Business Immigration and the EU referendum

16 June 2016

Out of all the topics of debate surrounding the EU Referendum, few are more emotive than the subject of immigration. Recent polls show it is likely to feature heavily in people’s decision making and that 75% of people want the present level of net migration to be cut. This goes some way to explaining why it has become such a key battleground in the referendum campaign.

But how clear are the arguments on either side? Do employers have a different perspective? And how much emphasis should we place on this issue when making one of the most important decisions in our recent history?

In a nutshell

The Leave campaign argues we cannot control immigration as long as we remain members of the EU and that this puts pressure on public services and pushes down wages. The Remain camp claims that immigrants pay more in taxes than they take out of the system and that EU immigration should reduce as a result of the “emergency brake” deal struck by David Cameron (restricting access to benefits for those who move to the UK).

As with much of the EU debate, it is difficult to pick through all the arguments, counter arguments and statistics in order to make an informed choice. But while personal opinions vary enormously regarding the impact of current net migration levels on the country as a whole, many employers will be trying to work out the implications for business immigration and wages.

Pressure on wages

There is evidence that the migration of low paid workers puts downward pressure on the wages of people in similar occupations – an observation which obeys the fundamental law of supply and demand. What is more difficult to gauge is the overall effect that cutting the labour supply would have (i.e. by reducing net migration). Some salaries may indeed increase but other vacancies may simply go unfilled. An increase in salaries will benefit some workers but could lead to businesses cutting recruitment or exploring alternatives, such as automation and artificial intelligence, which become less expensive by comparison.

For those wishing to take the argument deeper still, some economists state there is a trade off to be made between maximising GDP (the economy’s total output) and achieving maximum employment. Which is more important: the nation’s overall wealth or the gainful employment of its citizens? That’s not such an easy question to answer. Some politicians have recently been attacked for daring to suggest that there might be more important things in life than GDP so I will leave it to you to make your own mind up. But suffice it to say, that looking at salaries in isolation does not give you the complete picture when it comes to the nation’s economic health.

Skilled workers and the search for talent

The position with regards to highly skilled workers is, unfortunately, no easier to resolve. Businesses frequently highlight skills shortages and the challenges of recruiting highly skilled employees. In areas of the economy as diverse as the technology sector, the National Health Service and football’s Premier League, recruiters regularly look abroad to find the most qualified candidates. Yet opinions in the business community remain divided regarding the impact of a possible Brexit, as witnessed during MHA MacIntyre Hudson’s recent EU debate.

Some employers lament the fact that they would potentially need to go through a costly and time-consuming process to recruit skilled individuals from within the EU. Whereas others hope a reduction in low-skilled migration from the EU would lead to an increase in the quota of skilled workers they are permitted to recruit from abroad, whether from the EU or farther afield. Your viewpoint here is likely to depend on whether your workforce is primarily skilled or unskilled, and the extent to which you recruit from overseas.

The problem is that we cannot be sure how the business immigration landscape will change after the referendum. If the UK votes to leave, nobody knows whether or not the free movement of labour will continue. If not, future governments will have the power to control net migration far more tightly than in the recent past, but what will they do with that power? On the other hand, if the UK votes to remain, nobody can predict what effect Cameron’s “emergency brake” will have on the level of EU migration, or the knock-on effect to business immigration from outside the EU.

The spotlight has yet again been shone on immigration and we cannot rule out subsequent policy changes on non-EU immigration, irrespective of how the nation votes on June 23. Whatever the result, it seems that businesses are simply going to have to brace themselves for change.

EU citizens currently living abroad

Some employers have questioned what will happen to EU citizens currently working in the UK in the event of a leave vote. Whilst I am not an expert on international law or the Vienna Convention, the consensus appears to be that rights already acquired would not be affected, so nobody would be forced to leave the country in which they currently reside. This applies equally to EU citizens living in the UK as to UK citizens living overseas. Hopefully, this provides a little reassurance amid a wave of uncertainty.

What to conclude?

When debating immigration, we must not forget the vital role that migrants play in the economy and especially in the highly skilled sector. However, for employers who wish to focus on business immigration and attracting talent from overseas, there are no easy conclusions to be drawn. It seems reasonable to argue that tighter controls over the number and profile of people coming to the UK would give us the freedom to make better choices designed to boost the economy at any given point in time. But whether we make smart choices is an entirely different matter.

What we can say with certainty is that immigration policy matters whether the UK is in or out of Europe. Successive UK governments have failed to meet their own immigration targets or to move the debate into more sensible territory. Whether the country votes to leave or remain in the EU, we should demand more of our government in these matters. But as controversial as it may seem to some, in the absence of a crystal ball to predict the future, perhaps immigration should not be the core issue when the national goes to the polls on June 23.

If you wish to discuss any of the issues covered in this article and how they apply to your business, ‎Phil Partington is a specialist in international employment matters for MHA MacIntyre Hudson. Please do not hesitate to contact Phil if you have any question.