Brexit and the Labour Market

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Following the UK’s departure from the European Union controls will be imposed on the movement of workers from the EU to the UK. In the Queen’s Speech the Government pledged to introduce an Immigration Bill to bring EU nationals within current UK immigration law whilst “still allowing the UK to attract the brightest and the best”. The estimated average of annual net migration from 2010 to 2016 was 250,000. In the year to December 2016, net migration from the EU was estimated to be 133,000. The available data on migration are extremely poor. They fail to provide an accurate number of migrants entering or leaving the country or the number of migrants in work. The data, based upon flawed sample surveys, are wholly inadequate for policy making and measuring the success or otherwise of the policies adopted. The margin of error for the latest net migration statistics was 41,000. The Government must prioritise plans to improve the long-standing flaws in the data if it is to take effective control of migration. The Minister for Immigration told us that the Government is committed to a long-term objective to reduce net migration to the tens of thousands. Using a strict annual numerical target to achieve this objective runs the risk of causing disruption to businesses and the economy. The long-term objective of reducing net migration to a sustainable level is likely to be best achieved by a flexible approach which can adapt to the needs of businesses and the labour market, in particular during any implementation period. Businesses will have to accept that immigration from the EU is going to reduce and adapt accordingly. Many firms that have, quite rationally, adjusted their business models to take advantage of plentiful low-cost labour will need to raise wages to attract domestic workers or increase capital investment in automative processes. Both may lead to higher prices for consumers. The Government can help by ensuring that the domestic workforce is trained to offer the skills that businesses need. Our warning in 2008 that the employment of migrant workers could lead to businesses neglecting skills and training for domestic workers has proved prescient.4 The Industrial Strategy needs to develop and fund an effective system of technical and vocational skills training to meet the needs of the economy and the public sector; and to incentivise research and investment in automation.
Keywords: 
Labour Market, Brexit, Single Market, European Added Value
Country of publication: 
United Kingdom
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Publication date: 
Tuesday, July 25, 2017
Number of pages: 
58
Title Original Language: 
Brexit and the Labour Market
Abstract Original Language: 
Following the UK’s departure from the European Union controls will be imposed on the movement of workers from the EU to the UK. In the Queen’s Speech the Government pledged to introduce an Immigration Bill to bring EU nationals within current UK immigration law whilst “still allowing the UK to attract the brightest and the best”. The estimated average of annual net migration from 2010 to 2016 was 250,000. In the year to December 2016, net migration from the EU was estimated to be 133,000. The available data on migration are extremely poor. They fail to provide an accurate number of migrants entering or leaving the country or the number of migrants in work. The data, based upon flawed sample surveys, are wholly inadequate for policy making and measuring the success or otherwise of the policies adopted. The margin of error for the latest net migration statistics was 41,000. The Government must prioritise plans to improve the long-standing flaws in the data if it is to take effective control of migration. The Minister for Immigration told us that the Government is committed to a long-term objective to reduce net migration to the tens of thousands. Using a strict annual numerical target to achieve this objective runs the risk of causing disruption to businesses and the economy. The long-term objective of reducing net migration to a sustainable level is likely to be best achieved by a flexible approach which can adapt to the needs of businesses and the labour market, in particular during any implementation period. Businesses will have to accept that immigration from the EU is going to reduce and adapt accordingly. Many firms that have, quite rationally, adjusted their business models to take advantage of plentiful low-cost labour will need to raise wages to attract domestic workers or increase capital investment in automative processes. Both may lead to higher prices for consumers. The Government can help by ensuring that the domestic workforce is trained to offer the skills that businesses need. Our warning in 2008 that the employment of migrant workers could lead to businesses neglecting skills and training for domestic workers has proved prescient.4 The Industrial Strategy needs to develop and fund an effective system of technical and vocational skills training to meet the needs of the economy and the public sector; and to incentivise research and investment in automation.
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