After Brexit: Fewer immigrants or just different immigrants?

There was a new twist on the Brexit and immigration question last week. The Leave campaign came up with the Save British Curry slogan. Priti Patel blamed the EU for the tougher restrictions on non-EU workers. This, she claimed, was preventing restauranteurs from bringing workers over from the Indian subcontinent.  Of course, as an employment minister she well knows that the EU has nothing to do with these restrictions but the point she was trying to make (I think) was that tougher rules on immigration from outside the EU have been brought in because of the easier access for EU workers. A government under pressure to reduce immigration had to balance looser restrictions on EU migration with tighter restrictions for everyone else. If we were to leave the EU, so the logic goes, the tougher restrictions on workers from India would not be necessary.*

This sentiment was echoed during Channel 4’s EU referendum debate, which drew its audience from ethnic minorities. Most of the pro Brexit members of the audience gave immigration as their main reason for wanting to leave the EU. Not all of them wanted to reduce immigration, though. Many were opposed to free movement of people from the EU because they felt it had made it more difficult for those from elsewhere in the world to come to the UK. A number of people argued that the increase in immigration restrictions was an indirect result of EU membership because the increase in migration from Europe had led to pressure on the government to curb it elsewhere. But, rather than wanting to restrict immigration, some of the Brexiters wanted to level down the barriers and make it as easy for people from elsewhere to come to the UK as it is for those from the EU. Trevor Phillips remarked that it was the first time he had heard an open borders argument from the Brexit side.

 

This all sounds a bit confusing but there might be a grain of truth in it. It is certainly true that the number of immigrants from elsewhere in the world began to fall at around the same time that the eastern European countries joined the EU.

Long-Term International net migration by citizenship

UK, 1975 to 2015 (YE September 2015)

01d4c33d

This may well be due to the relative ease of employing people from the EU compared to those from elsewhere. As Migration Observatory noted, the number of non-EU people coming to the UK to work fell sharply from the middle of the last decade. It could be that EU migrants met some of the extra demand for labour which might otherwise have been met by people from Commonwealth countries.

chart-10

What difference leaving the EU would make to this is difficult to say. Some people think that, if we applied strict immigration criteria to all countries, the resulting labour shortage it would force businesses to invest more in training and technology, thereby employing more British people and raising productivity.

But, as Jonathan Portes says, even if this were achievable, which is by no means certain, it would take some time and, in the meantime, businesses would kick up a fuss:

[W]ould we really ban unskilled migration for economic reasons entirely? At least in theory, it is possible to make a plausible economic rationale for doing so; while this would cut growth in the short term, it might over time incentivise firms into productivity-enhancing investment or training.

But these effects are lengthy and uncertain (and not obvious in previous periods of low migration). Meanwhile, business would suffer and would be vocal in saying so. And the incentives for irregular migration would increase significantly.

Sussex University’s James Hampshire makes a similar point:

Governments have limited capacities to exclude, identify and remove immigrants, and when limited legal entry routes come up against labour market demand on the one hand, and supply of migrant workers on the other, the result is usually irregular migration. Would replacing EU free movers with European irregular migrants represent an improvement? Irregular migrants are more readily exploited, which makes it easier for unscrupulous employers to undercut local wages, and they do not contribute to income tax receipts.

Thus there is a huge gap between the simplistic claims of the Leave campaign, and the complex reality of governing the world’s fifth largest economy, further inconvenienced by the rule of law. In the event of Brexit, the government would come under tremendous pressure from employers and businesses to either admit those (now controllable) European nurses, lawyers, and students as immigrants, or else replace them with people from elsewhere.

Research by Migration Observatory for the Financial Times found that 75 percent of EU citizens working in the UK would not meet the visa requirements applied to non-EU workers.  Even if the EU workers already here were allowed to stay, the restrictions would soon lead to a labour shortage.

Employers who have been used to having a plentiful supply of well qualified labour on tap and who have been running down their training investment for some time, would be unlikely to change their policies overnight. There is also evidence to suggest that some firms’ entire business model is based on the availability of relatively cheap on-demand labour. Businesses would not want to see this supply of labour cut off and would soon put pressure on the government to ease immigration restrictions.

If the UK were to stay in the EEA after Brexit, the rules on free movement would be more or less the same. For many Leave voters, this would defeat the whole object of leaving the EU. Immigration is still the most important issue among people stating their intention to vote Leave. If the Brexit settlement didn’t include the free movement rules, the most likely immigration policy would be a standard set of work-related criteria for a wider group of countries. To avoid a sudden labour shortage, these criteria would have to be much less stringent than they are now. This would probably shift the balance of migration back towards non-EU citizens. There would still be lots of migrants from Europe simply because it is closer but the mix of immigration would probably tilt back towards those from the Indian subcontinent who make up the majority of non-EU migrants and who made up the majority of all migrants before the A8 accession in 2004.

chart-10 copy

With the exception of Japan, immigration is a significant factor in the labour markets of all developed economies, whether inside or ousted the EU. As this OECD chart shows, relative to the size of our population, immigration to the UK in 2013 was considerably lower than in some other advanced economies.

