both inferential and descriptive statistics to infer conclusions from the data collected. Descriptive statistics were helpful in summarizing and describing data using statistical quantities, which was essential in assessing the existing patterns in collected data. A significant limitation of descriptive statistics is that they cannot be utilized in arriving at conclusions; however, they are vital in representing and interpreting data. On the other hand, inferential statistics deploys statistical variables to generalize findings about the study.
The method for analyzing data comprised mainly of univariate data analysis, which entailed assessing the distribution of one statistical variable at a time. Bivariate and multivariate data analyses were used in evaluating the patterns of relationship between various variables; an example is the relationship between existing between immigration and macroeconomic variables such as unemployment, production costs and inflation rates.
Representation of descriptive statistics involved the use of tools of visual representation such as graphs, charts and tables. Comparative data and trends of iterative data collected were represented using graphs and tables (Fisher 2007).
CHAPTER 4: RESULTS
The aim of this study was to find answers to the following research questions:
- How does Polish migration to the UK affect the unemployment rates in the UK?
- How does Polish migration to the UK affect unemployment rates in Poland?
In an attempt to answer the above research questions, the following research objectives were used in presenting the results of this study:
- To investigate the effect of Polish migration to the UK on the rates of unemployment of both UK and Poland; and
- To assess whether immigration rates has a significant influence on the rates of unemployment based on the data collected from UK and Poland.
4.2 The Effect of Polish Migration to the UK on the Rates of Unemployment of both UK and Poland
According to EU law, any resident of an EU member state has the right to move freely between other member nations. After accession to the European Union, it was speculated that emigration from the A8 nations would result in an increase in immigration towards prosperous regions of the United Kingdom (Department of Trade and Industry 2006). This is because of the high unemployment rates and lower living standards in East European nations. The government of the United Kingdom estimated an increase of approximately 150000 from the A8 countries moving to the UK in search for employment. In reality however, as of July 2006, statistics point out that 447,000 people originating from Eastern Europe had applied for jobs in the United Kingdom; out of these, approximately 62% (264,555) originated from Poland. Towards the end of 2006, Polish immigrants had increased to approximately 370,000; however, this figure excludes about 150,000 self employed workers originating A8 countries whom did not need to apply to work in the UK and register with the WRS (House of Lords 2008). According to the Polish Embassy, the number of Polish people residing in the United Kingdom is approximately 500,000-600,000, which implies that the Polish people make the third largest ethnic minority in the United Kingdom. The Push factors for Polish migration to the UK include: (a) Poland has an average unemployment rate of about 18.5 percent; (b) youth unemployment of approximately 40 percent; and (c) rural unemployment in other regions of at least 40 percent. Some of the pull factors for Polish migration to the UK include: (a) unemployment in the United Kingdom of about 5.1 percent; (b) shortages of skills and soaring demand for semi-skilled and skilled labour; (c) as of December 2007, UK had about 607,900 vacancies; (d) Poland’s GDP is only $ 12,700, which is relatively low when compared with UK’s GDP of $ 30,900 in terms of average earning; and (d) the fact that the United Kingdom is one of only three nations that did not limit the numbers of immigrants originating from A8 countries (Migration Advisory Committee 2010). The findings also point out that Polish immigrants in the UK are mostly semi-skilled and skilled tradesmen and industrial workers. In addition, most Polish immigrants intend to reside for only short periods of less than 12 months, have young families, and are mostly employed in factories in positions such as farm workers, cleaners and warehouse operatives (House of Lords 2008). The following figure points out the percentage of migrants in the total employment in the UK labour market. The findings from this study point out that the percentage of foreign-born people in total employment in the UK rose from about 7.3% during 1993 to about 13.5% during 2010 (The Migration Watch UK 2012). It is apparent that the number of immigrants in the UK labour market has increased drastically in the recent times although it fell slightly because of the recent global financial turmoil.
