Restricting post-Brexit immigration from Europe into the UK would "very likely" lead to lower growth in both output and employment, the expert body advising the government on future migration policy said in an interim report on Tuesday.
The Migration Advisory Committee (MAC), which is due to publish its recommendations on a future migration policy in September, said that, because of the vote to leave the European Union, many businesses were already experiencing problems in retaining and/or recruiting staff from the European Economic Area (EEA).
UK businesses not prepared for post-Brexit employment skills shortages
MAC's interim report summarised the evidence it has received from more than 400 business organisations, individuals and companies and concluded that many firms were simply not prepared for the shortage of workers and skills they could face once freedom of movement from the EEA ends when the Brexit process is complete in December 2020.
Post-Brexit EU-UK restriction of migration could lead to lower employment and output growth
While the MAC did not make any proposals for future policy, the report said: "The MAC view is that it is important to be clear about what the consequences of restricting migration would be. Lower migration would very likely lead to lower growth in total employment, and lower output growth."It would not necessarily mean lower growth in output per head, which is more closely connected to living standards. There is little evidence that, over long periods of time, countries that have had higher rates of labour force growth have had higher rates of growth of output per head."However, there is no doubt that some types of migration can raise productivity and output growth may be desirable if the extra output improves the government finances: our final report will discuss the fiscal impacts of EEA migration."
An uncertain landscape: businesses not well-prepared for post-Brexit labour market
The report said that many businesses did not seem well-prepared for a changing and tighter labour market in which they might be competing for labour more intensively than in the past. "Still fewer seemed to be making provisions for change," said the MAC."A large part of this is understandable – it is very hard to plan when there is considerable uncertainty about the future (including, but not confined to, the future migration system).
This sense of pervasive uncertainty came across strongly in many submissions and during our stakeholder engagement."
EEA migrants and UK population growth projections
The report said that one issue raised was the contribution of EEA migrants to population growth and how this varied across the UK. It said that projections from the Office for National Statistics suggested that if EU net migration were to be reduced to zero, the population in Scotland, Wales and Northern Ireland would stop growing and even fall in the next 20 years.Although England's population would continue to grow over this period, some Northern regions of England would not. "Demography does not respect administrative and political borders," observed the MAC.
UK employers do not deliberately seek EU workers
Alan Manning, professor of labour economics at the London School of Economics, who chairs the group, said that the evidence submitted to the MAC showed that the vast majority of employers do not deliberately seek to fill vacancies with migrant workers."They employ EEA migrants when they are the best or, sometimes, the only available candidates. The expansion of the EU in 2004 marked a qualitative and quantitative change in EEA migration. Workers from the older member states have been, and remain, more likely to work in high-skilled jobs than the UK-born but this is not the case for those from the new member states," he said."Employers in all sectors are concerned about the prospects of future restrictions on EEA migration. The high-skilled are concerned about having EEA workers subject to the current non-EEA system, which they do not hold in high regard. The lower-skilled are concerned that the impact of restrictions is likely to be greatest on them."A thriving business sector is vital, but it is part of the means to the end of providing a high quality of life for UK residents, an objective that the MAC has always used in evaluating migration policy."How the lives of UK residents are affected by EEA migration requires a full assessment of the impacts of that migration, not just the perspectives of employers.
What will be covered in the final MAC immigration report?
"Our final report will consider a wide range of impacts: on wages, unemployment, prices, productivity, training, the provision of public services, public finances, community cohesion and well-being. Nothing in this update should be used to pre-judge our conclusions on these questions."Prof Manning accepted that some employers believed a greater sense of urgency was required in formulating a new migration system, but he said it was important the MAC came to "the right, rather than rushed" conclusion for a system to come into effect in 2021.He added: "Some sectors are currently experiencing difficulties in recruiting and retaining EEA migrants, problems that are emerging without any change to the migration system and reflect the realisation of risks for business models that have become heavily reliant on EEA workers."Migrants have a choice and it cannot be taken for granted they will choose to come to the UK: migration flows can change very rapidly, as the fall in EEA net migration since the referendum shows."
MAC interim report: conclusions
In its conclusions on the business world's evidence, the report said the simple answer to why companies employ EEA migrants is because "they are the best available candidates". Consequently, employers were "unenthusiastic" about the prospect of future restrictions.But the report added: "What is best for an individual employer is not necessarily best for the welfare of the resident population, which is the criterion the MAC uses when evaluating migration policy. To assess that requires a detailed study of the impacts of EEA migration of different skill levels: our final report will consider these."
SOURCE: Relocate Magazine
