Ending free movement for low-skilled European workers is economically dangerous – here's why

Ben Chu
The MAC did not directly analyse the likely economic costs of government interfering with the forces of supply and demand for low-skilled labour: Getty

Things are getting bleak when even non-partisan experts seem to be turning a blind eye to evidence.

Last week’s comprehensive report on European Union migration from the government’s independent Migration Advisory Committee (MAC) gave with one hand and took away with the other.

It did a splendid job of busting some entrenched myths about the economic impact of flows of EU migrants under freedom of movement.

No, EU migrants are not a drain on public services or the public finances. No, they do not discourage employers from offering training. No, they do not harm schools. They are not responsible for more crime. There is a small negative impact of low-skilled EU migration on low-skilled UK wages but this is more than offset by other factors, not least the evidence that migrants seem to boost national productivity growth.

Such an authoritative overview would have been most welcome during the 2016 EU referendum campaign, when politicians sprayed the public with bogus claims about the adverse economic impact of free movement, often without media challenge.

As Jonathan Portes of King’s College London wrote for The Independent: “It is hard to overstate the significance of these findings. Immigration, overall, has made the UK a more productive economy and a more prosperous country – and can do so in the future.

And yet the MAC’s chair, Professor Alan Manning, also recommended last week that a post-Brexit immigration system should cut off opportunities for low-skilled workers (including from the EU) to come to the UK, while throwing open the door to the high-skilled from everywhere in the world. “Low-skilled”, by the way, would effectively encompass those migrants who could only command a salary of below £30,000 a year, which is higher than the UK’s median.

This is strange because there is nothing in the evidence assembled by the MAC which seems to support this radical change of immigration policy from an economic perspective. While it finds that high-skilled migration is more economically beneficial, there is nothing presented which suggests low-skilled migration is, in any substantive way, harmful. The opposite in fact.

And the heavy reliance of some sectors on EU workers speaks for itself of the likely disruption of cutting off the supply. EU migrants account for 30 per cent of employees in food manufacturing, 16 per cent in warehousing, and 14 per cent of construction workers.

The Institute for Public Policy Research think tank has estimated that, under the regime advocated by the MAC, virtually all of the EU employees currently working in hotels and restaurants would have been ineligible to come here.

Nevertheless, the MAC’s policy advice seems to have strengthened the hands of the anti-EU free movement members of the government, including Theresa May. Reports suggest that cabinet ministers have concluded that this “high-skill yes, low-skill no” recommendation is roughly what they will target.

This isn’t final. Assuming there is no collapse in the Brexit talks before next March, talks will then begin, during the transition, on a free trade deal. The EU is very likely to ask for some continuation of work rights for all EU citizens in return for the kind of comprehensive agreement that the UK is shooting for.

And reports also suggest the cabinet accepts the need for some kind of “specific route” for low-skill worker migration from the EU to continue for heavily migrant-reliant sectors such as agriculture, social care and hospitality. The MAC report had only mooted a carve-out for agriculture.

Yet there’s something unsettling nonetheless about the general direction of travel set up by the MAC and the government.

Professor Manning seems oddly insouciant about the economic consequences of cutting off the supply of low-skilled labour to certain sectors, saying they are “not necessarily the parts of the UK economy that we want to be growing”.

This would hold more weight if the MAC had directly analysed the likely economic costs of government interfering with the forces of supply and demand for low-skilled labour. But it didn’t.

Jonathan Portes also points out that, despite the MAC report being impressively comprehensive in most dimensions, it did not commission work on how trade in goods and services and liberalised migration for work can be mutually supportive; an important subject in relation to EU free movement.

Yet one of the great virtues of science is that one need not draw the same conclusions from the data presented, or the evidence uncovered, as the particular scientist presenting it. One perfectly respectable conclusion from the empirical work marshalled by the MAC is that free EU movement is actually already working pretty well for the UK economy and that – Brexit or no Brexit – there is no case for scrapping it.