Figure 5: Percentage of those in employment who are migrants
The statistical findings point out a number of benefits to UK associated with Polish migration to the country. For instance:
- Eastern European immigrants contribute about £ 2.5 billion to the UK economy;
- Polish workers in the UK were responsible for about 0.5-1 % of UK growth;
- 80% of Polish immigrants are young and aged between 18 and 35 years, which helps the UK to cope up with an aging population and labour force;
- Research has affirmed that new Polish immigrants are usually skilled, flexible and enthusiastic;
- Polish immigrants help in offsetting the inflationary pressures imposed by an increase in the fuel prices, which helps in ensuring that interests rates are low and increases the fiscal policy options to address unemployment to the UK; and
- Polish immigrants have filled a skills gap
Regardless of the benefits of Polish immigrants to the UK labour force, there are a number of concerns associated with the same such as increased pressures on the provision of social services such as education; increased fraction of wages returned to Poland; and an increase in dependents associated with migrant workers who manage to register (The Migration Watch UK 2012). The following subsections detail the findings associated with the effects of Polish migration to the UK on the unemployment of both UK and Poland.
4.2.1 Effect of Polish Migration to UK on the UK unemployment
Secondary data documented by other studies and published materials report mixed findings regarding the relationship between Polish migration to the UK and the levels of unemployment in the UK. It is apparent that the accession of the A8 countries resulted in a considerable migration, about 1.6 million workers, from these nations to the United Kingdom, especially Poland (World Bank 2009). With a substantial migration, it is apparent there is a significant impact on the labour market. For instance, during the period 2006-2007 alone, about 223,000 Polish migrants were registered to work in the United Kingdom. Assessing the effect of Polish migration on employment of UK nationals has proved to be extremely challenging. In addition, the methodologies of these studies have been subjected to criticism. However, considerable success has been reported on assessing the effect of Polish migration to the UK on the wage levels, which has affected significantly the lowest 15% of earners. The effect of Polish migration to the UK can be looked at in terms of the relationships and patterns existing between youth employment and Polish migration. Over the transition period after the accession of A8 countries, at least 1.6 million workers from these countries migrated to the UK. During the period 2004-2011, the employment of immigrants increased by approximately 600,000. During the same period, the number of unemployed young individuals in the United Kingdom increased almost twofold from 575,000 to one million. The figure 5 below shows the casual relationship between the two variables.
Figure 6: Youth unemployment and immigration
The primary causation factor of the increased youth unemployment is the recent global recession. Nevertheless, an analysis of the characteristics of the Polish migrants point out that their arrival into the United Kingdom also contributed to the high youth unemployment in the UK, which is because of their age profile and employability. It is apparent that Polish migrants to the United Kingdom are (Budnik 2007):
- Considerably young when compared to the population of the United Kingdom as a whole;
- Comparatively highly educated, which is evident by the fact that mean school leaving age for workers born in the United Kingdom is 16 years whereas for the case of Polish migrants to the UK is 19 years;
- Polish migrants are highly motivated to work, wherein, in most case, searching for job opportunities is the main reason behind immigration. In addition, their participation level in economy is relatively higher than for UK nationals. For instance, the participation rate for men and women from A8 countries is 95% and 80% respectively whereas for UK, the participation rate is 83% and 75% respectively. In addition, A8 immigrants are well known for strong work ethics; and
- Polish immigrants are willing to work at relatively lower wages than UK born workers; for instance, about 89 percent of Polish migrants earned less than £ 400 weekly compared to 57% of workers born in the United Kingdom.
An inference from this observation is that increased Polish migration to the UK has adversely affected the wage levels in the UK labour market.
