Brexit Could Mean Less Unskilled Labor in the UK

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Source: Adobe Stock/Sulupress

For decades, the hospitality, retail, food and construction industries have taken particular advantage of the European Union’s rules allowing freedom of movement, meaning Europeans can work legally in any of the 28 countries that are members, even if they are unskilled laborers. Non-Europeans must obtain work visas under immigration rules that require graduate-level skills and a minimum annual salary of 20,800 pounds.

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Now that the U.K. has voted to leave the E.U., though, that could all change. When the U.K. does finally untangle itself from its E.U. member-state neighbors — a process that many are promising will be complete within two years — it’s likely to start requiring European citizens to clear the same visa hurdles as other foreign workers. Three-quarters of the 2.2 million people from other E.U. countries currently working in Britain wouldn’t make the cut, according to the Migration Observatory at Oxford University.

Migrants Take the Blame for UK Unemployment

The Leave campaign convinced a slim majority of U.K. citizens, 52%, that it has been too easy for “migrant workers” from Europe to waltz into the country and take British jobs.

Who would benefit from a Brexit? Not the EU. Source: Adobe Stock/Stephen Finn.

Now that the U.K. is officially leaving the European Union, what will happen to non-citizens with jobs on the island?  Source: Adobe Stock/Stephen Finn.

“We have absolutely no power to control the numbers who are coming with no job offers and no qualifications from the 28 E.U. countries,” former London Mayor Boris Johnson said in a speech before the vote.

The Leave proponents were also able to successfully argue that the low wages that many E.U. workers seem willing to take in labor-intensive industries such as construction, mining and steel production — especially people fleeing struggling economies — drag down wages for native Britons. Nearly 40% of the more than two million European workers in Britain hail from low-wage nations such as Poland and Romania. And since a debt crisis struck the European south, growing numbers of Italians, Greeks, Spanish and Portuguese have left for a chance at any employment in Britain. What is a low wage in the U.K. is a princely sum to many leaving these countries.

Construction and Metals Production

“What we don’t know is what is going to be the status of those people going forward,” Keith Howells, the chief executive of Mott MacDonald, a major construction services firm with projects in Britain and worldwide told the New York Times. Around 20% of his workers in Britain are from elsewhere in the E.U.

For construction, mining and metals production in the U.K., there could be a real labor shortage if native U.K. workers can’t or won’t do the highly specialized work demanded of these industries. However, the Brexit might still accomplish its goals, even if some jobs go unfilled. A PathMotion survey found that if U.K. companies were unable to freely hire E.U. graduates as a result of Brexit, 25% of employers said they would be likely to increase recruitment of British graduates.

Unskilled labor positions, however, on U.K. construction projects could suffer without migration as seasonal and per-project hiring would have a smaller pool to draw laborers from. The bigger effect on the local economy will be felt by lower-wage industries such as picking crops, serving coffee and cooking in restaurants.

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If Brexit truly is only the beginning, and such populist uprisings take hold across the globe, then the spigot of cheap labor could get turned off in the U.S. and other nations as well. If the U.K. is to become merely a European experiment in cutting off easy, low-wage labor, then it’s hard to imagine tougher immigration to the island having any kind of larger, macroeconomic effect on the global economy… but if this is the match that lights tougher immigration rules in the U.S. and elsewhere? Then the very idea of immigrating to a more prosperous nation for a better life could eventually be seen by many to not be worth the trouble.

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