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.