Illegal workers

Britain is cracking down on immigrants working illegally. But there might be a case for treating them as contributors to the economy, unlike the immigrants who are not working and who have to be supported with food and hotel accommodation.

This is an economic argument, not a legal of moral one. And it is one that classical liberal economists have made about immigration enforcement more generally. The crackdown as currently designed treats ‘illegality of status’ as the operative category, when ‘contribution to output’ is arguably the more relevant one for economic policy purposes.

An illegal migrant working in a nail bar, car wash, or construction site is, whatever his immigration status, adding to GDP, filling a labour gap that, in sectors like these, often is not being filled by domestic workers at the wages employers are willing to pay and, crucially, not drawing on the asylum accommodation and support system that costs the taxpayer, by the Home Secretary's own reckoning, something like £158,000 a year for a family of three.

He is also usually paying VAT on everything he buys, and quite often income tax and National Insurance too, either through false documents or because his employer simply doesn't check. The migrant who is not working, by contrast, is a pure fiscal liability while his status is unresolved: housed, fed, and litigated over, with no offsetting output.

So a strict economic ledger, leaving aside legality, would rank them very differently. One is a net contributor by most measures; the other is a net cost. Recognising that distinction has real precedent: Spain's arraigo laboral, Italy's periodic sanatorie, and various US ‘earned legalisation’ proposals all effectively convert demonstrated work history into a route to regularized status, on the theory that someone who has been supporting themselves for years has already answered the question employers and the Treasury care about.

The anomaly might be redressed by work-history-linked regularization: rather than blanket amnesty, a route to legal status conditional on a verifiable employment record, tax records, NI contributions, employer references, over some minimum period. This rewards contribution specifically, not mere presence.

The transaction could be formalized rather than criminalized. Instead of raiding nail bars and imposing civil penalties that just push the same workers further underground, a scheme allowing employers to regularize existing workers' status by paying a fee, back taxes, or both, in exchange for amnesty from penalty, would turn informal into formal employment rather than destroying the job.

A sponsored bridging visa could be granted for sectors with demonstrated shortages, such as the government's own Temporary Shortage List review, and would let people already doing the work simply be granted permission to do it legally.

Separating enforcement priorities could direct resources at the organized crime layer, traffickers, exploitative gang-masters, and document fraud rings, rather than treating the migrant labourer as the primary target.

There are a few counter-arguments to be weighed. if working illegally becomes a plausible path to regularisation, it creates an incentive to enter and work illegally in the hope of eventually being ‘earned in’, precisely the dynamic Denmark-style deterrence policy is trying to close off, and the UK government is explicitly modelling itself on Denmark.

And there is queue jumping. People who applied through sponsored work routes, sat through English-language and salary-threshold requirements, or are waiting years for asylum decisions, may reasonably object to a system that rewards those who bypassed it.

Cheap, off-books labour in sectors like construction and food production can depress wages and conditions for legal workers in the same trades. The ‘undercutting honest businesses’ framing the raids use is not purely rhetorical.

The strongest version of the case is not to leave illegal workers alone, but to have the enforcement architecture sorted by economic behaviour rather than by status alone, and to target exploitation and organized crime. This would give demonstrated, tax-paying labour a formal route rather than driving it deeper underground where neither the Treasury nor the worker benefits.

Madsen Pirie