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Points-Based Immigration System

Does the Minister recognise that, to economists, the very concept of a shortage in a free market is a difficult one to grasp? If the wages for a particular skill are allowed to reach the market clearing level, the supply will, by definition, equal the demand. If demand changes, employers have to start paying more, but they might be reluctant to do so. They might prefer to employ cheap labour from abroad. In that sense, a shortage could persist only if a Government did not allow wages to rise to the market clearing level. When we kept nurses' pay below the market clearing level, we had a shortage of nurses and had to import them from abroad. When we raised their pay—as I had long urged—we found that we had a surplus of domestic nurses.