A cut to migration after Britain voted to leave the European Union would prove challenging for food and clothing manufacturers, as well as domestic personnel services, which rely more heavily on a foreign labour force, a report warned on Monday (15).
Immigration was a focus point of the June 23 referendum, with campaigners to leave the EU calling for an end to freedom of movement for members of the bloc.
Companies risk closure unless they can revamp their businesses, the Resolution Foundation said, adding that replacing migrant workers in such firms with UK workers was not that simple a solution, given the pay gap between the two sets of workers.
It is estimated that migrants comprise 30 per cent of the workforce in food and clothing manufacture and personnel services. According to the think tank, Eastern European workers typically earn almost £3 an hour less than UK-born workers.
“The government must use its new industrial strategy to support these firms, such as food and clothing manufacturers, who have relied heavily on migrant workers. These firms will need to invest in skills and new technology if they are to stay afloat in a changed labour market,” said Stephen Clarke, a policy analyst at the Resolution Foundation.
He added: “A new migration policy will also need to be properly enforced if it includes a greater role for temporary workers. We currently have just one labour market enforcement officer for every 20,000 working age migrants. In future, a new single enforcement unit, with more resources, will be needed to prevent new risks of migrants illegally overstaying their visas and the undercutting of pay and conditions that could follow.”
Overall, however, the think tank found the increase in immigration over the past 10 years has not had an impact on the wages of British workers.
Indeed, future cuts to immigration could have a positive impact on the income of some British workers, but they will still be exposed to Brexit’s impact on the broader economy.
The analysis showed that cleaners, security employees and sales staff were among those whose income has fallen in recent years as a result of immigration. These workers could see their income increase by between 0.2 and 0.6 per cent by 2018 if immigration fell immediately to tens of thousands a year – a key policy pledge by former prime minister David Cameron.
But such a salary boost would not shelter workers from the wider economic consequences from Brexit, the thinktank added.
“Those expecting a wage boost off the back of a post-Brexit fall in migration are likely to be disappointed,” Clarke said. “Any such gains will be dwarfed by the losses caused by the post-referendum slowdown in the economy.”
The Bank of England earlier this month issued its biggest-ever downgrade of a GDP forecast in the light of Britain’s looming EU exit. Its growth forecast was slashed from 2.3 per cent for both 2017 and 2018 to 0.8 next year and 1.8 the year after.
New prime minister Theresa May has said that she intends to guarantee the rights of EU citizens currently living in Britain.
May said her promise depends on the rights of British citizens living in other EU countries being guaranteed after the UK leaves the union, which is not expected to happen before 2019.
