Data shows Johnson’s Brexit won’t result in a high-wage economy


British Prime Minister Boris Johnson has said Brexit will turn Britain into a high-wage economy. Daniel Leal/Reuters

The UK’s move towards a more restrictive migration regime after Brexit will not deliver the ‘high wage’ economy promised by Prime Minister Boris Johnson, a report has found.

Analysis by the Resolution Foundation indicates that restricting freedom of movement will lead to changes in the labor market but will not have a large impact on the UK economy in terms of wages.

Immigration has significantly changed the size and composition of the UK workforce over the past two decades.

Between 1994 and 2019, Britain’s working population grew by 18% (4.9 million), with migrants accounting for more than three-quarters (77%) of this growth, and EU workers alone accounting for over a third (34%) of the total working population. growth.

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During this period, EU migrants have become increasingly overrepresented in the lowest paid occupations. In 2019, EU workers were significantly more likely than UK-born workers to work in low-paying jobs such as factory workers or elementary roles.

The report argues that the impact of the new migration regime on the economy as a whole is likely to be small.

“The Prime Minister’s claims that controlled migration is the key to a new high-wage economic strategy are exaggerated,” the report said.

“While shrinking low-productivity, migrant-dependent sectors like agriculture and food manufacturing could boost average productivity, the new regime is unlikely to have a big impact on the productivity problem in the future. scale of the UK economy, as there is no strong relationship between changes in the share of workers who are migrants across countries and productivity growth.

Lower migration will also not improve public finances as previously claimed.

“While the Office for Budget Responsibility finds that the new migration scheme could lead to savings of £2bn to public finances by 2024-25, this figure is small compared to other spending, such as the £8.7 billion in Covid-19 related personal protective equipment (PPE) which the Department of Health and Social Care recently declared written off,” the report said.

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Lower-paying industries such as food manufacturing, warehousing and hospitality will also struggle as they rely on migrant labor and typically experience high staff turnover.

For example, one in five workers (20%) in the food industry in 2017-2019 were from the EU and would not be eligible for the new “skilled worker visa” (SWV), which means that these industries will have to adapt or shrink. coming years.

The restaurant and accommodation sectors which rely on EU workers in SWV ineligible roles for 10% of their workforce have seen vacancies double as the economy reopens.

Kathleen Henehan, senior research and policy analyst at the Resolution Foundation, said: ‘Despite claims from both sides of the debate, the UK’s new migration regime will do little to change the UK’s economic trajectory. United Kingdom, or its low central investments, the challenges of low productivity.

“At the end of the day, a migration strategy is not a substitute for an economic strategy.”

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