By David Milliken, Annika Breidthardt and Leigh Thomas

LONDON/BERLIN/PARIS, May 15 (Reuters) – An unemployed builder sits on the pavement, begging for small change next to a slogan saying “EU policy at work – British workers are hit hard by unlimited cheap labour”.

The arresting image comes from an election poster for the United Kingdom Independence Party, a once-fringe movement that wants to withdraw Britain from the EU and looks set to garner the most votes in next week’s European Parliament polls.

Worry about immigration is now higher in Britain than in any other EU country bar Malta. A quarter of Britons in a recent survey named it as one of their top two concerns, compared with 19 percent in Germany, the country with the third-highest level of unease, and fewer than 10 percent in Italy and France.

Immigration has become a hot topic in Europe as it recovers only slowly from years of economic crisis.

Anti-EU parties across the bloc are demanding borders be shut to new migrants or numbers rationed. EU rules mean people are free to move from the poorer east to the richer west and thousands of people from Africa and Asia continue to risk perilous routes across the Mediterranean into southern Europe.

Britain certainly has plenty of immigrants. The country’s population of foreigners has risen by more than a million since the last EU elections in 2009 – a bigger increase than anywhere in the EU apart from Italy where foreign residents make up 7 percent of the total population.

But most economic studies suggest that for Europe’s biggest economies, acting as a magnet for foreign workers is more of a blessing than a curse – at least until they stop working.

“Overall the impact of immigration has been broadly positive for the economy. There has been little or no negative impact for employment,” said Jonathan Portes, director of Britain’s National Institute of Economic and Social Research.

A study by the Paris-based Organisation for Economic Co-operation and Development last year showed that immigrants to Britain paid more in taxes than they took out in pensions and benefits by a margin equivalent to 0.5 percent of GDP.

This is better than the OECD average of 0.35 percent, while in France and Germany immigrants were a net drain of 0.5 percent and 1.1 percent respectively.

Those figures reflect high pension costs – in Germany’s case, partly because of the relatively elderly ethnic Germans from the former Soviet Union who were encouraged to migrate after the fall of the Berlin Wall, and in France because the age profile of immigrants is older than average.

Facing a declining and ageing population, German industry has actively sought immigration. By 2050, a third of the population will be above the age of 65, according to government data, and the population is seen shrinking by a quarter.

More than 7.6 million foreigners were registered as living in Germany at the end of last year, the highest number since records started in 1967. Some hot spots such as Cologne, Dortmund and Hanover have struggled with a large number of poor immigrants from Eastern Europe.

But new incoming workers tend not to compete with the indigenous population for jobs.

“Foreigners often are not put into communicative jobs. In the supermarket for instance, the foreigner works in the warehouse, while the German works at the till. Those are not exactly the same jobs,” said Herbert Bruecker, a professor at the Institute for Employment Research.

Portes saw a similar trend in Britain though he said some people in lower-skilled jobs have experienced downward pressure on wages as a result of outside competition.

“A lot of people who work in food processing are from eastern Europe,” he said. “Often they don’t get paid very much, and the conditions are not very nice.”

The situation is mirrored in Italy where most foreigners are employed in low-skilled jobs in industry, construction, seasonal labour or domestic care, a sector where 4 out of 5 workers come from abroad.

Nor do new incomers tend to overburden the welfare state.

“On average the foreigners still receive fewer transfer payments than the German population, simply because they are younger and the bulk of transfer payments in Germany is pensions,” said Bruecker.

Nonetheless, there is growing pressure to tighten up.

A German government panel recommended in March limiting job-seekers’ stay to three months if they fail to find work, expelling those who commit benefit fraud and blocking their return for a certain period. The panel also proposed tougher bureaucratic controls on those seeking benefits.

Britain has also introduced measures to limit access to benefits for EU migrants who earn less than 150 pounds ($250) a week, something EU officials have warned may breach European law.

FRENCH IMMIGRATION WANING

In sheer numbers France has one of the biggest foreign-born populations among developed countries at 7.36 million but it is no longer a top destination for immigrants as it once was.

Data from EU statistics agency Eurostat showed that in 2012, there was net foreign migration of 112,000 into France, compared with 239,000 in Britain and 366,000 in Germany.

“France hasn’t been a big destination for immigration for years and the illusion that it is comes from the tendency to confuse immigrants and the children of immigrants,” OECD head international migration Jean-Christophe Dumont said.

National Front leader Marine Le Pen, who polls indicate could come top in next week’s election, told Reuters EU rules stopped France taking steps to keep foreigners out.

“Europe is a sieve with totally open borders, but EU requirements mean we are forced to put in place policies that attract immigration,” she said, blaming generous welfare that cannot be restricted to French citizens.

Britain’s ruling Conservative party pledged to reduce annual net immigration to the tens of thousands when it took power in 2010 and has had to crack down on immigration from outside the EU.

Boris Johnson, the Conservative Mayor of London and one of the party’s more pro-immigration voices, said that created the unintended consequence of barring high-skilled people from countries like Australia and New Zealand so as to hit targets.

“There’s no reason, in my view, why we need to have completely untrammelled movement from the EU,” he said in a recent interview.

A NIESR study into the British government’s plan to halve net immigration said it would reduce GDP per head by 2.7 percent by 2060 and require a rate of income tax more than 2 percent higher than otherwise to fund a more elderly population.

However both Portes and the OECD said that immigration was not a permanent solution to Europe’s ageing workforces.

“Labour migrants’ … net contribution generally tends to be positive, at least in the short run. Nevertheless, in the long run … it is neither a major burden nor a major panacaea for the public purse,” the OECD said.

Much depends on whether migrants retire in the country in which they worked, or return to their country of origin.

Whatever the economic evidence, the anti-immigration message is resonating in France, the Netherlands, the Nordics, Austria and Britain.

Matthew Goodwin, a University of Nottingham professor, said UKIP leader Nigel Farage had scored by conflating the issue of immigration with opposition to the EU.

“They have doubled down on that ‘left behind’ electorate … by merging immigration with the issue of Europe, and combining that with a big side dish of anti-establishment populism and attacking Westminster elites, attacking elites in Brussels who they allege have colluded to undermine the voices of the left behind,” he said.

Farage’s pitch is that unlike the main parties he will talk straight to the British electorate. But as often in politics, all is not what it seems.

A few days after he unveiled UKIP’s poster, the apparently destitute British builder turned out to have been played by an actor – who was an Irish immigrant. ($1 = 0.5939 British Pounds) (Additional reporting by James Mackenzie in Rome and Mark John in Paris. Editing by Mike Peacock)

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