The Exchequer must fix the labour market quickly if EU migrants leave the UK in droves

The departure of foreign workers could pave the way for more Britons getting jobs post-pandemic, writes Mary Dejevsky

Losing migrant workers may force the UK into rebalancing its economy (Reuters)

Last weekend I finally had my car washed. It had become too much of a disgrace to the courtyard in the block of flats where I live. Neighbours had admirably done it themselves with bucket and sponge during the various lockdowns, or availed themselves of the pressure hoses at a nearby petrol station. I went back to the recently reopened hand car wash a few streets away, joined the queue for an “outside only” and returned with a vehicle that no longer invites “clean me” inscriptions in the dust.

But this is not about cars. It’s about people, and work, and having my car washed and dried by hand, even by a team clearly very good at their job, would not be my first choice. Long ago, the same service would have been quicker and more convenient at a garage after buying petrol. For years now, though, automatic car washes have all but vanished from urban areas, to be replaced by human graft. Which seems a highly retrograde trend.

How can the sums possibly add up to the point where human power has displaced machine power in an industrialised country such as the UK? All right, so valet service was always there if you wanted your pride and joy cosseted, but it was an expensive niche. Now it’s the relatively inexpensive norm.

The car wash has long seemed to me to offer part of the explanation for the UK’s dismal productivity figures. Woe is us, economists have lamented for years, looking at the persistently stagnant productivity figures. But what do you expect if you are living in a country where it more cost-effective for a landlord to rent out a derelict site for a manual car washing operation than for a petrol station to invest in a state-of-the-art automatic car wash? It is the same calculation that says that plane-loads of people can be airlifted to the UK during a pandemic to pick fruit and vegetables that would otherwise rot.

Britons, it is said, just won’t do the work – which was supposedly demonstrated last summer, when “the natives” were invited to do just that, and stayed away in their droves or walked out after only a couple of back-breaking shifts.

Read more:

• Britain’s partnership with India is not going as planned
• The war is over! But the next skirmish with the EU won’t be so funny
• Welcome to post-Covid life for disabled Britons – a needless struggle

Well, maybe “the natives” won’t do it. But at least part of the point is that there have been other workers who will do it – on the terms and conditions set by UK employers. There are machines that can substitute for some of this physical labour but it’s French and German farms that are using them, not by and large their UK counterparts. I wonder why.

All this is by way of an entry point into a discussion that began back in January and has simmered or raged by turns ever since. The economists Jonathan Portes and Michael O’Connor argued, on the basis of official statistics, that as many as 1.3 million people born abroad had left the UK over the previous year, largely as a result of the pandemic, but also in response to Brexit. If the figures are correct, the exodus would have huge implications for the economy as a whole, and especially for London and for those sectors, such as hospitality and construction, where especially EU migrant workers were employed.

Since then the argument has gone to and fro, with some saying that the figures may have been wrong or misinterpreted, others maintaining that they could be less than 250,000, and yet others still pointing out that the UK’s generally poor record of compiling migration statistics means that we cannot actually know. The Independent’s Ben Chu has provided an excellent summary.

But, of course, the argument is not only, or even mainly, about how many workers, especially from the EU, may have left the country. It is about a continuation of the migration and Brexit arguments by other means, and an effort to bend the government’s ear. And here the running has been made by employers, especially in the construction and hospitality sectors, that stand to be most affected by the loss of their foreign staff. Despite this, with hospitality in particular only just starting to open up, it may be too early to tell how many workers have left at all, left for good, or may be on their way back.

My argument, however, is not about numbers – though observation suggests that more Europeans may have stayed than Portes and O’Connor conclude – but about the doom-mongers forecasting dire economic consequences for the UK from an exodus of migrant workers. And this is not because I regarded free movement within the EU or the arrival of immigrant workers into the UK as, of itself, a bad thing.

What has been a bad thing is the proliferation of low-paid, insecure jobs, the shameful way in which labour regulations are not enforced, and what is now the addiction of employers in many sectors to cheap labour – and that includes the sainted NHS, which has been recruiting doctors and nurses on the cheap who it has not had to train, as numbers of British medical students are kept artificially low.

Ah, yes, says an economists’s consensus, but the number of new workers has helped increase GDP. But it has not increased unemployment among British workers and it has had a negligible effect on pay. And, by the way, EU workers contribute more to the Exchequer than they claim in benefits or health costs. So what is not to like?

Well, the drag on productivity, for a start, that discourages labour-saving investment. And the disincentive to employers to recruit and train school-leavers from here, giving the UK one of the poorest records in skills, even as it has one of the highest rates of young people going to university.

As for the nil to negligible effect on jobs or pay, try asking some of those affected by plants and factories hiring practices. Or try this question: how much might pay in these sectors have risen without the arrival of new workers? (I’ve tried asking this, and economists are just as averse to hypotheticals as politicians are.)

Anyway, a reckoning of a sort may be at hand. This week’s it is reported that 12,000 jobs are being lost at Debenhams, and even this is a fraction of the traditional retail jobs on the line. Across hospitality, too, there will likely be businesses unable to reopen, even though jobs in e-commerce and delivery may be on the rise. At best, the departure of immigrant workers could simply match the jobs lost to the pandemic (after all, was it not said all those years ago that what made the UK so attractive to migrant labour was not benefits, but jobs?) – so confounding the dire forecasts.

If not, and if labour shortages emerge in some sectors, that might not be so terrible, either. Some temporary pain might be worth enduring, if it forced the UK into re-balancing its economy, with the level of pay and conditions that should define an advanced economy, less manual labour, more automation, less piece-work and more checks on the black economy.

I doubt that more than 1 million immigrant workers have left the UK, but if even a quarter of that number have, then perhaps it could be a blessing in disguise – a chance to get our labour market in order.