Do you buy coffee in the mornings? If so, you are probably served by staff from EU nations as a result of free movement benefits under the Treaty of Rome. After Brexit, new arrangements will need to be made for these workers, as many businesses, especially in the hospitality industry, have stressed that they are entirely reliant on them. The current plans account for highly skilled workers. But what of the majority of jobs that are currently filled by EU workers? How will the hospitality, retail, service, and construction industries be able to cope with the sudden termination of the supply of employees? Without a clear continuation policy, British consumers will find be faced with increasing prices and a lower quality of service.
Yesterday, the Migration Advisory Committee published a report, ‘EEA migration in the UK’, in which they make proposals for how to deal with migration from the European Economic Area after Brexit. The 140-page-long Report (which can be read here) makes a range of proposals. Firstly, though, it dispels some of the myths surrounding immigration, especially from the EU. It notes that EU migrants pay more in tax than they take from the state, by £5 billion. On healthcare (which was the basis of such a key promise of the Leave campaign), it notes that EU workers support and sustain the NHS.
“They increase the demand for health services but also the supply as migrant workers pay taxes to finance those services and can also be employed providing these services”
The Report finds that there is no credibility in the claim that migration suppresses wages. There is also no evidence that migration puts employers off investing in training. Far from taking jobs away from British nationals, the Report finds that, because migrants spend money and are often from different demographics to the settled population, they actually create different kinds of jobs that would not exist without them.
“An increase in population does not inevitably add to pressures on the labour market or public services because the extra population contributes to both supply and demand”
“Migrants do not simply replicate the existing resident population, they have a different age and skills distribution. It is likely that migrants add more to demand than supply in parts of the economy”
However, the Report leaves many questions unanswered. This stems from the truism that “the impacts of migration will depend on the type of the migrant, in particular their age and skills.” Thus, the Report goes on to say that Brexit will allow the UK more control over immigration and the type of immigrants that we wish to accept. The emphasis on selecting ‘the right sort of migrant’ was always the impetus behind implementing the Points Based System for skilled workers from outside the EEA (a policy that was first floated by Nigel Farage). The Report goes on to argue that there should be no route for low-skilled EU workers after Brexit.
This warning is incongruous. If migration does not reduce wages and contributes both to the public purse and to employment overall, why would we want to prevent EU migration of low-skilled workers? These are precisely the workers who keep our economy afloat and take the positions that UK nationals are sometimes less willing to do. Rather than ensure migration for certain industries that are more in need of a supply of workers, the proposals suggest maintaining the current £30,000 salary requirement, automatically filtering out the low-skilled workers. Employers face a £1,000 per annum surcharge to recruit EU migrants in jobs that pay £30,000 or more. Many industries would struggle with this. Chief among them are the construction industry, the hospitality industry, and the service industry. Instead, there could be special arrangements for industries that require migration. This would mirror the approach proposed in the Report for seasonal workers.
It is no surprise that many businesses expressed alarm at the conclusion. Richard Burnett of the Road Haulage Association has said, “We need an immigration policy across all skill levels. It is about what our businesses need. The idea that only high-skilled immigration should be allowed is both ignorant and elitist.” Meanwhile, the Federation of Master Builders and D&D London have warned that either their businesses or their industries could be crippled by a lack of low-skilled migration, and BMW now plans to close its Mini plant temporarily after Brexit, because of a predicted shortage of parts. The head of the Migration Advisory Council, Ian Mulheirn, himself said on 18th September 2018, that “if all EU migrants disappeared tomorrow it would cost taxpayers £8 billion”. So why the discrimination against low-skilled workers?
I can see one reason. Low-skilled jobs are more common and lower paid. They require no training. Therefore, it would be much cheaper for the government to fill these positions with UK workers who will not need training, while the Government can bring migrants to fill trained positions, saving money that should have been spent on training UK nationals. This policy is both cynical and flawed.
The policy is cynical because it is designed to save money at the expense of British citizens. Instead of getting trained and working high-paying jobs, British nationals would be forced into low-paying unskilled jobs.
The policy is flawed because of three reasons. Firstly, London may cease to be such a global hub when we leave the EU, and well-trained individuals may not wish to work in London even if they are allowed to. This is true of a number of sectors. To name but one, there are fears in the banking industry as banks may move their clearing from London to Frankfurt, a move that Deutsche Bank made in July 2018.
Secondly, it would be foolish to lose the opportunity to have a highly skilled British workforce who could support the city after Brexit and encourage foreign firms not to move their offices from the City.
Thirdly, British workers may not want to or be able to adapt to the newly available positions. This could lead to the reduction of business in a number of sectors and lead to price increases. Bad news, for example, for anyone who gets a coffee from Costa in the morning. Even if your preferred branch doesn’t close, you may be served with lower quality coffee for a higher price.
Among the concrete proposals submitted by the Migration Advisory Council is moving EU citizens into the existing Tier 2 route for non-EEA nationals, as well as scrapping the cap. Both of these proposals were predicted by Danielle Cohen and you can read more about this here. Scrapping the cap is, needless to say, a welcome suggestion and likely to be a vital part of protecting the NHS after Brexit. The NHS already struggles from the existing cap of 20,700 which was introduced by Theresa May, then Home Secretary, in 2011. The pressure on the NHS would be critically exacerbated with the introduction to EU workers into the route.
Key to the Tier 2 proposal is that EU nationals should not be valued above non-EU migrants under the Tier 2 scheme. This point is on the face of it uncontroversial, but raises many issues. For example, will settled EU workers in the UK be required to reapply under Tier 2. It seems that a system that is nominally ‘non-discriminating’, could in fact seriously prejudice EU workers that are already working in the UK. A transitional arrangement could be implemented, securing the right to work of EU workers that are settled in the UK, whether or not their salaries are in excess of £30,000.
It is to be hoped that the Government do not use this particular proposal of the Report in a more sinister way. They ought not to adopt the cynical and deflective technique of some of the hard right Brexiteers during the 2016 referendum, of talking up Brexit for the purpose of increasing migration from outside the EU. Such arguments have been proposed by Sajid Javid, Jacob Rees-Mogg, Daniel Hannan, and other influential Brexiters. To call these men ‘global-Britain advocates’ would be a perversion. They use majestic language about the Commonwealth and invoke colonial imagery in order to pursue an anti-migrant and often xenophobic agenda.
The Home Secretary, Sajid Javid has tweeted that he “will closely consider [the MAC Report] as we take back control”. We hope that he will heed the advice on scrapping the cap on Tier 2 migrants but also to ensure that there is still support for industries reliant on low-skilled workers, to invest in training for British nationals, and to ensure the rights of settled EU nationals. Further, the Report’s conclusions on the net benefits of migration suggest that the Government should scrap its net migration targets, which Jonathan Portes, a Professor of Economics at King’s College London, has branded “economically illiterate”. However, if Brexit is used as a vehicle to drastically reduce immigration, consumers will suffer the consequences.
Dominik Young, Danielle Cohen Solicitors, 19th September 2018