Uncharted Territory

August 23, 2016

After the Brexit Referendum (2) – Free Movement vs Work Permit Schemes

Filed under: Brexit, Economics, Migration, Politics — Tim Joslin @ 3:22 pm

In my previous post, I argued that free movement is the best way to organise migration.  During the referendum campaign we heard Boris Johnson parrot the phrase “Australian-style points system” with nauseating regularity.  Putting to one side the inconvenient fact that even Australia doesn’t have an Australian-style points system, since a large majority of migrants to Australia are brought in through company sponsorship schemes, I nevertheless assumed that the UK would, after Brexit, attempt to implement some kind of points-based system.

I argued that a points-based system was misguided, in part because it’s bound to reduce social mobility within the UK.  Nevertheless, as the Guardian reports, a survey by ICM on behalf of a think-tank, albeit one I’d never previously heard of, called British Future, found that “[o]nly 12% [of the sample] want to cut the number of highly skilled workers migrating to Britain; nearly half (46%) would like to see an increase, with 42% saying that it should stay the same.”  Baffling.  Why exactly are we leaving the EU?

But, part way through my previous post, it became clear that a pure points-based system might not be what all the Brexiteers have in mind.  I quoted David Goodhart writing in Prospect magazine in favour of “guest citizenship”.  According to Goodhart, free movement has led to many EU citizens coming to the UK who “do not want or need to become British”, causing an “integration problem”.  He claims that “unnecessary resentment” has been created by “the lack of a distinction between full and guest citizenship”.  Utter poppycock.  The problem is the reverse.  Voters are afraid, so they tell us, of their communities being changed by immigration.  If they thought migrant workers were here only temporarily one might reasonably suppose they’d be less, not more, concerned.  In a Wonderland Alice-like leap of logic, Goodhart somehow argues that because many migrants don’t stay forever they should be prevented from doing so, ignoring the common-sense argument that people don’t usually make a decision to stay forever in advance.  Life is what happens when you’re busy making other plans.  Roots are put down over a long period of time.  Moss gathers only slowly on stones.  And so on.

To put my cards on the table, I find Goodhart’s views fairly, well, abhorrent is the word that comes to mind.  He notes in passing, for example, that “the right of people to bring in dependents should be reviewed.”  It seems to me that if you’re working somewhere, you should be able to make your life there.  Not every migrant worker will choose to do so, of course, and some jobs necessarily involve spending time away from one’s family, but settling where you work is the norm, and I don’t see what right the UK has to prevent it.  Doing so is exploitation, pure and simple, taking advantage of the weaker economic circumstances in some other parts of the world.

So I was a bit disappointed to read Alistair Campbell’s musings in The New European (“My memo to Mrs May…”, issue 2, July 15-21 2016) drifting towards Goodhart’s position:

“…in addition to discussing terms of exit, you would like [sic] to explore the possible terms on which we might stay, including another look at immigration… Might freedom of movement become freedom of labour, for example?”

No, Alistair, we should simply be asking for what the EU failed to accept first time round when Cameron asked, which is renewed transition controls with those countries from which there is a large net flow to the UK.  Clearly, 7 years has not proved to be anything like enough for the economies of Eastern Europe to converge with those in the West.  This would save the principle of free movement by amending the rules, rather than sacrificing the principle to rigid, ill-thought-out rules that were drafted on the basis of no experience whatsoever.

The bizarre situation we find ourselves in is that we’ve voted to leave the EU in part because of the number of migrants into rural areas – Boston, Lincolnshire, had the highest Brexit vote – but, judging by the frequent dire warnings from food producers, supposedly we are going to have to create (presumably time-limited) work-permit schemes to maintain the migrant work-force in those very same areas!  Yeap, we need temporary migrants to replace people who, according to David Goodhart, were treating “our national home… as a transit camp and a temporary inconvenience.”

We’ve got a big problem here.  On many levels, not just that of how society values different jobs, an aspect Peter Fleming emphasises.

According to the food producers, we have to produce as much food in the UK as possible.  Even though farming less intensively and leaving more land fallow would surely reduce soil depletion and enhance our ability to feed ourselves in the long-term.  Do we really think our national security is at risk if we have to buy cucumbers from Poland or Romania, rather than employ Poles and Romanians to pick cucumbers grown in East Anglia?  Of course it isn’t.

