During the referendum campaign in 2016, the remain campaign predicted massive job losses were we to vote to leave the EU. A month before the vote took place, David Cameron and George Osborne warned that a vote to leave would “put hundreds of thousands of people out of work right across the country.” Project Fear was ignored by the voters and with good reason. A figure of three million, or perhaps 3.2 million, job losses if we left the EU has been doing the rounds for many years. The figure was not plucked out of thin air, but was based on a report written in 2000. However, the report in question, written by Dr. Martin Weale for the National Institute for Economic and Social Research, did not say what Nick Clegg, John Prescott and others claimed that it had said.
Dr Weale actually wrote:-
Detailed estimates from input-output tables suggest that up to 3.2 million UK jobs are now associated directly with exports of goods and services to other EU countries. This has given rise to popular concern that some of these jobs might be at risk if Britain were to leave the Union. Opponents of membership on the other hand argue that many of the benefits flowing from the increasingly integrated European Economic Area might still be available even if the UK were to withdraw, particularly since the Uruguay Round Agreement has imposed significant limits on the trade barriers that the EU can place on non-members. In conjunction with the potential gains from withdrawing from the Common Agricultural Policy and no longer paying net fiscal contributions to the EU, there is a case that withdrawal from the EU might actually offer net economic benefits.
The report did not say that these jobs would be lost if we left the EU. Far from it. It suggested that withdrawal may actually be beneficial. The Britain in Europe cross-party group, which campaigned unsuccessfully for Britain to join the €uro, latched on to it and spun Dr Weale’s original report to claim that academic research proved that 3.2 million jobs would be lost if we left the EU. .
Unsurprisingly, Dr. Weale was furious at this distortion of the findings of his research, describing it as “pure Goebbels” (a reference to Hitler’s Minister of Propaganda) and saying, “in many years of academic research I cannot recall such a wilful distortion of the facts”.
This did not stop remainiacs from repeating their claims, right up to the 2016 referendum. Perhaps they hoped that if the lie is repeated enough it will eventually be accepted as truth.
The truth is that over 40 years of EU membership has been of little benefit to UK-born workers. Evidence for this can be found from the Government’s own Office for National Statistics. Professor Tim Congdon showed in his booklet Europe Doesn’t Work (Published by the Hampden Trust in 2013) that the EU has actually destroyed British jobs.
At the start of 1973, when the UK joined the EEC, there were 24.9 million people in employment. By the first quarter of 1983, the figure had fallen below 23.7 million – a drop of 1.2 million, or nearly 5%. This hardly suggests that our membership of the Common Market was beneficial for employment.
The statistics for UK-born men in employment are even more interesting. In 1973, there were 15.6 million men at work, 14 million in 1983 and 13.8 million in 1993, the year that the EEC became the European Union. In 1993, the UK was beginning its recovery from the recession of 1990-91 and was to enjoy almost a decade and a half of growth before the downturn known as the Great Recession, which began in 2007.
However, by 2007, a significant change had taken place in the UK labour marker. Three years earlier, the EU had enlarged eastwards to take in eight countries which had been under Marxist rule since the end of the Second World War:- Poland, Hungary, the Czech Republic, Slovenia, Slovakia, Estonia, Latvia and Lithuania (often referred to as “EU8”).
These countries were much poorer than the nations of the West and, unsurprisingly, many of their workers were keen to take advantage of one of the four freedoms of the EU’s Single Market – free movement of people – to take a job in a Western European country where wages were higher than in their native countries.
Fearing a disruption to their workforce by a sudden influx of cheap labour, France, Germany and Austria, among others, applied the permitted short-term restrictions on free movement. The UK did not. Tony Blair, Prime Minister at the time, latched on to a report by a German think tank which calculated that a mere 15,000 Eastern European workers would travel to the UK. This estimate proved to be spectacularly wrong, with 653,000 immigrants arriving from these countries between 2004 and 2011.
This mass movement of people has had a significant effect on the UK labour market, which has been particularly noticeable since the start of the Great Recession. In the 12 months to mid-2009, some 800,000 jobs were lost. Two years later, there were still 800,000 fewer UK-born people in employment than at the end of 2007, but the number of people in employment from the EU8 countries actually rose by 200,000.
This suggests that allowing free movement from these countries has actually resulted in a loss of jobs for UK-born workers. It is not as if most of the arrivals from the EU8 countries were highly-skilled individuals such as surgeons or financiers. According to a report for the Office of National Statistics covering the period 2007-09, 37.5% of EU8-born workers are employed in “elementary occupations”. 25.4% work in manufacturing and 29.2% in “distribution, hotels and restaurants.”
In other words, workers from these countries are taking unskilled jobs which any UK born person could do. Tim Congdon quotes a report by Professor David Metcalf of the Migration Advisory Committee which calculated that 160,000 more UK-born people would have been in work if there had been no migration from outside the EU between 2005 and 2010 instead of the 700,000 who did arrive. When asked directly to confirm this, he replied, “Yes, that would be a reasonable way of putting it.” It is therefore not unreasonable, argues Tim Congdon, to apply a similar formula to the 588,000 migrants from the EU (not just EU8 countries) who arrived in the same period. This would result in their arrival causing a net loss of 135,000 jobs for UK residents.
Moving forward to the period since the June 2016 referendum, the UK jobs market has remained robust. Forecasts of economic gloom have thus far been proven unfounded. The unemployment rate, which stood at 4.8% when we voted to leave the EU, stood at 4.3% a year later. The employment rate – in other words, the percentage of people of working age actually in work – rose above 75% in May 2017, the highest figure in over 45 years. The prospect of Brexit has not caused widespread job losses – yet.
This could change if Brexit is botched and we leave with no deal, thus finding ourselves unable to trade with the EU. The lack of clear guidance by the Government has already caused a few companies to move a handful of staff to newly-opened subsidiaries in an EU member state. Some financial services firms in the City of London are also considering relocating staff away from the UK just in case the “passporting” rights disappear. So far, the number of jobs moving abroad – or planning to do so – is fairly small, but the longer any uncertainty persists, the larger the final total may be. Furthermore, the crash-out no deal scenario would actually be as catastrophic for jobs as Osborne and Cameron were saying a year ago. This calamity is, however, eminently avoidable.
Assuming we do manage to engineer a smooth departure from the EU, the prospects for jobs in the UK are likely to remain much better than the doomsayers are predicting. Our fishing industry could be revived, generating jobs all around the UK coast. Furthermore, we would be able to repeal those EU regulations which have been concocted by Brussels (as opposed to those which originate with bodies like the World Trade Organisation, with the EU merely acting as a conduit) which do not serve the UK well by loading small businesses with excessive red tape.
In the longer term, advances in robotics are likely to make significant inroads into the UK jobs market, but even here, Brexit will be an advantage for us because we will no longer being tied by the principle of free movement of people and can therefore make greater use of short-term work permits for foreign workers which will ensure that UK-born workers will not have to bear the brunt of any automation-induced shrinkage of the workforce.
No one should expect a jobs bonanza on Brexit day, but at least if the Government can secure a smooth transition, the doomsayers will finally have been proved wrong.
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