The second method to evaluate the effect of Polish migration to the UK labour market is to assess the relationship existing between Polish migration and UK unemployment. With this regard, different studies have reported mixed findings, and economists having different views as to whether Polish immigration to the country increased the country’s unemployment levels (Budnik 2007). For instance, the National Institute of Economic and Social Research reported that there is no correlation existing between increased immigration and unemployment in the UK, which contradicts the view that higher immigration increases unemployment among UK-born workers. In fact, The NIESR maintained that the opposite might the actual case wherein higher immigration serves as employment stimulus by increasing the total employment levels. The Institute of Policy Research also reported the same results by claiming that Polish migration to the UK does not have a damaging impact on the UK unemployment levels (Budnik 2007). Regardless of the fact that, unemployment in UK is about 2.5 million, it has reduced in the recent times suggesting that Polish migrant workers are playing a vital role in accelerating economic growth instead of increasing unemployment on UK born workers. Industry analysts also point out that Polish migration has resulted in a renewed demand for goods and services needed by the Polish people in the construction industry. Overall, pro-immigration groups point out that Polish immigrants contribute to the economy positively because it helps in offsetting the aging UK workforce, increases its flexibility and makes it economical by reducing the interest rates and easing the pension burden.
The House of Lords initiated a study to assess the effects of Polish migration to the UK titled “The economic impact of immigration”, which reported that record levels of Polish immigration has little or no effect on the economy of the UK (The Migration Watch UK 2012). However, the report warned that increased competition resulting from immigration had a negative effect on the low paid indigenous labour force. Similarly, the Migration Advisory Committee published a research reporting that for every additional 100 immigrants entering the UK, the number of UK residents being employed reduces by 23. This result challenges the academic consensus that acclaims that there is no correlation between immigration and unemployment rates in the UK.
Based on statistical figures that point out that unemployment in the UK increased by approximately 450,000 from 575,000 in 2004 Q1 to 1,016,000 in 2011Q3 (Migration Advisory Committee 2010). Surprisingly, the number of immigrant workers from A8 nations increased by the almost the same number, which is a clear indicator that higher Polish immigration to the UK increases UK’s unemployment. Although correlation cannot be used to prove causation, it is apparent that the employability and youth profiles of Polish migrants rob UK born workers of employment opportunities.
4.2.2 Effect of Polish Migration to the UK on Poland’s Unemployment
It is apparent that the accession of Poland to the European Union during 2004 and particularly the provision for Polish migrants to move freely to UK labour markets increased the outflow of workers from the country. In less than two years after accession, the decrease in the mobile age population in Poland became extremely severe to result in considerable labour deficits in particular occupations, industry sectors and regions. For example, some regions and large town lost about 10-15% of their total workforce aged 20-39 years (Budnik 2007). Furthermore, the outflow was exceedingly high in rural areas. Seasonal agriculture, trade and construction industries suffered severely, an effect, which was replicated in a number of specialized professions such as radiologists, anaesthesiologists and physicians. For instance, during 2007, at least 35% of construction companies cited the difficulties associated with hiring new workers. Polish migration to the UK is resulting in increasing labour deficits and mounting wage rates in Poland.
The correlation between mobility and labour market is one of the central tenets of the economic theory of migration. In relation to countries that import labour, several theoretical and empirical models have placed a lot of emphasis on the labour market performance of immigrants and their resulting effect on the host labour markets. Surprisingly, there are limited empirical studies that evaluated the effect on unemployment of the sending countries. The migration theory acclaims that, for the sending country, a massive outflow of the labour force should lead to a fall in unemployment in the short term, an increase in the number of job positions vacant, exert pressure on wages in the medium term, and cause an upward occupational mobility of foreign labour in the long term. Out of these, only two effects are of crucial significance: the effect on the wage levels and unemployment.
During the pre-accession period, Poland was faced with the challenges of high unemployment and job shortages. For instance, in 2002, the unemployment rate in Poland was approximately 20%. The gradual development of the labour market situation in Poland was noticeable during 2003, and gained a substantial momentum after 2004. Between 2004Q2 and 2007Q1, the total number of unemployed people had fallen from 3.1 to 1.5 million, with the unemployment rate at below 10% in 2007 (Migration Advisory Committee 2010). The following figure 6 shows the migration and labour market phenomena.
