This is my third post in a series of pieces on Britain and the EU. In the last, I examined some economic consequences of Britain’s EU membership, and in this post, I want to look at another consequences – free movement of labour. Studies looking at the first wave of immigration from A8 countries after 2004 find a positive impact on the economy as a whole. These macroeconomic effects mask the ‘distributional’ impacts however.
There are winners and losers from free movement of labour. The thinktank Open Democracy published a report in 2012 which looked at this issue. Here are a few stats it draws out on immigration to the UK from A8 countries:
- A8 migrants are significantly younger and better educated than the native population. Between 2004 and 2009, almost 70% of A8 migrants were aged between 20 and 35, compared with just 19% of native residents of the UK. Around 35% of A8 migrants were educated beyond 21 years of age, compared to just 17% of the local population.
- A8 migrants are much likely to be working in low-skilled jobs than native workers. The ONS estimated in 2008 that 38% of A8 migrants were working in elementary occupations (even though they are on average better educated than UK workers).
- As a result, in 2007, 70% of A8 migrants earned less than £6 an hour (the minimum wage was £5.35 an hour in 2007), compared to around 15% of UK workers
There are some aspects of this that could be seen as positives. We have an ageing population, so an influx of young, skilled migrants could help ease some of the issues and ageing population brings. Those skills could improve the productivity of the UK economy, supporting vital services.
In other regards though, the effects of these factors on the low-skilled end of the labour market are likely to be significant (even if the overall impact on the economy is positive). While A8 migrants are relatively higher skilled, they are often not doing work commensurate with their skills. People argue they are doing jobs Brits won’t do, but we are supposed to believe in supply and demand. If Brits won’t do a particular job, the employer should either increase the wage offered or invest in capital equipment to reduce the requirement for labour. If it can’t or won’t do either of these things, the job probably shouldn’t exist.
An influx of young workers is also likely to place pressure on particular services in certain parts of the country. Schools, housing and health all face greater pressures due to immigration from the EU, although the magnitude of the impact is not equally spread throughout the country. This can be dealt with if the government has the ability and the will to increase provision of these things, but housing, schools, medical facilities and the relative professionals to staff these things take a long time to build and to train, while planning is difficult when you don’t know how many people will come and where they will settle.
Migration to the UK from Eastern Europe is related to the unemployment rate in the home nation. When unemployment is high, people emigrate. While a period of high unemployment on the continent may coincide with a labour shortage in the UK, equally, it may not, so the numbers coming and their timing is largely based on the performance of economies elsewhere.
Other countries use a points-based system to determine who they want to allow into the country, and they can loosen or tighten the points criteria as needs change. In the UK, we have a visa system for those wishing to come to the UK from outside the EU, but cannot impose restrictions on those coming from the EU itself. Even if you believe immigration is a positive thing (and I broadly do), the idea you would not be able to impose any restrictions of those seeking to come from certain parts of the world – regardless of your national interest – just doesn’t sit right with me. This is one area that would need significant reform before I could be convinced the continued UK membership of the EU is desirable.
This is the second in a series of posts on Britain’s membership of the EU. The first is here. As a companion to these posts, I’ll be referencing the book “Moored to the Continent” (MTTC) by Baimbridge, Burkitt and Wyman. This post will draw on chapter 4 of that book entitled “Consequences of EU Membership”. The authors write that:
“Successive governments claimed that the benefits of EU membership are ‘self-evident’, so that the UK must remain at the heart of Europe; otherwise it would lose crucial political influence and millions of jobs… Furthermore, the claim is repeatedly made that even a slight weakening in the trend towards greater unification would cost the UK jobs and influence, never mind what would occur if the UK voted to withdraw from EU membership. Yet, governments of all colours have been remarkably reticent to undertake an independent cost-benefit analysis of EU membership.
The reason for this apparent conundrum is that at least in purely economic terms, it is doubtful that the UK has received a net benefit from EU membership.”
So what are the consequences of Britain’s EU membership? MTTC outlines a number of consequences including:
Trade with the EU - It’s often said that the UK benefits massively from free trade with the EU, which might be lost were we to leave, but it’s a two way relationship. The UK has rather a large trade deficit with the rest of the EU, so all those countries desiring to sell their wares to the UK would probably suffer a lot more should a British withdrawal result in new trade barriers being thrown up. So the consequence of EU membership that we all benefit massively from preferential trade is somewhat overblown.
The Common Agricultural Policy (CAP) – In protecting EU agriculture by imposing an external tariff on food imports from outside the EU, consumers within the EU pay higher prices for foodstuffs. This exacerbates the ‘cost of living crisis’, but also encourages an inefficient transfer of resources into agriculture and away from manufacturing and services.
Single Internal Market (SIM) - The single internal market within the EU removes all trade barriers and allow free movement of capital, people, goods and services between members. Before it’s introduction it was claimed it would allow consumers to buy cheaper goods due to increased competition and the existence of greater economies of scale, creating 5 million jobs across the EU. The authors of MTTC argue however that although the removal of trade barriers between member states would have been attractive in the more protectionist 60s and 70s, by today, successive rounds of global trade talks have already drastically cut tariffs, and so the benefits of the SIM are now less clear cut.
