The Impact of Migrants on the United Kingdom's Economy

This essay analyzes the way in which migrants could possibly affect the economy of the United Kingdom, covering factors such as circular flow of income, labor market, GDP, and unemployment.

Introduction to
economics

Table of Contents
Table of Contents.............................................................................................................................2
INTRODUCTION...........................................................................................................................1
MAIN BODY..................................................................................................................................1
The way in which migrants could possibly affect the United Kingdom’s Economy..................1
CONCLUSION................................................................................................................................5
REFERNECES................................................................................................................................6

INTRODUCTION
Economics can be defined as the branch of knowledge which is mainly concerned with
the consumption, production and exploitation of monetary resources. There are various types of
factors that are leaving impacts upon it in negative as well as positive manner. These are
demand, supply, taxation, employment etc. In order to maintain the economic growth, it is very
important for all the countries to make sure that they formulate strategies reduce their impact
(Asad, Hashmi and Yousaf, 2016). For this purpose, the economists of all the nations analyse the
position of the economy and then try to formulate new policies and strategies. Present essay is
based upon the analysis of the way in which migrants could possibly affect the economy of
United Kingdom. For this purpose, different elements are covered in this essay. These are
circular flow of income, labour market, GDP, unemployment etc.
MAIN BODY
The way in which migrants could possibly affect the United Kingdom’s Economy
According to various economists of United Kingdom immigration has left impacts upon
the growth of economy in positive as well as negative manner. Some of them think that if labour
from other countries will come in UK and work for the companies which are operating business
here then it will be beneficial for the economy. It will leave positive impacts upon the supply of
labour and most of the public organisation in the nation are dependent upon the employees from
other countries. According to them migrants of working age are more likely be in employment ac
compared their counter parts and it results in favourable contribution in the public finance of
United Kingdom. These economists think that if workers from other countries will work for the
companies of UK then it will be beneficial for whole nation as they will help the entities to meet
their long-term goals and try to enhance contribution in GDP. On the other hand, some of the
economists think that it is not beneficial for the economy (Feng, Hu and Moffitt, 2017). They
think that when workers from other countries will be working for UK’s companies then they will
send a big part of their income to their home country which will result in reduction in growth of
UK.
Bothe groups of economists have their own ways of thinking and they have different
factors for their point of view. Migrants in UK are working for most of the public companies and
facilitating them to perform the operations in systematic manner which results in higher GDP.
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On the other hand, all the compensation which is received by them from the employer is not used
by them. Some of the part of it is sent by them to their families in tehri home country. Some of
the economists thinks that it can be regarded as a loss of the UK economy as the income
generated within the nation will be sent to another country. Both the arguments are valid but in
critique of them it could be said that money will be sent by the workers to their home but the
contribution of then in the profit of the company will be very high. On the other hand, the
employers hire workforce of other countries as they work for lower compensation as compared
to the local workers (Hamza and Sihaloho, 2019). With the help of this fact, it could be
determined that their contribution in the development of economy is very high as compared to
the funds that are earned by them in the nation. When such staff members are recruited by the
UK’s local companies then it results in reduced recruitment cost which helps the enterprises to
save their monetary resources to perform their operational activities in systematic manner. Apart
from this, all the staff members work productively which also lead the organisations towards
growth and increase their contribution in the GDP of UK. By analysing the views of both groups
of economists it has been determined that if the facts provided them will be analysed with reality
then it will show that the number of positive impacts is very high rather than the negative
impacts. For example, if companies in United Kingdom will hire the local staff members then the
entity will be required to pay the higher compensation to them as compare to workers from other
nations. It will result in higher cost for the company that may also reduce the profits for the
accounting year.
There are various elements which are required to be analysed while determining the
impact of migrants on the United Kingdom’s economy. These are unemployment, flow of
income, GDP and labour market (Jensen, 2018).
When an individual is not able to get a job then it is known as unemployment. The total
of employed and unemployed individuals is known as labour force. Unemployment rate around
the world in increasing continuously and in order to seek for employment most of the people are
moving to other countries. It helps them to get a job so that they can live their live. In order to
earn they have to suffer very much. Since past few year the employment generation rate of UK is
increasing continuously which shows that the country is providing employment to most of the
individuals. Apart from this, it is facilitating to reduce the global unemployment rate as various
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people move to UK to get a job and results in decrement in unemployment (Khan and Mingyi,
2018).
(Illustration1: Unemployment rate, 2020)
(Source: Unemployment rate, 2020)
The above chart reflects that in Japan and USA the rate of unemployed persons is
increasing which is affecting the growth of economies (Unemployment rate, 2020). It is the
global issue which is required to be dealt to reduce poverty around the world. As the number of
jobs in UK is very high so the entities within the country are recruiting workers from other
countries for their own benefit but it also contributes toward reduction of unemployment. When
the organisations will hire individuals, who are from different nations and not able to get job in
their own country then they will work for lower compensation. This element is highly focused by
