By Catherine Harris
Brexit – the UK vote to leave the European Union – has caused uncertainty in a number of areas. One of which is the impact that potentially reduced immigration will have on the British economy, particularly in industries which have a high proportion of migrant workers from the EU.
Workers from the EU are allowed to continue to work in the UK for the two years of Brexit negotiations, after which their future is uncertain. But the the UK’s new prime minister, Theresa May, has warned that the status of EU migrants is up for negotiation.
This could have a significant impact on the UK economy. Research has long shown that it will be worse off without its immigrant workers. Indeed, ratings agency Fitch has already downgraded the UK’s credit rating to AA from AA+ with a negative outlook, hinting that further downgrades might follow. It cited reduced immigration as one of the reasons for the UK’s weaker economy. Meanwhile, the National Institute of Economic and Social Research has said that reducing immigration by two-thirds will see the UK economy shrink 9% by 2065.
The significance of EU migrants in the UK workforce can be explained by figures showing their high employment rate and concentration in particular industries. Despite EU migrants making up only about a third of all migrants in the UK, data from the Office for National Statistics shows that EU nationals constitute 64.3% of the migrant workforce in the UK. Accordingly, working age, non-UK EU nationals have a higher employment rate than both non-EU nationals and UK nationals, at 78% compared with 61.7% and 74.4%, respectively.
EU migrants tend to be concentrated in certain sectors of the economy. The public sector (which comprises public administration, education and health) is the largest sector for migrants from Western Europe (EU14 nationals) at 27.6%, but only the fifth largest for nationals from A10 countries (countries that joined the EU in 2004) at 11.1%. For nationals in the rest of the world the figure is 28.1%.
For A10 countries, the largest industry sector is distribution, hotels and restaurants at 27.6%, followed by manufacturing at 19.3%. This compares to just 9.6% of UK nationals employed in manufacturing and 6.7% of rest of the world nationals.
There is variability in the sectors in which EU nationals from different countries work within the UK. However, it is clear that the sectors of public administration, education and health, hotels and restaurants, distribution and manufacturing have high levels of EU migrant workers and could be significantly impacted by Brexit.
Focusing on the NHS, EU immigrants make up about 5% of English NHS staff, according to the English Health Service’s Electronic Staff Record. Across the UK, EU immigrants make up 10% of registered doctors and 4% of registered nurses. EU immigrant nursing numbers have risen at a time when the numbers of British-trained nurses has actually fallen, therefore plugging an important skills gap. The figure for registered doctors from the EU is significant, but it is below the level of staff from outside the EU.
Campaigners who were in favour of Britain remaining in the EU argued that leaving could cause an NHS staffing crisis. Indeed, one of the UK’s top economists, Stephen Nickell, claimed that the NHS would be “in dire straits” without migrant workers. Former Liberal Democrat leader Nick Clegg has previously said the NHS will be “in serious trouble” without EU workers. UKIP, however, says these NHS jobs could be filled if immigration was reduced.
Restrictions on non-EU immigrants have affected NHS recruitment, suggesting that the same could happen if there were limits on EU immigration to the UK. These restrictions did not trigger a process of existing healthcare workers fleeing the UK. But it has been suggested that a skills shortage in the NHS could be caused directly through new restrictions preventing EU-born NHS staff from working in Britain, or indirectly because EU-born staff will leave the UK pre-emptively due to the uncertainty created by talk of restrictions to migration.
Manufacturing in the form of food production may also be profoundly changed by Brexit if EU nationals are forced to leave the UK. Migrant labourers from the EU make up more than 30% of all workers in the manufacture of food products, including jobs such as processing cheese and meat, making baked goods and animal slaughter. It is unlikely that UK nationals or migrants from outside the EU could fill such a gap.
Brexit could also leave a great many unfilled jobs in areas such as agriculture and hospitality, which are significantly staffed by migrants. Since many of them are taking unskilled jobs British people do not want to do, the result could be a serious labour shortage in temporary and seasonal work.
Businesses that are particularly reliant on migrant workers may therefore need to rethink their business models. It has been suggested that greater automation could help them cope with the loss of migrant workers in sectors such as agriculture and manufacturing.
The high proportions of EU migrant workers in the sectors featured here could be used by Brexiters to argue that Britons are losing out to foreign workers taking their jobs. They might argue that the roles can be filled by British workers or opened up to the global market. But the evidence that British workers or migrants from outside the EU have either the capacity or desire to fill the vacancies EU migrants could leave behind is lacking.
This may well leave sectors such as manufacturing or the NHS understaffed and under-skilled and could have a negative impact on the UK economy. But the extent to which this occurs really depends on how the government decides to treat EU migrants already living in the UK. As with many other issues related to the referendum, the impact remains uncertain.
This post originally appeared on The Conversation.
Note: This article gives the views of the author, and not the position of the Euro Crisis in the Press blog nor of the London School of Economics.
Dr Catherine Harris is a Senior Research Fellow on EU labour migration at the University of Birmingham. Catherine’s expertise lie in the fields of entrepreneurship and enterprise, ethnic entrepreneurship, social difference, EU enlargement, EU migration, Polish migration and the Polish community in the UK.
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