Britain’s Brexit CrisesOn the Road to Perdition
Richard Barfield explains how long-term solutions will be required to reverse the labour shortages being experienced by the UK in the wake of EU workers returning to the continent
The HGV crisis has shown that the consequences of Brexit are touching us all.
Thousands of EU drivers have left the UK and the shortages of these key workers are starting to cripple the economy. The Coronavirus pandemic, early retirements and tax changes are contributing factors to the 30,000 fewer HGV drivers in this country than a year ago, of which 16,000 had come from the EU.
These figures may seem small compared to the UK’s 32.4 million workforce, but the knock-on effects for the economy are serious and widespread. The UK’s supply chains are only as strong as their weakest links, and it only requires small changes to put severe strain on the intricate and finely-tuned flows of goods that support our lives.
The current crisis with HGV workers goes against the upward migration trend that the UK has seen in recent years. Net migration to the UK had risen to 310,000 in 2019/20, according to the latest figures from the Office for National Statistics (ONS), which was close to its pre-Referendum level. However, there was a marked switch from EU to non-EU migration of about 130,000 people a year. Brexit and the Government’s Europhobic policies were no doubt a major cause. Since then, the Coronavirus crisis has accelerated the departure of EU citizens. It is unclear how many people will return, even if they are entitled to do so.
The departure of EU workers from the UK is causing problems across the board. Daily news bulletins report extensive labour shortages (often related to an absence of EU workers) – drivers, butchers, farm workers, food processors, warehouse staff, care workers, nurses, doctors.
None of this should come as a surprise. The UK’s 2016 workforce of 30.3 million people included 2.2 million EU citizens across all industry sectors. The sectors most reliant on EU citizens were manufacturing, wholesale and retail trade, hotels, restaurants, transport, and constructions. Despite the obvious risks to the economy, Boris Johnson’s administration chose not to extend the Brexit transition period nor make any contingency arrangements to encourage EU workers to stay in the UK.
The vacancies are both the source of a short-term crisis and a symptom of a long-term problem.
The UK’s need for immigrant workers has been growing for years and is set to continue. Irreversible demographic forces mean that the ratio of older citizens to working age population will rise from three in 10 in 2019, to four in 10 by 2039. To keep the ratio stable, the UK would have to grow its working age population by 20% over the 20-year period, everything else being equal. Clearly, making it difficult for European neighbours of working age to come here makes matters worse.
The Government’s points-based immigration system seems deliberately designed to discourage the EU citizens that the UK needs from coming. When they weigh up the hurdles that they must jump, and the fees that they must pay, with their freedom to work and live in any of the EU’s 27 member states, it is not hard to see what they are likely to decide.
Unfortunately, as the compounded effect of disrupted supply chains causes more delays and disruptions, the UK is likely to become an even less attractive destination. By contrast, the EU’s freedom of movement makes the vast single market resilient and helps it to cope with its own labour shortages much more easily – partly helped by the UK putting up barriers.
Meanwhile, in Northern Ireland, there is an interesting control experiment occurring as the Northern Ireland Protocol keeps the province in the EU single market. There, there are no comparable shortages of fuel, butchers, chefs, or hotel workers to be observed.
The Home Office has announced that it will be issuing short-stay visas for drivers and poultry workers, but industry experts say that such a move is unlikely to attract many people. Wage increases would attract workers, but the recent fall in the value of sterling against the Euro makes them worth less to EU citizens.
Instead, British consumers will see prices rise because wage increases that are not earned by productivity improvements will feed inflation. With Brexit, there is a double whammy because its trade barriers are already reducing productivity.
The lack of HGV drivers, and the ensuing petrol shortages unfolding, is the tip of the iceberg of a long-term problem which will not be remedied overnight. To change course, the Government would first need to acknowledge the problem and the economic realities of Brexit. The next step would then be to develop a coherent long-term plan with industry, to head off the impending disasters that Brexit has triggered. Without dramatic change, the UK seems stuck on a road to perdition.
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