Figure 7: Migration and Labour market phenomena in Poland
Source: Budnik 2007
It is apparent that massive immigration results in not only reducing unemployment but also an increase in the vacant positions for jobs. A striking effect of Polish migration to the UK is the shortage of workers in the country, which was extremely severe in the construction industry, wherein at least 30% of construction companies cited difficulties in hiring workers. In fact, most companies in Poland claim that labour shortages is one of the primary barriers to growth (Budnik 2007).
It is evident from the figure 6 above that, in the recent years, substantial changes in unemployment were recorded. Basing on the back-of-the-envelope analysis, it can be concluded that a slow fall in unemployment was followed by an increase in employment levels and stabilization of individuals who were inactive in the labour market. A closer analysis of the relationship existing between the number of Polish migrants residing in the United Kingdom temporarily and the unemployment levels reveals that from late 1990s until 2004, unemployment was one of the main push factors, as evident by a high correlation. Nevertheless, after 2004, the increasing migration was followed by a decrease in unemployment (Budnik 2007).
With regard to the aggregate wage levels, it is evident that Polish outflow has no considerable wage pressure during the early post-accession times. During 2004-2006, wages in Poland increased moderately, at a rate of 2%. However, during 2007, the mean monthly salary increased by approximately 9%. Budnik (2008) assessed quantitatively the effect of migration on the wage levels of Poland, and reported that the impact of migration on aggregate wage levels was moderate, wherein a 5.5 percentage point increase in the rate of outflow migration in Poland was anticipate to adjust the wage rate by approximately 1.3% during the years 2002-2006, which were characterized by intense labour shortages and massive migration outflow.
CHAPTER 5: DISCUSSION AND CONCLUSION
5.1 Summary of the Main Findings
These results were helpful in assessing the relationship between Polish migration to the UK and the effects on unemployment in both UK and Poland. The results point out that Polish immigration to the UK has a considerable effect on unemployment of both countries, especially in terms of the unemployment and wage rates in both countries. For the case of UK, Polish immigration to the country results in higher unemployment rates and lower aggregate wage rates. For the case of Poland, outflow migration of Poles to the UK results in reduced unemployment levels and higher aggregate wage levels.
5.1.1 How Does Polish Migration to the UK Affect the Unemployment Rate in UK?
There are mixed results regarding this research question, with different secondary data sources revealing different impacts of Polish inflow migration on UK unemployment levels. For instance, the NIESR reported that Polish inflow migration has little or no impact on the unemployment levels in the United Kingdom whereas the Migration Advisory Committee reports the opposite case. However, a scrutiny reveals that the employability and the young age profile of Polish immigrants displace UK born workers in the labour market, which results in higher unemployment.
5.1.2 How Does Polish Migration to the UK Affect the Unemployment Rate in Poland?
It is apparent from the findings that Outflow immigration in Poland reduces unemployment rates in the country, which is then followed by an increase in the employment levels. An analysis of the pre-accession and post-accession unemployment levels reveals a drastic decline in the unemployment levels in the country.
5.2 Wider Implications for this Study
The findings presented in this study have considerable implications for policy makers for both UK and Poland, particularly with regard to control immigration. Overall, it is apparent that Polish migration to the UK is detrimental on the labour market of the country. As a result, policy makers are well advised to control immigration in order to curb the rising unemployment of UK born workers caused by a displacement by rising Polish immigrants in the country. For the case of Poland, policy makers should control outflow migration to help curb the problem of labour shortages in the wake of increased outflow migration of Poles to UK.
5.3 Suggested Directions for Further Research
This study has evaluated only the impact of Polish immigration on unemployment in terms of unemployment rates and wage rates for both UK and Poland. This leaves the need to evaluate other the effect of immigration on other factors affecting the labour market such as inflation, interest rates and demographic of immigration.
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