Screen Shot 2016-05-19 at 18.50.20

Chart via OECD International Migration Outlook.

It is therefore reasonable to assume that an economy such as Britain’s will require a certain level of immigration regardless of how well we train our people of how much we invest to improve productivity.

In the event of Britain leaving the EU, the Brexiters at the Channel 4 debate might therefore get what they want. Tighter restrictions on EU migration probably would lead to looser restrictions on migration from elsewhere. In this scenario, it is likely that the overall number of immigrants wouldn’t change by much, it’s just that the mix would be different. Fewer people from Poland and more from Pakistan. Somehow, though, I don’t think that’s what most of the immigration focused Brexit voters have in mind.

*Update 1: This might not solve the curry crisis. As this FT article says, the problems faced by Britain’s Indian restaurants are more complex and long-term than just a shortage of staff.

Update 2: A NIESR paper published earlier this month concluded that a sudden tightening of immigration restrictions could have a significant negative impact on per capita GDP and on public finances. People might be willing to pay higher taxes in return for lower immigration but I wouldn’t want to bet on it.

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7 Responses to After Brexit: Fewer immigrants or just different immigrants?

  1. This is another false argument – what is to prevent curry chefs being trained here?

    Another deception – like we cannot get enough Brits to train as nurses with thousands being turned down for training.

    The message – if we leave – is less immigrants, as we clearly cannot cope with the numbers.

    All our problems are made made worse by mass immigration – there has to be restriction.

    The EU is an anti-democratic scam – allowing poorer incompatible countries to join – we were never going to flood Poland – though many of our jobs have gone their – including the firm my wife worked for.

    Cameron even wants Turkey to join – we can all guess what will happen then.

    Cameron lies – he wants mass immigration and did not get down to “tens of thousands” those numbers he had control of outside EU.

    Like Labour (New and Old), they want mass immigration to continue.

    People only have to look at what is happening – skilled & semi-skilled Brit wages held down – less housing & jobs available to Brits – Pension Pyramid Scam- worsening food/ water/ energy security – more crimes – greater congestion – more NHS overstretch…..

    • gunnerbear says:

      Well said. Time to shut the gates and if any business is caught using illegal labour jail the owner for 10 years and take every single piece of property the owner and his or her family have.

  2. gunnerbear says:

    No more immigration – full stop. Is the author seriously suggesting that with millions unemployed in the UK that business would not be able to find a worker…..of course business would then have to pay the worker a decent wage as the business wouldn’t be able to go to an agency stuffed full of people who will 15 to a house…

  3. Keith says:

    This is very amusing. Are the racists happy to have more brown types in exchange for fewer Poles?

    This EU referendum is a very amusing waste of time and money to keep the far right tory party and even more far right swivel eyed types, such as the above posters, busy. What would all you silly people do if the elite did not play a few games now and then? It is rather like its a knock out plus those pointless celebrations for the Queen as she has not dropped dead yet. Once the remain side wins and The Queen dies we can have a good old royal burial and a Coronation of Charles, and all will be forgotten. Nothing like a Coronation to divert attention. The Royals are all German; but better not tell the Brexit types. Immigration strikes again!!

    • “far right swivel eyed types, such as the above posters”

      Keithy boy – big fail – 0 out of 10.

      The values are clearly that of the left-wing to protect the working class.

      Take it into school and your teacher will explain it to you more fully.

      BTW: It is about the numbers and not their colour. Nor are they to blame for wanting a better life for their family – it is the fault of corrupt governments that want open door immigration (including Camerons).

    • gunnerbear says:

      Eh? Swivel eyed? Why on earth should any business in the UK need to import a chef from India given the millions we have on the Unemployment register? Are you seriously suggesting that a UK business deprived of the ‘immigration tap’ wouldn’t soon be looking to train up a British worker to do the job of being a chef?

      Hell, without mass immigration, there might even be an upward pressure on wages.

  4. JohnM says:

    Wage rises equal price rises equal wage rises equal………
    Elephant in the corner time: Age demographic V low birthrate.
    Millions unemployed to fill the gaps. That’ll work?
    English employers are experts at employing people already trained/educated, without spending any more than is mandated upon training (and in many cases using untrained labour to the detriment of quality, productivity and safety)
    The millions unemployed are not unemployed without reason.
    No imported labour (and most is educated to a higher level) and it will be downhill.
    This is from the frontline by the way…..where 3 employees are from Germany, two from Poland, and one from UK. Hard work finding educated already-trained people in this country. Poor employee investment biting industries arse (not for the first time)

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