Parliament has debated the new immigration bill this week. Government announcements are heavy on Brexity slogans about taking back control and “Global Britain”, but the reality is that the Bill gives Ministers the power to exclude people from the UK labour market who don’t hold a high level qualification and aren’t a higher earner.
Decisions about what workers British companies need will no longer be an economic or business decision, but a political one, which can be taken by Ministers and based on political considerations and newspaper headlines.
Many of the immigrant key workers who have kept Britain running over the last few months wouldn’t have been able to come to the UK had this system been in place, including many front line health and social care staff.
A newly qualified Nurse, Policeman or Teacher would earn too little to move to the UK under the Government proposals. No care assistants could ever qualify.
It is modelled on the Australian points based system which is popular on the right despite admitting much higher levels of immigration that the UK.
Sometimes I think that the popularity of the Australian system on some parts of the political spectrum is due to photos like this:
Aren’t there loads of lazy unemployed people who can do these jobs? Can’t they go and harvest crops and work in care homes?
Priti Patel definately thinks so. This is what she wrote in “Britannia Unchained”, co-authored with Dominc Raab and other prominent Johnsonites:
The British are among the worst idlers in the world. We work among the lowest hours, we retire early and our productivity is poor. Whereas Indian children aspire to be doctors or businessmen, the British are more interested in football and pop music.
Government Minister George Eustace apparently thinks so too:
Eustace is unusual in that he did briefly work for money before becoming a career politician. His family own a fruit farm in Cornwall, which might explain why he is so keen to encourage people to work in the industry. As Secretary of State for Environment, Food and Rural Affairs he is responsible for developing the grant scheme for his own family firm to replace the EU subsidies they have long enjoyed.
Sadly for George the website he directed people didn’t work:
When it did work it it had the most terrifying disclaimer of any on-line form I have filled in:
Frankly I think that is insulting bollocks. It’s a myth that there are loads of lazy people hanging around doing nothing. In reality the labour market is tight and has been for years.
Unemployment is as low as it was back in the early 70s, and lower than it has been in my working life. The era of high immigration has co-incided with falling unemployment. Immigrants haven’t displaced indigenous workers, they have expanded the workforce and helped to grow the economy, which in turn, has led to more employment and economic growth.
There are lots of people who are economically inactive, but these are older well off voters who have taken early retirement and who aren’t going to be attracted back by the wages that care homes or fruit picking pay:
10% of men aged 50-55 are economically inactive, rising to 20% of 55-60 years and 45% of 60-65 year olds. There are plenty of people in the UK to do jobs like pick crops and work in care homes but they are mostly old people and well off. The work is too hard and they don’t need the money.
Why do we have people coming to work in the UK with low levels of qualifications?
Because there is a mismatch between people leaving the Labour Market and people entering.
Lots of people who have low levels of qualifications but lots of experience and acquired skills are leaving the labour market. The generation who entered the labour market in the 60s and 70s mostly entered with no qualifications. Only a tiny percentage had A levels or a degree. There were lots of opportunities for white collar and blue collar jobs, wage increases were high, unions were powerful. They earned lots, had lots of skills but were expensive to employ. They were the first generation of blue collar workers to afford foreign holidays and new cars, even if those cars had square steering wheels.
When times got hard for employers they were the first to be given redundancy/early retirement.
The people entering the labour market today have lots of qualifications, but not much skills or experience. Few kids today have part time jobs before entering the workforce because it is cheaper for employers to hire “apprentices” on £3.50 ph.
It is that mismatch between skills and experience leaving the labour market and talent and qualifications entering the labour market that has created a gap.
The people filling that gap come from abroad – they are still in the unqualified category, but they generally have a higher level of skills or experience than a UK school leaver. People who have worked with manual occupations will understand that there is a world of difference between skills, qualifications and experience. The Government’s definition of unskilled worker doesn’t recognise that distinction.
At the heart of the problem are a group of politicians who have never had an actual job. They don’t understand that difference between qualified, skilled and experienced, and as a consequence they don’t understand why the UK economy has benefited from immigration.
This isn’t unique to the Conservatives. The last 2 Labour manifestos had lots of warm words about the positive aspects of migration but were committed to ending freedom of movement, and presented immigration as a wicked capitalist plot to drive down workers wages.
Will this bill reduce the number of immigrants?
The Bill will definitely reduce the number of legal immigrants, but only at the expense of an increased number of key workers with no route to a legal immigration status who become undocumented, facing the cruelty of the Hostile Environment, exposing them to exploitation at work, with no way to force employers to provide basic rights like sick pay and safe working conditions. The same terrible situation that faces millions in the US. We all know how cruel and messed up the American immigration system is, and to import the worst bits of it to the UK is crass and stupid.
What the bill does is make the levels of immigration a political choice not an economic or business choice, and it puts those choices in the hands of populist politicians who have never worked in any of the industries they are now determining the correct size of their labour force. Newspaper headlines will determine whether the NHS can recruit staff or not.
What has this got to do with Clive Ruscoe’s economics class?
(for those who didn’t go to school with me Clive taught me economics back in the 80s and wrote the text book on this era)
Up to the 1970s economists believed that unemployment was mostly due to lack of demand, and a small amount of structural unemployment due to technological change.
