Immigration & the EU-Referendum

Immigration, it has turned out, is one of the hottest topics in the run-up to the referendum. With Prime Minister Cameron having promised a reduction of net-migration to under 100.000 per year, the reality looks a bit different. According to new statistics from the Office of National Statistics, net-migration into the UK stood at 333.000 in 2015, the second highest on record. Out of those 333.000, 184.000 Europeans came to live and work in the UK, under the freedom of labour movement.

For Brexiteers, this is just what they have been waiting for. Both Boris Johnson and Michael Gove, two of the leading voices of the Leave-campaign, have called for a reduction in European net-migration into the UK and for the introduction of an Australia-style points system. This, they argue, would help the UK make sure that only high-skilled, high-earning foreign workers would enter the country.

Economists however are not impressed. “Under the current system, the UK is mostly attracting the right kind of immigrants from the EU already”, a report by Berenberg Bank in London finds. An Australia-style system would create extra administrative costs and would rely on government or some other central agency to identify supply gaps in the labour market and then allocate foreign workers accordingly in a more effective way than the current market based system. “It makes little sense to risk introducing a government failure where a market failure doesn’t exist”, the analysts conclude.

Still, Johnson and Gove pretend to have a case in point. And yes, on a superficial level, you could argue that large amounts of European workers end up in low paid, low skilled jobs in Britain. According to a recent study by the Migration Observatory at the University of Oxford, a majority of Europeans currently working in the UK would not meet Tier 2 visa criteria, were they obliged to apply for a work permit in order for them to work here in the UK. A Tier 2 visa requires, among other criteria, a university degree and an annual salary of at least 20.000 pounds.

But, this does not come as a surprise, as large parts of the British food manufacturing, fruit picking, plumbing and building industry are desperate for workers, independent of where they come from. Eastern Europeans come here because there is plenty of work for them and wages are higher than in their home countries. They also come because British companies cannot find enough Brits who want to work as plumbers, fruit pickers, waitresses or builders.

Still, Vote Leave argues, Poles, Bulgarians and other EU-nationals should not be allowed to come here for work. The argument is similar to what you hear in Germany when discussing the asparagus industry: These people are taking away our jobs, our future, our prosperity.

A pretty one-sided argument, both with regard to the UK economy as well as the German economy. So what do firms do if they cannot find domestic workers for their jobs? Not only the builders, but also food processing firms, the hotel industry and even tech firms fret about the possibility that they would soon be restricted in hiring EU-nationals instead of Brits. Obviously, this cannot be good for their business.

As Taavet Hinrikus, the co-founder of TransferWise, one of the fastest growing London fintech firms, put it, a Brexit would be “a complete disaster for the tech scene”. According to him, tighter labour laws could lead to TransferWise opening an office in Germany, maybe in Berlin. “If the movement of people gets restricted, we would need to make changes”, Hinrikus said. Not only professional changes, but also personal changes: “I don’t know whether I would still want to live here.”

Like me, Hinrikus is a foreigner. He comes from Estonia but has lived in the UK for many years. Limitations to European immigration after a Brexit would not just make things harder for TransferWise here in London where a third of their 100 employees come from other EU-countries. It would also create an additional emotional barrier between Brits and other Europeans, a feeling that I share.

As do many other fellow Europeans here in the UK: 40 percent of EU-nationals working in the UK say the referendum has negatively affected the opinion of the country, a recent study by Totaljobs has found. 87 percent of Europeans living in the UK are worried about the potential impact of Brexit. Still, 76 percent hope to stay even if Brexit becomes a reality. “Maybe even the Brits will leave”, Hinrikus joked when I spoke to him on Tuesday, “who wants to work in a UK that suffers a huge economic crisis?”

The anti-immigration attitude here in the UK strikes me as odd, given that the UK prides itself on having had one of the biggest empires in the world, with citizens in the remotest places on earth. Many of those people came to live in the UK after the liberalisation of the colonies, a welcome stream of immigration. Since 1991, EU migrants have accounted for just over a quarter of total net migration into the UK and thus, for only a small portion of the growth in the UK population, the Migration Observatory has found.

Of course, Vote Leave-campaigners still have one argument in reserve. Because of European immigration into the UK, public services and housing have come under severe strain, they claim. Both for schools as for flats, the economists at Berenberg flatly reject this argument. EU migrants make a net-contribution to the UK budget, the study finds, thus enabling more, not less funding for public services.

The same goes for the housing market: “The UK housing market suffers mainly from a lack of supply than excess demand”, they conclude, “less than 10 percent of Britain is urbanised, it does not lack space.” Comparing the country to Germany where you have thousands of little towns dotted around the countryside instead of one big centre like London, I definitely agree. “Better land and planning laws to make the supply side of the market more responsibe to changing demand conditions are badly needed”, the report reads.

So let’s see what June 23rd brings. I hope I won’t have to apply for a visa any time soon.

 

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