Employers in low skilled sectors say ending free movement would harm their businesses

A large section of the public would like to see significant restrictions on free movement whatever the result of the EU referendum. Employers have a particular interest in the outcome and have joined the debate but there has been little independent assessment of their position on the issue. Our research, out today, aimed to help fill this gap through research with employers in three sectors – food and drink, hospitality and construction. Our findings leave little doubt that restricting their access to this source of labour could have significant and damaging effects on many companies and the jobs of the British workers they employ.

EU migrants are late-comers to the UK labour force

Despite the talk of ‘benefit tourism’, no one should be in any doubt that the principal motive of EU migrants is work. Most foreign-born workers are from outside the EU, accounting for around 11 per cent of workers, compared to 5 per cent for EU citizens. However, as the graph shows, while numbers of workers from inside and outside the EU have increased over time, migrants from Eastern Europe and the Baltic states have provided the largest relative increase, rising from 0.2 per cent in 2005 to 2.6 per cent in 2014.

Proportion of working-age UK population who are foreign born, by non-EU and EU country groupings:

The widely held belief that EU migrants are meeting employers’ needs for low skilled labour is reasonably accurate. The three sectors we looked at, hospitality, food and drink and construction are all big employers of EU migrants. In the food and drink sector they represent more than a third of all employees in the sector, and EU8 migrants 21 per cent alone. In hospitality EU migrants are around 1 in 8 of the workforce, and non-EU around 1 in 6. More than half of London’s construction workers are migrants, many from Eastern Europe.

Employers and EU migrants have a marriage of convenience not a match made in heaven

Employers said they recruit EU migrants because they are available to meet their general labour needs, not specific skills shortages. Many employers emphasised that they neither purposefully source migrants, look to recruit them nor have a preference. Immigration is the most contentious issue in British politics. Sections of the public are convinced it harms the job prospects and living standards of British workers. Contrary to reports of employers shunning ‘lazy Brits’, most employers said there is no difference between EU migrants and British workers on measures such as productivity, work ethic and commitment.

But there is one important difference between some EU migrants and British workers. Their mobility and short term goals make them more flexible. They can adjust their hours up and down in a way that British workers either can’t or aren’t willing to do. This quality is valued in low skilled sectors. EU migrants meet employers’ needs for a flexible labour force, demanded by fluctuations in the business cycle: resulting in construction from short-term projects, in hospitality from seasonal peaks and in food and drink from the ever changing demands of supermarkets and customers.

Employers want to recruit British workers but see limited options

Employers said they were continuously seeking alternatives to EU migrant labour and had been doing so for many years. But they encountered barriers, including low unemployment and, in less populated areas, lack of local people of working age and poor local transport. Older workers and students, while having some potential to meet shortages, had limitations: students in their availability at peak times and older workers for the hard physical labour required, as well as interest in the work.

Young people are the favoured option but employers find it hard to attract school and college leavers because of their sector’s image and limited career prospects. Employers complained that young people want to be footballers or X factor winners. If they want to be chefs, they aspire to be Gordon Ramsay, not the cook at the Dog and Duck. Employers across sectors were involved in initiatives to address this issue, for example the Big Hospitality Conversation and Construction Industry’s Go Construct’ initiative. They felt the supply of young people could only be switched on through changes in the UK’s education system and the status of vocational routes.

There is little evidence that migration is used as a substitute for training

The view that employers prefer to recruit migrants ready-trained than to invest in British workers is has little supporting evidence, with research finding consistently that  employers who hire migrants are also generally those who invest in training. But our employers, like others, train only for their shorter term needs. For skilled labour to be available in periods of growth, over-provision is necessary and realistically facilitated by government support. Employers also said that this would only reduce their use of migrants in the long run and that, even then, they would still require low skilled workers.

An increase in non-EU labour migration is seen as unlikely

Of all the options we put to them – older workers, students, ex-offenders – loosening restrictions on recruitment from outside the EU was seen as the least feasible, but also unlikely to result from Brexit. Many had experienced the cost and bureaucracy involved in work visa applications. But more importantly, their needs were largely for low skilled workers who are unlikely to be included in any post-Brexit arrangements. EU migrants were also seen as in some ways more suited to their business, more flexible and mobile than those from further afield.

Ending free movement is likely to have damaging consequences

Our findings are in line with the broader quantitative and econometric evidence that EU migration has not had a significant negative impact on native workers. In the sectors we examined, EU migration has helped employers create and sustain more flexible and efficient business models. 

While increased training and more broad efforts to improve the pay, employment prospects and job quality of young and unskilled Britons would obviously benefit the UK as a whole, they are neither directly inhibited by EU migration, nor would they provide much immediate assistance to the sectors where EU migrants are concentrated. In the event of Brexit, therefore, the impact of ending free movement on these sectors would likely be significant and damaging. 

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