And apparently migrants on low wages are essential to our food production.  Yet those communities ultimately sustained by farming – Boston, Lincolnshire and its ilk – don’t want East European shops and voices on their high street. I guess Goodhart envisages migrant permits forcing workers to stay on the farm 24/7 – how else to prevent them shopping or speaking in Boston High Street? – and, I presume, traveling in blacked out vehicles to and from Stansted for their Wizzair flights.

But what bothers me most is the general attitude that it is acceptable for non-UK citizens to live in conditions that the locals aren’t expected to put up with.  The fact that only migrant workers will do certain jobs should not be a reason for ensuring a continual flow of migrant workers under schemes denying them rights to make a life in the UK.  Rather, it should be a warning that working conditions in those jobs are exploitative.  Pay – that is, the minimum wage – needs to be increased.  Only when British workers apply for such jobs should we employ migrant workers with a clear conscience.

And I seem to recollect that seasonal fruit-picking jobs were advertised in local newspapers back in the day (I’m talking ’70s and ’80s).  I read such ads as a kid and wondered if I could get some pocket-money that way.  Students, I recall, habitually supplemented their grants by helping bring in the harvest – grape-picking in France being the coolest gig.

The government should simply  face down the farming lobby.  Tell them they’ll simply have to pay more after Brexit.  Put the minimum wage up faster than currently planned to give them a clue as to what they should be paying.  Don’t give them an exploitative migrant-worker scheme.  And don’t give one either to any of the many other industries that are also no doubt lobbying ferociously behind the scenes.  If some jobs move overseas and we have to import cucumbers, so be it.  It makes no economic sense for the UK to do everything – the theory of comparative advantage and all that.

The tragic thing is that if we hadn’t accepted over the last decade that it was OK to employ migrants on lower pay than Brits would accept for the same work and conditions we might not be Brexiting in the first place.

 

August 9, 2016

After the Brexit Referendum (1) – Free Movement vs Immigration

Filed under: Brexit, Economics, Migration, Politics — Tim Joslin @ 5:34 pm

In the days before the Brexit referendum I found myself unable to focus on anything other than the last frantic round of debates, speeches and pleas.  It was clear to me even before the vote that there are several huge interconnected problems with our political culture which could lead to a major political accident.  So I began drafting a letter/paper to send, initially to my MP. Of course, the exercise grew like Topsy and, whilst I may still produce a single document, I’m breaking it up in the first instance and posting it on my rather appropriately named blog.

My original idea was to be clever and couch my thoughts as “regardless of the result of the referendum”, so please don’t think my views are just a snap reaction to the setback.

My overall view has consistently been that the referendum should never have been called and that, even if we Brexit, we must rebuild and strengthen our trading, political and cultural relationships with Europe.  Isolation is not the answer.  Instead we must address the causes of so much dissatisfaction and fix our democracy.

We mustn’t just roll over.  Rather, we need to be tough not only on Brexit, but also on the causes of Brexit!

The most significant issue for Remain was the utter, abject failure – not just during the referendum campaign, but over many years – to build a case for free movement within the EU, or, strictly speaking, the single market of the European Economic Area (EEA), which includes a few additional countries in addition to the EU.  The desirability or otherwise of free movement remains a live issue, since the UK may wish to stay in the single market, members of which are supposed to permit free movement.  Since UK membership of the single market would be highly desirable, it’s definitely worthwhile to start making a coherent argument in favour of free movement.  The horse may have bolted, but it’s still in sight.

First, let me define my terms.

“Immigrants” vs “EU migrant workers”

The core issue in the referendum campaign was “immigration”, though, whatever Teresa “Maggie” May, and many other politicians and commentators are now saying to justify their stance on immigration controls, the question on the ballot paper was Leave or Remain, so the vote gives no clear indication of the level of opposition to free movement.

Furthermore the scapegoats for all our problems are not actually “immigrants”.  Immigrants arrive on visas and are generally on a path to citizenship.  At some point, very soon in many cases, they get to vote.

The term “immigration” suggests an intention of permanency from the outset, whereas “migration” is less committal.  It may or may not lead to long-term residence.  It’s unlikely to involve an immediate change of citizenship.