UK’s corporations and they hire workers outside of the country. It is beneficial for global
economy but harmful for UK because if the companies within the nation will recruit the workers
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from outside then the citizens of the region will also have to work for the lower compensation. If
they will ask for higher salaries then they will be replaced by the individuals who are ready to
work for lower wages. It may leave negative impact upon the economy but the positive
implications of it are also very high. When the cost for the companies will be reduced then their
profits will be increased which will result in high contribution of them in the GDP and national
income.
Another factor which is also required to be focused to analyse the impact of migrants
upon the economy of UK is circular flow of income. When income of a country flows in
different countries then it is known as circular flow of income. If migrants from various nations
will be working in United Kingdom then they will send a part of their income to tehri families in
their home country (Simionescu, Bilan and Mentel, 2017). It will result in flow of income which
may leave negative impact upon the economy of United Kingdom as the income earned in it will
be sent to another nation. Some of the economists of UK are concerned with this fact and they
think that due to this the level of growth of UK may get decreased. According to them, the
corporations of UK should hire the local individuals so that circular flow of income of the
country could be stopped. If the income of the country will be circulated in different countries
then it will enhance their GDP and leave unfavourable impacts upon the economic growth of
UK. They think that the government of the country should take effective steps against it and
impose policies for the public companies to reduce the number of workers who are from other
nations. If this step will be taken by legal authorities then the profits of entities will get impacted
and the growth of UK’s economy will also get affected due to this. If no action will be taken then
it can help to retain the economic growth therefore the legal authorities should not take any step
to reduce the circular flow of income.
GDP (Gross Domestic Product) is also a factor which is also required to be focused while
analysing the impact of migrants on the economy of United Kingdom. If all the organisations
which are operating business in different sectors of UK are able to generate higher profits then
they can contribute a higher percentage in the GDP of the country. If they are not generating
good profits and their costs are very high then it may leave negative impact upon the GDP and
economic growth. If migrants are working in UK for different companies then the entities
generate higher profits which helps them to sustain in the market. The main element which is
focused by all the organisations in which migrants are working is the lower compensation which
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is offered to them against their work (Stoian, Lădaru and Marin, 2017). By hiring individuals
from different countries, the entities in UK reduce their cost of recruitment and spend the
monetary resources to perform the operations in systematic manner so that they can generate
higher revenues and contribute in the GDP of the nation. If the migrants will work within the
companies then the productivity of business will be very high which will result in higher profits.
By analysing this fact, it has been determined that migrants will leave more positive impacts
upon economy of UK as compared to the negative implication. The second group of economists
which is concerned with the flow of income which is earned in UK and sent to another country
should analyse the positive impacts of migrant workers.
One more factor which can also be analysed to determine the impact of migrants upon the
economic growth of Unite Kingdom. The labour market around the world is growing massively
because of increasing rate of unemployment. Most of the individuals are moving to different
countries so that they can get a job and survive in the world. In most of the countries end number
of people are working who are not from that nation and it has resulted because of growth of
labour market. After globalisation the rate of growth of this market is increased massively
because the barriers to work or export in different countries are reduced. It is facilitating
developed as well as developing countries to strengthen the economic growth. The main benefit
which is acquired by labour market is facilitating individuals to work in other country so that
they can deal with the issue of unemployment (Vakulenko, 2016). Higher growth rate of labour
market has facilitated United Kingdom to enhance the growth rate of economy as it has
facilitated it to reduce the costs of employment and recruitment. This element also shows that
migrants have left positive impact upon the economy of UK rather than affecting it negatively.
CONCLUSION
From the above project report, it has been concluded that economics is the study of
exploitation, production and transfer of wealth. There are various types of elements that are
affecting the economy and all of them are required to be focused by all the countries. These are
migrant workers, import, export, taxation etc. In order to determine negative as well as positive
impacts of all of them different factors could be focused. These are unemployment, circular flow
of income, labour market, Gross Domestic product etc.
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REFERNECES
Books and Journals:
Asad, M., Hashmi, S. H. and Yousaf, S., 2016. Nexus between workers’ remittances,
unemployment, labor migration and economic growth in Pakistan. International Journal
of Organizational Leadership. 5. pp.360-379.
Feng, S., Hu, Y. and Moffitt, R., 2017. Long run trends in unemployment and labor force
participation in urban China. Journal of Comparative Economics. 45(2). pp.304-324.
Hamza, H. A. B. and Sihaloho, E. D., 2019. Impacts of immigrants to gdp in malaysia:
manufacturing, construction, services and agriculture. KINERJA. 16(2). pp.125-130.
Jensen, A., 2018. Do “Immigrants Increase the Unemployment of US Citizens?” An Empirical
Examination of Trump’s Campaign Rhetoric.
Khan, Y. and Mingyi, W., 2018. How the GCC Economic Crises Effect Labor Migration:
Evidence from Pakistan. Asian Journal of Economics and Empirical Research. 5(2).
pp.139-146.
Simionescu, M., Bilan, Y. and Mentel, G., 2017. Economic Effects of Migration from Poland to
the UK. Amfiteatru Economic. 19(46). p.757.
Stoian, M., Lădaru, G. R. and Marin, F., 2017. Unemployment and the Migration of the
Romanian Labour Force. Causes and Effects. Amfiteatru Economic. 19(46). p.901.
Vakulenko, E., 2016. Does migration lead to regional convergence in Russia?. International
Journal of Economic Policy in Emerging Economies. 9(1). pp.1-25.
Online
Unemployment rate. 2020. [Online]. Available through:
<https://www.researchgate.net/figure/Unemployment-Rate-Comparison-to-Reference-
Countries-This-is-an-important-indicator-for_fig3_281268865>
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