More Migrant Workers Not Expected to Have Big Impact on UK Economy, Experts Say

The Canary Wharf financial district in London on April 26, 2019. (Leon Neal/Getty Images)

Getting more migrant workers into the UK will help some industries, but it’s not expected to have a significant impact on the economy, experts said.

It comes after Chancellor of the Exchequer Kwasi Kwarteng appeared to confirm media reports that immigration rules for migrant workers will be changed to address labour shortages.

Kwarteng told the BBC on Sept. 25: “It’s not about relaxing rules. The whole point about the Brexit debate if we want to go down there was we need to control immigration in a way that works for the UK.”

When asked if additional occupations would be added to the Shortage Occupation List (SOL), Kwarteng said: “Home Secretary [Suella Braverman] will make a statement in the next few weeks. But we have to grow this economy.”

UK Prime Minister Liz Truss and Chancellor of the Exchequer Kwasi Kwarteng visit Berkeley Modular, in Northfleet, England, on Sept. 23, 2022. (Dylan Martinez - WPA Pool/Getty Images)

Skills and Labour Shortages

Business groups, including the Confederation of British Industry and the British Chambers of Commerce (BCC), have long called for a change to the SOL.

Jane Gratton, BCC head of People Policy, told The Epoch Times businesses had not been able to operate fully due to labour shortages at all skill levels.

Referring to the BCC’s latest Quarterly Recruitment Outlook survey, Gratton said three out of four businesses that were looking to hire people couldn’t fill the vacancies during the first two quarters this year, meaning businesses had to turn away new orders and in some cases “don’t have the skill to complete the work that they have on their order books.”

Gratton said businesses prefer not to hire from overseas but have to do so due to “this critical shortage of people locally,” citing the example of employers who couldn’t find people they can train to do jobs that require “just below level three [qualifications],” referring to school leaving qualifications.

Asked whether increasing migrant labour would have different levels of impact on big businesses and smaller businesses, Gratton said SMEs (Small and medium-sized enterprises) tend to lack the experience and funding to use the immigration system and would welcome a reduction in the cost of becoming a licensed sponsor.

The Job Centre Plus logo is seen displayed outside the employment office in Trowbridge, England.
(Matt Cardy/Getty Images)

Madeleine Sumption, director of The Migration Observatory at the University of Oxford, and Kristian Niemietz, head of Political Economy at the Institute of Economic Affairs, said they do not expect a relaxation of immigration rules will have a significant impact on the economy.

Niemietz said empirical evidence shows a liberal immigration regime has a “broadly positive” impact on the economy because it helps better match skills to jobs and has generally increased GDP per capita, but he’s not expecting a massive impact in this case because the current system is “already a fairly liberal one.”

Points-Based System

Under the post-Brexit points-based immigration policy introduced by former Prime Minister Boris Johnson’s government, E.U. citizens could no longer move to the UK without visas since Jan. 1, 2021, but there was a liberalisation of immigration policies for skilled non-E.U. workers.

The cap on the number of non-E.U. skilled migrant workers was discarded, and applicants in some occupations can be granted visas with salaries lower than previously required, according to The Migration Observatory.

Post-study work visa, which was introduced in 2008 and scrapped in 2012, has been re-introduced, and employers no longer need to advertise a job in the UK for at least four weeks before hiring from overseas so they can save on administrative costs.

Near-Zero Economic Impacts

“Therefore, I’m not expecting massive differences,” Niemietz said. “But what’s currently quite difficult is the issue of lower-skilled migration. If they extend shortage occupations, then that could become easier.

A crane operator works above the seafront at Weston-super-Mare in England on Sept. 22, 2022. (Geoff Caddick/AFP via Getty Images)

Sumption told The Epoch Times that research suggests high-skilled migrant workers, who are already eligible under the current system, tend to have the greatest economic impact, but there had been no suggestions in media reports that the upcoming changes will include encouraging more high-skilled migrants to come.

Regarding an increase in lower-skilled migrant workers, “past evidence basically suggests that while there would be benefits to specific employers who use those schemes, but the kind of macro impact of it is likely to be pretty close to zero just because the impacts of migration into low wage jobs [are] not very big,” she said.

“If there are workers available to do particular kinds of work, those industries may expand,” Sumption said, noting that the size of a particular industry “may matter for political reasons,” but has few impacts from a purely macroeconomic perspective.

Sumption also highlighted other challenges related to the SOL.

It often ended up benefiting the “loudest” lobbyists instead of places where labours are “economically most needed” because “working out that idea of need is just so difficult and the evidence just is quite poor,” she said, adding that exploitation is also an issue when it’s difficult for people to change jobs due to visa requirement.

Net Migration

Relaxation of immigration rules will likely be met with resistance from some Conservative and Brexit voters, nearly half of whom now consider immigration one of the top three issues facing the UK, according to the latest YouGov issue salience survey.

Previous research suggested human values, instead of economic considerations, are stronger indicators of the public’s attitudes toward immigration.

Eric Kaufmann, professor of politics at Birkbeck College, University of London, previously told The Epoch Times that unless the ruling Conservative Party starts reducing the number of net migration, it’s like to lose the next general election because many Brexit votes and red-wall voters “won’t show up” again.

In an article published in 2019, Niemietz argued that anxieties about immigration are “not really about overall numbers,” arguing there was public support for skilled migration and free movement between Canada, Australia, New Zealand, and the UK.