Free movement creates jobs and allows managed migration
It’s not just the single market that’s good for jobs, free movement of people is too.
For Brexit, the issue of free movement (and therefore immigration) goes hand in hand with the single market. This is because the EU maintains that single market membership and the EU’s four freedoms (free movement of goods, services, people and capital) are indivisible. And the single market is integral to UK trade – particularly for the services sector, which accounts for 80% of the economy. Research by Cebr found that leaving the single market could cost the UK between £25bn and £36bn a year – and that’s just from lost trade in the services sector.
So Britain has a choice about whether to prioritise one over the other. And Theresa May’s government has chosen to prioritise immigration control by ending free movement of people. But as Martin Sandbu points out in the Financial Times, there are still ‘flawed perceptions’ of free movement. As well as free movement already allowing for managed migration (more on this further down), Sandbu writes ‘with fewer EU workers there would also be fewer jobs’. He also reminds us of piece by Simon Nixon in the Wall Street Journal that free movement of people also means free movement of jobs to the UK. Many jobs in Britain aren’t strictly ‘British jobs’ – they’re actually European jobs.
European jobs and European investment – based in Britain
In the automotive industry, carmakers make decisions about where each new model and component will be built. With the UK out of the single market, other countries still in it will have an advantage. Nissan chief executive Charles Ghosn previously pointed out that the investment the carmaker made in Britain was European and not British. And Ghosn added ‘if walls are erected between the EU and Britain, investments will be reduced’.
What we have made is European investment, not British, based in Britain … If walls are erected between the EU and Britain, investments will be reduced.
Charles Ghosn, chief executive of Nissan
We have already started to experience a Brexodus of jobs in financial services moving to the EU and elsewhere. Other industries are also considering relocating some of their operations to the EU to ensure continued access to the single market. At the EU summit yesterday, remaining EU members agreed to relocate two EU agencies from London and its 1,000 jobs.
Countries outside of Europe have also been motivated to invest in Britain as a gateway to Europe. In a note about Brexit by the Japanese government as reported by Business Insider, it said ‘nearly half of Japanese direct investment intended for the EU in 2015 flowers to the UK’. And it warned they may have to relocate operations from the UK to the EU if it no longer had the same access to the bloc.
Immigration is another important factor in businesses’ decision to relocate. The British Summer Fruits industry recently reported that farms across the UK were struggling with labour shortages with fewer applicants since the referendum. Laurance Olins from British Summer Fruits said ‘if we do not have the pickers, we do not have a soft fruit industry’. Similar comments have been made by the hospitality industry with a warning that jobs would be lost without immigrant workers. And many of the jobs in agriculture and hospitality are of the ‘low pay’ kind that don’t seem to be a priority in the government’s insistence that the UK will still welcome the ‘brightest and best’. Free movement allows the flexible and open kind of migration these sectors have grown to depend on.
… in the short-term, without immigrant workers from the EU and elsewhere many businesses in the sector will fail, taking all their jobs, local and migrant, with them.
British Hospitality & Tourism Industry Brexit Strategic Response November 2016
Managed migration with free movement
The prime minister has committed again to cutting net migration to the ‘tens of thousands’. To achieve this, free movement would need to end and immigration would have to be dramatically cut. But industries across the UK are already warning of labour shortages. And with signs of the UK economy now slowing as well as an election resulting in a hung parliament, the mood over immigration has started to soften a little.
In his Mansion House speech this week, the chancellor Philip Hammond called for ‘managed migration’ with the end of free movement post-Brexit. And a ‘jobs and prosperity’ first Brexit. This is what the Labour party is also calling for. It’s a ‘softer’ version of immigration control whereby jobs and the economy are prioritised over a net migration target, which the prime minister continues to insist on.
We’re still to find out how this ‘managed migration’ will work and what it means for people and businesses. We know from the the Queen’s speech that the government will introduce an Immigration bill but failed to give us a clue as to what it might contain.
Mostly, however, their ‘managed migration’ is still an end to free movement, which means the end of single market membership. Whilst it’s a good thing that politicians seem to be softening on immigration particularly with the damage dramatic cuts could do to jobs and the economy, there is a better question that needs to be asked. And that’s how the UK can better manage migration with free movement. More importantly, is it necessary?
As we’ve pointed out previously, free movement already allows for ‘managed migration’. Under EU law, unconditional free movement is only allowed for three months. After that an EU citizen must either be working, studying or be self-sufficient. But the UK has not enforced these limitations within free movement. In the New Statesman, George Eaton points out the government has considered “the cost of recording entry and exit dates was too high’ and ‘since most EU migrants are employed (and contributed significantly more in taxes than they do in benefits), there was no economic incentive to do so’.