I’ll therefore use the term “EU migrant workers” to refer to those who are in the UK under the free movement provisions of EU treaties.  I should say that, whatever the context, I don’t like the negative connotations of the word “immigrant” and I’d prefer a more distinct term with a different root rather than “EU migrant workers”.  But those are the words we have and it’s kind of important to actually be understood.

Of course, some EU citizens come to the UK for reasons other than to work or to seek work.  Such “EU migrants” may be economically self-sufficient – retired or the wealthy enjoying the London lifestyle, perhaps – and are unlikely to be able to claim benefits or subsidised housing.  The issues cited in the referendum campaign relate, though, mostly to “EU migrant workers”, not “EU migrants”.

The Rationale for Free Movement of Labour

Why does the EU insist on freedom of movement within the single market?  It seems not to have occurred to the leaders of the Remain campaign to try to answer this simple question.

When I started drafting this post I assumed that the argument for free movement would have been clearly stated by the founding fathers (sorry, they seem to have all been male) of the EU (or, strictly, of the organisation’s predecessor, the EEC).   If there is such a statement – and I may research further – it’s not likely to rank highly in any citation index.  We’re not talking about the Rights of Man, here.

No, all accounts I have seen suggest that the freedom of movement we see now evolved from an initial freedom of movement specifically to work, that is from the free movement of labour.

I’ll come onto why free movement purely to work is unworkable (intended, of course – I can’t resist a play on words) in a fair society, but, first, why is the free movement of labour so important?

The argument is not often stated clearly, but there are several threads of thought:

First, the observation was made in the mid 20th century – predating the EEC, I understand (sorry, more research needed) – that one reason the US economy is more dynamic than Europe’s is because of the higher rates of migration between states in the US than between countries in Europe.  This allows new industries – Motown, Hollywood, Silicon Valley – to develop rapidly and regions to regenerate through “creative destruction” rather than stagnate when the local economy declines – Detroit, for example.

Second, it’s often said that free movement of labour is necessary for free movement of capital.  I take this to mean that if companies or an entire industry moves, or an industrial  cluster exhausts the local labour supply, trained workers can move too.  The alternative would be skilled workers in one country having to retrain or be unemployed, whereas workers in another country have to acquire the relevant skills.  Those with a vocation may be frustrated in their ambitions.  This aspect of European free movement is presumably most beneficial in very highly-skilled occupations, such as research and financial services.

Third, free movement benefits the European economy as a whole when one or more countries face an economic downturn.  As we’re seeing now, young people from some of the southern European countries which suffered most in the euro crisis, who would otherwise be unemployed, are able to find work in the UK and other economies where demand is presently creating more jobs.  Or, conversely, one economy may boom and draw in labour from its neighbours.  Germany’s post-WWII economic miracle led to “Gastarbeiter” (literally “guest-worker”) deals with its neighbours (and, famously, Turkey) which clearly foreshadowed more general free movement in Europe (and complemented free movement between the Treaty of Rome signatories).

Why Free Movement of Labour is Not Enough

Having established free movement of labour – relatively uncontroversial for some decades, certainly in the UK – the EU in 1992, through the Maastricht treaty, and by various directives and court rulings, granted additional rights to EU nationals resident in other member countries, in effect a form of EU citizenship.

There’s little disagreement about the basic narrative of how freedom of movement of labour became EU citizenship, though if you listen to Farage or Johnson you’d assume it was mission-creep, perhaps a plot by European superstate zealots.

But if you reflect for a moment on how people live their lives it’s obvious that freedom of movement purely to work is not enough.  People put down roots where they work.  They may want to retire there.  They start families, or have children already.  Crucially, because people don’t necessarily make a conscious decision that they’re going to remain forever in their adopted EU country, they don’t tend to apply for citizenship.  So the rights of EU nationals to benefits, pensions, housing, healthcare, education of their children and so on has to be protected and on the same basis as the locals.  This is simply a logical consequence, which should have been instituted from the outset.

There are, however, those who deny this logical consequence.  For example, David Goodhart argues in Prospect magazine (August 2016) that:

“A guest citizen is not a full member, does not have full access to social and political rights and leaves after a few years.  Formalising guest citizenship would mean that we could concentrate rights, benefits and integration efforts on those who are making a commitment to this country. … If we don’t want to continue with relatively high inflows we have to guard full citizenship more jealously.”

