Potential problems of free movement of labour
Large net flows of people cause infrastructure problems. The UK has seen a rise in population of 0.5 million in past year – approx 75% of this increase is due to net migration (though this includes both EU and non-EU). (link). There is concern that a rapid rise in population places strain on public services – health, education and housing.
In theory, a rising working population should directly increase GDP, leading to more tax revenues which can be used to spend on improving public services. (Migrants are net fiscal contributors). However, in the UK, the net migration has occurred during a period of restrained public spending. Real GDP per capita growth has been low, and the government have been committed to cutting aspects of public spending. Therefore, the rise in population has put pressure on public services, with people feeling that public services, like the NHS have been under pressure because supply hasn’t met the growing demand from rising immigrant population.
However, see: NHS and immigration for evaluation of this point.
Large net flows exacerbated housing crisis. The UK has a housing crisis – demand is growing faster than the ability (or willingness) to build new houses, the result is house prices and rents have been rising faster than prices and wages, increasing living costs. The large net flows of migrants has not caused this housing crisis, but the additional flows of people has exacerbated the gap between supply and demand. In theory, more houses could be built to deal with rising demand and population growth. But, this is complicated by the fact UK has limited land it is willing to give up for building, e.g. protests against building new houses on greenbelt land.
See: Immigration and housing.
Congestion
Even if public services and housing increased to meet supply, you could argue a rising population leads to a decline in quality of life because it increases population density and congestion. For example, in UK, there is limited land to build new roads (without going through countryside). Therefore, a rapid rise in population due to free movement of labour, will contribute to more traffic congestion, which has both economic and social costs.
On the other hand, higher population densities can have some benefits.
Downward pressure on wages. The argument is that, if you allow large net flows of workers from low wage countries, these workers will be willing to bid down wages and the increase in supply of labour will lead to a fall in wages of native born workers. This is particularly the case for unskilled workers who are closer substitutes for immigrant labour.
However, this is complicated........READ MORE
