Facing Facts: the impact of migrants on London, its workforce and economy

PwC launched a new report with London First on the impact of migrants on London, its workforce and economy. While there has been much discussion about immigration over the last few months, there has been a lack of hard evidence about the contribution of migration. What we’ve done lifts the bonnet on the engine of London and the people who make it run.

Both in my capacity as a member of the Mayor of London's expert advisory panel on Brexit and as global head of PwC’s immigration practice, the timing of this report could not be better. As Jasmine Whitbread, the dynamic new chair of London First, puts it, immigration is one of the key issues for almost all businesses in London.

It is, therefore, key for both Government and business to have a detailed understanding of the facts. This will not only assist the Government in its deliberations about future immigration policy but also help business assess the impact of future immigration changes on their resource and skills requirements. This will inform how they should respond to the Industrial Strategy paper in terms of education and training. 

Our report is unique in terms of the data that has been studied. We collaborated with the Office for National Statisics to gain access to data that had not previously been analysed, as well as conducting a survey of more than 120 businesses with London First. We track the growth of London's workforce over a 10 year period from 2005-2015 and break the numbers down into UK. , EU and non EU-born workers.

The benefits of migration leap out of the economic analysis. On average, each migrant worker contributes a net additional £46,000 in Gross Value Added (GVA) per annum to London's economy. With approximately 1.8 million migrant workers that amounts to £83bn, almost one quarter of London's GVA per annum. 

The analysis shines a spotlight for business leaders on the impact of migration on key industry sectors such as financial services, construction, retail and hospitality and leisure, highlighting the specific issues they are likely to face in recruiting and retaining talent.

Demographic trends will pose new challenges. For example, there are some 300,000 construction workers in London, half of whom are migrants. Of the half who are UK-born, around one-fifth are expected to retire within the next five years. At the same time, the construction sector is growing strongly with numerous infrastructure projects and new housing projects underway. Vacancies are rising and apprenticeships are not being completed. This conundrum causes one construction industry executive to tell me there could be a skills shortage of 230,000 people in five years’ time – equivalent to the population of Luton. 

The Government appreciates there cannot be an immigration cliff edge, and that the full two year implementation period after Brexit will be required to allow a new system to be put into place, that relies on less migrant labour but ensures the continued success and growth of business and the UK economy. 

The rich information in this report can help shape Government thinking and policy to help ensure the UK-born workforce of the future benefits from the right education and training. It is also a call to arms for business to think now about its talent pipeline and the steps it must take to contribute to the immigration policy debate. The Government wants to hear the views of industry on the Industrial Strategy.

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