Do We Really Need Yet More Eu Workers?

This week our Chairman Lord Green of Deddington wrote an article for Conservative Home arguing that claims made by businesses that they need continued net inflows of migrants from the EU must be scrutinised by government. The full article is below.

Do we really need yet more EU workers?

By Lord Green of Deddington

As Brexit approaches, industries are becoming increasingly vocal in their claims that a continued flow of EU workers is vital to their future. However, the evidence suggests that in many cases these claims should be taken with a large pinch of salt.

For a start, EU workers in the UK have shown a clear tendency to stay on.. Indeed, the number of those who first arrived in each year from 2010 remained about the same in 2016. Of course that could conceivably change but existing EU workers should be confident that they are to be guaranteed the same rights as British citizens. So why would workers who are settled here, earning far more than at home and with full access to the health and education systems, suddenly up sticks in large numbers? Surely that is very unlikely.

There was a fuss in August when the number of arrivals from the EU8 fell to a few thousand, but even though emigration also increased there was still a net inflow, and the numbers from Romania and Bulgaria went up. Indeed, the net inflow just from Eastern Europe was, in fact, 50,000 in the year to March 2017 and 127,000 from the entire bloc. Hardly a Brexodus.

It is also important to be clear that even zero net migration from Europe would not mean tumbling numbers of workers, far from it. It would mean that the number coming in was equal to the number leaving, so the total EU workforce would be unchanged. To put it simply, “one in – one out”.

The independent Migration Advisory Committee (MAC) has been tasked by the government with examining the claims of industry. Just as well, because the significance of EU workers to specific sectors depends, not only on their number, but also on their proportion. For example, there are quite large numbers in education and retail but they only amount to about 5% of the total in each sector. Conversely, the proportion can be high but the actual numbers are often quite small. Where either is small it is hard to argue that any diminution in net inflows would hamstring the industry or sector.

Where the number is small there might, in practice, be no real difficulty in coping with natural turnover perhaps by improving conditions to attract new recruits. Again, where the proportion is small there is likely to be scope for efficiencies, offering more hours to part time workers etc. If there really are serious problems, the MAC should be able to identify where they arise.

The truth is that some employers have been doing very nicely out of workers who are prepared to work hard while putting up with low pay, poor conditions and little flexibility in their hours. Worse, some employers are being subsidised by the taxpayer to employ migrants from the EU. In the financial year 2014/2015 the working age benefit bill for EU migrants was £4.4 billion – that is £12 million per day. It could now be higher as free movement has been fully extended to Romanians and Bulgarians.

One solution for employers would be to invest so as to improve productivity which has been virtually flat in the UK for nearly ten years. However, they are hardly likely to take the risks involved in investing in technology when they have a virtually unlimited supply of cheap and flexible labour. Employers could also look to the 1.5 million British workers who are still unemployed, plus over a million part time workers who would like to have a full time job but cannot find one. And, of course, now that there is to be a roughly two year implementation period, businesses will have nearly three and a half years to make any necessary adjustments.

It follows that the government must cast a very beady eye over the vociferous claims that they will be faced with. Low paid EU workers may be good for profits but the rest of society has to cope with the consequences for housing, public services and the cost of in-work benefits. Brexit is an opportunity to put a stop to this.

6th October 2017 - Economics, Employment, European Union, Migration Trends

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