Thatcher introduced the idea of free market economics. Unemployment was caused by Government or Trades Union interference in labour markets. By removing these barriers you increased employment by allowing markets and wages to reach a level where everyone was employed. Flexible labour markets were encouraged by stripping away workers rights so employers could hire and fire who they liked. In reality this created mass unemployment and introduced to the benefit system harsh sanctions for anyone who wasn’t deemed to be looking hard enough for work.
Blair came along and took the reverse view of Labour market inefficiencies.
He believed that flexible labour markets reduced unemployment, but he believed that the best way to create flexible labour markets was by positive measures to attract more people into the labour market. He introduced the national minimum wage, and expanded workplace rights in order to draw more people into the workforce, in particular women, minorities and disabled people. He also was much more positive towards immigration than any previous PM.
Blair’s approach worked markedly better than Thatchers and we lived through an era of low unemployment. Economic shocks like the credit crunch led to people taking early retirement and increasing the numbers economically inactive, but the structural changes that Blair made to labour markets permanently reduced unemployment in the UK.
The Government approach to the immigration bill is a direct repudiation of the Thatcher and Blair reforms.
The era of efficient markets and free market capitalism is over. Many on the left still complain that the Tories are hard line neo-liberals but they are missing the point.
This isn’t any kind of liberalism. It is aristocratic Toryism, of the same tradition that opposed the repeal of the Corn Laws. The Government will make no concessions to business on Brexit or on immigration, and if businesses speak out they will be subjected to the same kind of populist attacks that normally we only see from the authoritarian left.
The only businesses who matter are the hedge funds and venture capitalists who funded Brexit and the rise of Boris, the rest of us are bottom of the Government list of priorities.
Why does this matter?
The recent crisis has shown how dependent we are on immigrant key workers, not just Doctors and Nurses, but care home staff, delivery drivers,
These are areas where the UK has little or no chance of becoming self sufficient – we have had a shortage of agricultural workers for over 100 years, and we have been short of Doctors and Nurses since the 50s.
Residential care, agriculture, hotels and hospitality will all find it impossible to survive under the immigration regime proposed here, at a time when post Brexit we need to grow more of our own food, attract more overseas visitors and care for more elderly Brexit voters
The NHS will have to pay an immigration skills charge every time it employs an immigrant worker, reducing funding for patient care. The continued hostile environment puts off talented and highly skilled people from coming to the UK and makes staffing NHS services harder
Care homes who are short of money and staff will be hit the hardest. Parts of the UK were already running out of residential care places, and in some areas the care home system is already on the brink of total collapse. We are only months away fromm families being told that their nearest care home with a vacancy is a long way away.
What will happen next?
I do expect that we will see a big change in business investment. Despite low interest rates for 10 years businesses in the UK have been recluctant to invest in new technology and have substituted low wage employment instead.
The Corona crisis is changing business thinking and I expect a big switch from labour intensive to capital/technology intensive production. In the long run this will improve the UK economy, but will cause a big increase in short to medium term unemployment.
The jobs most at risk are the remaining high wage jobs in manufacturing, and I am doubtful that people laid off from these roles will welcome working in care homes, or seasonal work harvesting fruit and veg
A growing craft sector will absorb some of the displacement but there are only so many craft gin bars or artisanal bakeries we need.
If we make it harder for businesses to recruit we put companies out of business and we speed up shift to a low employment/high tech economy.
That is good news for people with high level skills and qualifications, but it is another kick in the teeth for people in manual occupations whose jobs will vanish rapidly over the next 18months. The lefties who found a high employment/low wage/low return on capital economy abhorrent will have to decide if they like a low employment/high wage/high return on capital economy any better.
Some pessimistic economists are forecasting a return to 1980s unemployment of 3m-4m. That still looks to me a worst case scenario, but a scenario that gets a lot closer with this immigration bill. My guess is that unemployment numbers are suppressed right now due to Covid funding, and will rise sharply once this is removed to at least 1.5m. If these newly unemployed want to take high risk low paid jobs in care homes then the Government plan might work. But lets be honest it will take a decade of high unemployment to make those jobs attractive
If the Corona crisis follows the pattern of similar crisis a lot of the reduction in workforce will be early retirements. Businesses will move older expensive workers off their books, and rather than join the ranks of the unemployed these displaced worker will increase the numbers of economically inactive.
If your favourite album is a nostalgia CD on the Hallmark label bought from a petrol station on your way to a holiday in Great Yarmouth this is no problem, but for the rest of us a really shit deal. EU citizens lose the right to move freely to 1 country. UK citizens lose the right to move freely to 27 countries.
Faced with the prospect of such economic damage you would hope that politicians would see sense. But this is a Government of people who have never worked in the real economy voted for by people who don’t work anymore. Common sense has become very uncommon
https://www.gov.uk/government/news/home-secretary-announces-new-uk-points-based-immigration-system
https://www.gov.uk/government/publications/the-uks-points-based-immigration-system-policy-statement
https://www.chroniclelive.co.uk/news/north-east-news/north-tyneside-care-homes-declare-18272970