There is a widespread feeling that immigration is too high, and that the cost of accommodating asylum seekers is a problem. The media have been conflating refugees, migrant seasonal workers, foreign students and immigrants for years, so, with a tenuous grasp of statistics, many people – including those who, paradoxically, have the most to fear from reduced immigration – just see all immigration as bad.
It’s an issue that troubles much of Europe, and to some extent the majority of developed nations. But the fact is we have a shared dependence on migrants, and a shared root cause for that – demographics.
The economic reality of an ‘ageing population’
Politicians often reference ‘ageing population’ and ‘reduced birth rate’ but with little emphasis on, or probably grasp of, the scale of the problem. In 1960, a person retiring at 65 had a life expectancy of just under six years. In the first decade of the 21st century it is now over 16 years, a 170% increase.
The economic impact of this is huge. Not only are people receiving pensions for much longer, but they require more health care and often need social care and nursing. Additionally, as well as fewer people being born, young people are in education for longer, almost half until 21. The ratio of wage-earning UK citizens to those in receipt of pensions and care is shrinking to the point that retirement age has been raised to 67, but two decades from now it would need to be 71 to keep pace.
In 2024 there were an estimated 12.95 million UK people in receipt of state pension. Government figures show that in August to October 2024, the number of people aged 16+ in employment was 33.77 million, and the employment rate for people aged 16-64 was 74.9%. A total of 9.34 million people aged 16-64 were economically inactive, and the inactivity rate was 21.7%. The number of vacancies fell in the last quarter and over the year to 818,000, but remains above pre-pandemic levels.
Essentially, government receipts struggle to match necessary spending, and a sizeable proportion of those receipts come from migrant workers. There were more work visas issued in 2023 (337,000) than 18 to 24-year-olds in receipt of unemployment related benefits (300,500). Ignoring qualifications and aptitude simply cannot bridge the economic gap.
An ageing population means dependence on migrant workers
For the reasons above, the contribution of migrant workers to the UK economy is crucial. Around 20% of people employed in the UK were not born here. This represents an economic contribution of over £87bn. Migrants also make a very significant contribution to the treasury. The average migrant worker pays £78,000 more than they take out, according to ONS data. They are usually young and fit, and most leave long before retirement age.
We know that many sectors of the UK economy and public services are dependent on migrants – 11.8% of NHS staff are migrants, with particularly high numbers of doctors and nurses – and all of the economic evidence makes it very clear that the UK economy overall would collapse without them.
How has this come about?
The impact of generational wealth inequality
Our ageing population’s declining workforce is dependent on migration because UK births are too few. The UK birthrate has been in decline since 2012, with fertility rates standing at 1.44 children per woman, the lowest figure since records began in 1938. While there are many reasons why people are choosing to have fewer or indeed no children, one factor that stands out is generational wealth inequality and its impact on people under 40 in particular.
If you mention wealth inequality, many people will think about billionaires, offshore funds, tax contribution, but there is a much more widespread issue, literally much closer to home.
The post-war scenario of buying a house and raising a family is now a pipedream for many young people. In 2023 an ONS report records that the average house price was 8.3 times the average salary. (I recall eyebrows being raised when mortgages of twice annual salary became available.) House prices have risen steadily for decades, partly as a result of insufficient numbers being built, but also due to the availability of buy-to-let mortgages to people with capital.
The consequence is that rents have been driven up to the point where renters struggle to pay for accommodation, with no prospect of saving a deposit or buying, even if their mortgage would be no more than the cost of rent. It would seem reasonable to assume this has a bearing on the birth rate.
Challenges in policy reform and Labour’s ambitious solutions
A period of higher interest rates and tax changes made buy-to-let less attractive for some, but there has been little if any impact on house prices. The Conservative government pledged a large increase in housebuilding, but fear of voter reaction prompted it to drop the planning law reform needed to implement the policy. The demographic of Conservative voters is unfavourable to most measures that might address the housing crisis.
For young people to achieve the economic stability required to contemplate having children, halting the rise in house prices is essential. It’s encouraging to see that Labour have pledged planning reforms, both for housing and economically necessary infrastructure, which may start to address the issue. Of course, building 150,000 houses per year is a significant ambition, but to achieve this will require an army of tradespeople, almost certainly migrants.
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