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Migration has a positive impact on GDP: MAC

Migration Advisory Committee (MAC) has issued its report on the limits for Tiers 1 and 2 of the Points Based System

19th November 2010: Skilled inward migration is contributing to British economy by raising GDP, and net fiscal contributions, Migration Advisory Committee (MAC) has indicated in its report on the limits for tiers 1 and 2 of the Points Based System.

worker-construction.pngThe report says: “All things being equal, migration clearly has a positive impact on Gross Domestic Product (GDP), through its effect on the size of the UK workforce. The impact of migration overall on GDP per head, which is the more relevant metric in many cases, is less clear-cut.

“This impact will be influenced by the impact of migrants on productivity, trade, investment and skill development of resident workers. It is likely that Tier 1 and 2 migrants, on average, have a positive impact on GDP per-head”.

The latest report says if government wants immigration levels to be achieved, the number of workers from outside Europe will need to be cut by between 13 and 25 per cent next year.

Responding to the report, Joint Council for the Welfare of Immigrants said it was unfortunate that the Government was pursuing political dogma to cap skilled migrants.

Following the publication of MAC report, Chief Exec of the Joint Council for the Welfare of Immigrants Habib Rahman elaborated it was unfortunate that the Government was pursuing political dogma to cap skilled migrants, despite independent MAC’s findings that skilled inward migration contributed to the British economy through raising GDP, net fiscal contributions and its wider ‘dynamic’ effects – such as foreign investment.
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Asserting that the Committee found on average there were no adverse effects on domestic workforce, the Joint Council also called on the Government to rethink its policy and not to further damage the economy.
 
Referring to Home Office figures, the Council said overseas students contribute between £5.3 and £8 billion to the UK’s economy annually. It said Professor Metcalf from the MAC has suggested a cut of 77,600 overseas students – half of those coming from outside Europe. But the move will cost the UK economy between £2.7 billion and £4 billion. The effects on universities would be most acute, at a time when they are facing the devastating cuts already announced.
 
The Council added: ‘MAC’s report consists of a lot more than just recommendations for the limits for 2011-2012. Instead it goes on to dish up proposals for reforming tiers 1 and 2 of the PBS with a view to meeting those limits. It also of course represents a welcome addition to the existing literature on the impacts of immigration on the UK.

`MAC’s recommendations are based on the Government’s objective of reducing overall net migration to an annual level of tens of thousands by the end of the Parliament. As such they have been tasked with finding a way to do this.

In June 2010, the Home Secretary commissioned the MAC to advise on the level at which ‘limits on Tier 1 and Tier 2 of the points-based system be set for their first year of operation in 2011/12 in order to contribute to achieving the government’s aim of reducing net migration to an annual level of tens of thousands by the end of this Parliament’. In doing so, the MAC was asked to take account of economic, public service and social impacts.

It is also being asserted by experts that plans to cap the number of immigrants will not go a long way to achieving new immigration targets. Instead, it is likely to damage economic growth.

In fact, in his foreward, MAC chair Professor David Metcalf stated: “It is not possible to reduce net migration to the tens of thousands by limiting work-related migration alone. This goal can only be achieved by also cutting net migration under the study and family routes.”

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