The post-Brexit UK economy faces a shortfall of more than 300,000 workers as a result of ending the free movement of labor with the EU, according to new estimates by leading researchers.
A joint assessment of the United Kingdom in Changing Europe and the Center for European Reform think-tank said that the end of free movement is constricting the British economy and “contributing significantly” to labor shortages in lower-skilled sectors, including logistics, construction and hospitality.
Jonathan Portes, professor of economics and public policy at King’s College, London, who wrote the report, said changing migration patterns were “a feature, not a bug”. “The long-term impact on the UK labor market will be huge,” he said.
After Britain left the European Union, it moved to a points-based immigration system that allowed skilled workers earning more than £25,600 a year or £10.10 an hour to get a work visa, but the research found the system was “not liberal enough” to give compensation. for the loss of EU workers.
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The estimate comes as the government takes steps to try and deal with the so-called “big pension” effect caused by the Covid-19 pandemic, which has left 500,000 more people economically inactive than in 2019.
Business groups representing affected sectors, such as truck drivers, hospitality staff, construction and agricultural workers, have called on the government to relax the visa regime by developing a “shortage occupation list”, but have largely been unsuccessful.
The study assesses labor shortages by using data in the annual population survey to compare actual labor numbers from the EU and the rest of the world against the estimated labor force of immigrants if the UK did not end free movement. By June 2022, they found job losses equivalent to 1 per cent of the UK workforce – around 330,000.
However, lower-wage sectors were disproportionately hit, with “transportation and storage” lacking 128,000, or 8 percent of the sector’s total workforce. For “accommodation and food” the figure is 4 percent; while for “wholesale and retail” it is 3 percent.
Co-author John Springford, deputy director of the Center for European Reform, said reducing labor supply would slow the economy. “Employers will respond with some combination of higher wages and prices, and less output, especially in jobs that are difficult to automate.”
Business groups argued the report showed that, while the government needed to do more to get Britons back into the workforce, there were clearly limits to domestic labor supply.
Jane Gratton, head of people policy at the British Chambers of Commerce, said competition for workers was keeping up with inflation and called on the Home Office to revise its list of labor shortages.
“Politicians need to be realistic about the skills they need from outside the UK. Brexit has given us control over our borders and the government needs to use the appropriate levers to help struggling businesses get the people they need,” he added.
Logistics UK, the industry body, said it had been working hard with the government since the 2021 lorry driver crisis to boost recruitment in the industry, running skills boot camps and running a publicity campaign to attract younger drivers.
However, policy director Kate Jennings said her organization was still pushing the government to introduce a new skills levy to fund training and “include selected roles, such as HGV drivers, on the shortfall list”.
The CBI, which represents UK industry, agreed that the list of occupation shortages needed updating but added that the UK also needed “long-term productivity improvement measures” to tackle the problem.
Looking to the future, Portes and Springford say there is uncertainty in some areas of the UK labor market. These include how the influx of immigrants from Ukraine and Hong Kong will make it into the workforce, and whether EU workers who left the UK during Covid-19 but are entitled to permanent “settled status” under the EU-UK withdrawal agreement will come. back to the UK.
The Home Office said: “People expect us to be able to control immigration, so our points-based system delivers for the whole of England by balancing the priorities of the skills and talent the UK needs by encouraging long-term investment in the domestic workforce.
“We have expanded the route of skilled workers to include medium-skilled jobs and now cover 60 percent of jobs in the economy.”