About the research
PwC was commissioned by London First (a not-for-profit consortium of businesses, including a number of important financial institutions) to analyse the impact of migration on the London Labour Market. The aim of the research was to provide policymakers and service planners with a factual summary of how migration to London from Europe and beyond has affected London’s population, workforce and economy. The urgency for the research was determined by the imminent timing of arrangements for the UK’s exit from the European Union (EU) and the need for an evidence base to inform decision making and democratic debate on government priorities such as immigration and employment.
The analysis, which was carried out between November 2016 and January 2017, focused on trends in migration to London between 2005 and 2015. It highlighted that the population of London is growing and increased from 7.4m in 2005 to 8.7m in 2015. The study concludes that the growth of the capital’s EU population – at 7.7% a year over the last decade – has far outstripped the growth of London’s UK born population at 0.4%, and the non-EU population at 2.4%. The research reports that migration is delivering benefits in London and around the UK. On average, each migrant worker contributes a net additional £46,000 in Gross Value Added (GVA) per annum to London’s economy. With approximately 1.8m migrant workers in London, their total contribution is around £83bn – 22% of London’s GVA per annum.
The analysis reports that the economic contribution of workers born outside of the UK also helps to create additional jobs in the wider London economy. The additional GVA generated by 10 jobs from migrant workers will support an additional 4 jobs in the UK economy (for UK born and/or migrant workers). These findings will be of immense value to government policy makers and to employers to inform their plans for how they are going to manage their changing resourcing and skills requirements given the combined effects of the UK’s exit from the European Union and changes to the UK workforce.
Methodology
The research explored three main areas:
- a summary of the main trends in migration to London, based on demographics such as region/country of origin, economic activity and other similar factors;
- an assessment of the impact of migrant labour on the London workforce, including impact by industry sector; and
- a high-level evaluation of the overall economic impact of inbound migration to London, such as the Impact of migrants on wages, in different sectors and in range of roles requiring different skill levels, and on the London housing market.
The PwC researchers used the ONS Annual Population Survey (APS) – all years 2006 – 2016, the ONS Annual Business Survey (ABS) – all years from 2008, and the London Business Survey (LBS) 2014 that ONS carries out on behalf of the Greater London Authority. De-identified data from the LBS and ABS was linked and matched at aggregate level with comparable characteristics from the APS and the Labour Force Survey, in the ONS Virtual Microdata Laboratory (VML). This helped to identify industry sector, employment percentage and type, salary band, country of origin, nationality, time in the UK, region, London borough and skill of position and role. Where the data allowed such analysis, the researchers explored the relative contributions of EU and non-EU born workers.
Research findings
The key findings of the research showed that London’s population is growing – from 7.4m in 2005 to 8.7m in 2015. The growth is as a result of an increase in both UK born residents (rising by an annual average of 26,700 – a 0.4% average annual increase) and people born overseas (an annual average of 83,500 – a 3.6% average annual increase). The analysis highlighted that 37% of London’s population was born outside the UK, which is broadly comparable with other major cities in the West, and that London’s migrant population is not evenly spread across its boroughs.
Migrants move to London for a variety of reasons. About half of all EU migrants initially move to London for employment and approximately 15% come to study. Just over a quarter of EU migrants come to London as a dependent of either a UK or foreign citizen. Non-EU migrants have slightly different reasons for coming to London. Approximately 20% come for work, 20% to study and just under half come as a dependant of a UK or foreign citizen.
Between 2005 and 2015, the total number of people working in London has grown by an average annual increase of 85,400 workers (2.3% each year). This reflects an increase in workers in all groups – UK born, EU born and non-EU born. UK born workers make up 62% of London’s workforce and the total numbers have increased by 20,800 each year on average. EU workers have increased by 32,900; and non-EU workers by 31,700 per year.
The report concludes that migration is delivering benefits for London and around the UK. With approximately 1.8m migrant workers in London, their total contribution is around £83bn – 22% of London’s GVA per annum. The economic contribution of workers born outside of the UK also helps to create additional jobs in the wider London economy. The additional GVA generated by 10 jobs from migrant workers will support an additional 4 jobs in the UK economy (for UK born and/or migrant workers). The equivalent job creation figure for workers born in the UK is 3 jobs. The tax revenue associated with the net additional GVA created by migrant workers associated with the London economy is approximately £30bn per annum. This is approximately 4.5% of total Government tax receipts for the whole of the UK.
The study has also helped to understand what’s happening in different sectors and industries. The report provides detailed analysis of the Construction, Financial Services, NHS, Hospitality and Retail sectors. The UK-born construction workforce is aging, without migrant workers to make up the shortfall, London would be facing skills shortages in the construction industry as the supply of younger workers cannot meet demand at the rate needed. Approximately 25% of the Financial Services work force is born outside of the EU and 15% within. One-quarter of the 175,000 NHS employees in London are born outside the UK. Doctors from the EU make up approximately 13% of those in the NHS in London. Around 70% of London’s hospitality workforce is born outside the UK. At 100,000, non-EU workers are the biggest group within the sector. London’s sector in the Wholesale and Retail sector totals 250,000 – with 56% UK-born, 32% non-EU born and 12% EU-born.
Impact of the research and findings for policy
The public benefit for the research is considerable. The decision by the British people in June 2016 to leave the European Union will have significant socio-economic and political consequences. Important policy decisions will include the new migration regime that replaces the rights of EU citizens and their family members to move, work and reside freely within the United Kingdom. It is important to understand the role migrants play in the economy when setting a new policy framework and the research outcomes provide an evidence base for these decisions and contribute to democratic debate. The findings will assist businesses to make informed decisions about the impact of migration on skills and talent within their own organizations and supply chains, and to future proof their workforce.
Following publication of the findings, Julia Onslow Cole, Head of Global Immigration at PwC and also a member of Mayor’s Brexit Advisory Council, briefed the Mayor of London, Sadiq Khan, and London First met with senior Home Office officials. The Mayor has referenced the report findings in relation to Brexit and the Government’s Industrial Strategy. The research outcomes were reported on by various media outlets including the Financial Times, City AM and the Evening Standard. London First will be presenting the outcomes at a sector-based dinner led by Lord George Bridges, Parliamentary Under-Secretary of State for the Department for Exiting the European Union, in June. They have also been invited to present evidence to the Home Affairs Select Committee.
Read the Report
London First and PwC (2017) ‘Facing Facts: The impact of migrants on London, its workforce and its economy’.
Publications and outputs
PwC wrote a blog post setting out their experiences of using the ONS Approved Researcher scheme and the impact of their research:
Will Leighton (13 March 2017) ‘ONS open microdata to more researchers – so long as public benefits’, ONS Blog. Available at https://blog.ons.gov.uk/2017/03/13/ons-open-microdata-to-more-researchers/