In other words, he wants us to become more like Qatar.

Why Free Movement is Preferable to Other Forms of Migration

During the entire Brexit referendum campaign I only heard one voice defending free movement.  Mine.  I piped up, somewhat uncharacteristically, in a meeting organised by UCL, where the aforementioned David Goodhart was one of the panelists, to point out that, from the point of view of the home country of migrant workers, free movement is preferable to a points-based system.  It’s less of a brain-drain.  So, I tried to explain, EU countries aren’t going to agree to anything less than free movement as part of any Brexit negotiations.

Goodhart seized on what I said to emphasise that migration in itself is a brain-drain, period, twisting the point I’d made.  So, having put my head over the parapet I had to reiterate my point that free movement is less problematic than a points-based system, since not only doctors are being tempted abroad; their patients are as well.  Wealth-creators may leave for sunnier climes; but so do the unemployed.

The problem with Goodhart’s suggestion that free movement has been bad for migrants’ home countries is that their governments – most vocally Poland in the UK context – simply don’t agree with it.  And he doesn’t repeat his claim in his Prospect article, acknowledging that migration to the UK has been an “unemployment safety valve for struggling southern or eastern European economies”.

But free movement is not only preferable to a points-based system from the point of view of the originating country.  It’s also better for the UK.

First, free movement is simple.  A points-based system not only requires a huge bureaucracy just to keep track of who should be working and who shouldn’t – a dead-weight cost on economic activity – it also implies some bod in Westminster making decisions on how many pheasant-pluckers and widget-testers the UK “needs”.  And all the lobbying that’s bound to accompany the process.  No wonder that in the example of the Australian system that is always cited, the vast majority of immigrants come in with company sponsorship – recruited abroad, something the Brexit brigade are always railing against.

Second, free movement is flexible.  Because it doesn’t involve granting citizenship, migrant workers remain mobile.  Should they fail to retain work in the UK they can return to their home country or go to any other EU country.  In particular, they lubricate the free movement safety-valve (if that’s not taking the metaphor too far) – in the event of a downturn in the UK (as we will no doubt see during the post-Brexit recession) those who have already migrated to the UK for work are no doubt better equipped than UK nationals to find work in their home country or elsewhere rather than swell the numbers of job-seekers in this country.  Perhaps flexibility is why David Goodhart champions a work permit scheme.  But such schemes are flexible only for the host country, not the migrant workers.  If the UK proposes to the EU a system of sector-specific time-limited work permits – as Goodhart seems to be advocating – in return for access to markets they’ll no doubt be told where to go.

Third, if we did institute a points-based scheme to address skills-shortages, won’t that reduce even further the incentive for UK employers to train British workers?  Or to promote them.  At present, migration from outside the EU is in part capped by salary requirements.  So your employer can recruit senior staff, but not junior ones.  Is that really what you want more of?

And, fourth, free movement also confers rights.  What is possibly achieved by restricting migration to and from countries from which the net population flow is low?  Restrictions on movement are almost bound to be reciprocated, so, if Brexit leads to the end of free movement, the opportunities for UK citizens will be reduced and British businesses hamstrung because of restrictions on the ability of their staff to work in France and Germany.  As ever, it’s easy to try to solve problems by taking away other peoples’ rights.

Finally, free movement is a mechanism for economies to converge.  Migrant workers relieve unemployment in their home countries and send money back home – the so-called remittances, helping those countries’ economies.  And economic convergence may take years, even a decade or two, but is a finite process.  Net bilateral migration flows are likely to reduce eventually to zero as the source country develops.  If we keep free movement, then eventually Poles, Bulgarians and Romanians will stop coming to the UK to work.

It seems to me that, if we abandon free movement after Brexit on the dubious assumption it was “the” rather than a reason for the vote – of course there’s no denying it was a factor – we’ll be making a huge mistake.  The current migration flows from Eastern European countries are a temporary phenomenon, and would reduce as their economies transition to be more like those in the West, and anyone who thinks the UK itself won’t someday need an “unemployment safety valve” is living in cloud cuckoo land.  Indeed, net flows of EU migrants may well reverse as the UK economy goes down the pan ahead of Brexit.

The tragedy is that arguments in support of free movement as opposed to other forms of migration were so rarely heard during the referendum campaign.

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