Question: Assess the impact on UK unemployment rates if there is a rise in immigration.
Migrants may be young people of working age who will help expand the economically active population and increase employment in the UK economy. If more people enter the UK economy and are planning on working then the pool of employable labour will rise. But, although migrants may increase employment rates in the UK, they may also take jobs away from domestic UK workers and cause unemployment to rise among UK citizens.
Additionally, migrants entering the UK could help increase the economy’s population and consumption, boosting AD. This means that UK firms must produce more goods, so they will hire more labour, more jobs are created and employment rises. However, if migrants come to work in the country when there is not enough demand for jobs then they simply become unemployed and will increase unemployment rates in the UK.
Moreover, migrants may be more flexible than domestic UK workers. For example they may be willing to work longer hours, harsher conditions and accept a lower pay. This improves the flexibility of the labour market, so employment rises. On the other hand, migrants’ family and friends may follow them to the economy but not possess the education/training/skills required to find jobs and consequently become unemployed.
Furthermore, migrants may fill important skill shortages in the domestic labour market, helping boost employment rates. Although, there is always the possibility of migrants coming to the UK to claim benefits and not work, simply adding to the UK’s unemployment rates.