MTTC makes a number of other arguments on the consequences of EU membership regarding the common fisheries policy, the historical costs of our membership of the ERM, and the consequences of the EU budget. Some of their arguments I find less convincing, but overall, I think they make the case rather well that the economic case for staying in the EU is anything but ‘self-evident’. At best there may be a neutral economic impact from being in the EU. At worst, EU membership is probably weakly negative. In economic terms, we are alright in and we’d be alright out. In my next post on this subject, I’ll look at some microeconomic and non-economic consequences of EU membership.
As we approach the EU elections on 22nd May, I’m planning to do a couple of posts over the next few weeks on the topic of the EU. As a good leftie, I should be wholeheartedly in favour of Britain’s membership of the EU right? Well not really. Being anti-EU or eurosceptic is seen as very much the preserve of the right in Britain. We like to think of those holding anti-EU views as being either UKIP ‘little Englanders’ or ‘rabid right’ Tories, but I want to set out some good reasons why those of us on the left should also have some pretty significant issues with the EU, at least as it is currently operating.
To kick off then, I’m not going to lay out my argument straight away, but just simply make an observation about the style of argument those on the pro-EU side often make. It’s a style that I find somewhat irritating. I’m going to use Nick Clegg as an example because he’s been in the news recently making the case for the EU (and in a pretty annoying way too). Below are Clegg’s opening speeches from his recent TV debates with Nigel Farage of UKIP. I often feel as though Nick Clegg is insulting my intelligence and these clips are no exception. He basically has two arguments:
1. Trade with EU means jobs.
2. By being part of the EU, Britain has more ‘clout’ in the world.
That’s pretty much it. In the debates he didn’t really expand much beyond this. It seems to me Clegg thinks the case for staying in the EU is so self-evident, he can’t actually bring himself to rise above the level of mouthing simplistic platitudes. This style is typical among those who are pro-EU. They sort of think you are a bit strange if you express doubts, but often can’t raise their game above the level of “of course we’re better off in the EU”. In subsequent posts I will take a look at some of the pro-EU camp’s arguments and see if they actually stack up. First though, here’s the promised vids. Each speech lasts for about a minute. The first one starts around 2m13s, and the second around 2m51s.
There was a backbench debate in the House of Commons today on the DWP’s use of benefit sanctions. The official line is that claimants are only ever sanctioned if they are not doing what is required of them to either find work or prepare for work. The strong suspicion however is that sanctions are being used primarily to get people off benefits. Labour MP Michael Meacher opened the debate with a speech in which he gave numerous examples of where claimants have been sanctioned through no fault of their own, and highlighted the impact this can have on people’s lives. Here is the text of the first part of his speech (from Hansard):
“I beg to move,
That this House notes that there have been many cases of sanctions being wrongfully applied to benefit recipients; and call on the Government to review the targeting, severity and impact of such sanctions…
…From the evidence that I have collected from my constituency surgery, Citizens Advice, YMCA, the excellent Work and Pensions Committee report on this issue and the Library, it is abundantly clear that the standards that the DWP likes to claim always apply in sanctioning cases far too often certainly do not. I wish to cite a number of cases drawn directly from those sources.
A security guard at a jobcentre turned away a man with learning disabilities who had arrived 20 minutes early to sign on. The man then returned two minutes late to sign on and had his JSA sanctioned for 4 weeks.
A man was sanctioned for four weeks because he had not known about an appointment as the letter had been sent to an address that he had left a year ago, even though Jobcentre Plus was aware of his current address.
A woman claiming employment and support allowance had been diagnosed with cervical cancer and had given the back-to-work scheme provider a list of her hospital appointments. She was sanctioned for failing to attend an appointment on the middle day of her three-day hospital stay. The woman had two daughters but her ESA was reduced to £28 a week. She asked for reconsideration, but had heard nothing five weeks later.
A woman was sanctioned for failing to attend provider-led training when the receptionist had rung to tell her not to come in because the trainer was ill. She was subsequently told that she should have attended to sign the attendance register.
A woman whose ESA was sanctioned had her benefit reduced from £195 to less than £50 per fortnight because she missed a back-to-work scheme appointment owing to illness. Her sister had rung two days beforehand to say that she could not attend and arranged another date, when she did attend.
An epileptic man had his JSA sanctioned for four weeks because he did not attend a back-to-work scheme meeting as his two-year old daughter was taken ill and he was her sole carer that day. He rang the provider in advance, but was told this would still have to be noted as “did not attend”. During the four-week sanction he suffered hunger, hardship, stress and an increase in epileptic attacks, but he was not told about hardship payments or food banks or how to appeal the sanction decision.
Lastly, a man in Yorkshire and Humber was sanctioned for allegedly failing to attend back-to-work scheme events. He had in fact attended, and the provider had no record of any failures. His hardship request was not processed, his housing benefit was stopped, and he fell into rent arrears and had no money for food, gas or electricity.
These are not isolated or exceptional cases.”
There seems to be the beginnings of a bit of cross-party opposition to the DWP’s behavior with regards to sanctions, and I believe an independent review into their use is under way. While I don’t expect it to result in huge change, if it ultimately means fewer sanctions, then some good will have been done.