Brexit Will Do More To Hurt Workers' Wages Than Raise Them, Resolution Foundation Report Says

'A fall in inward migration will not significantly help boost wages'.

16/08/2016 00:04 | Updated 16 August 2016

Brexit will do more to hurt low-paid workers’ pay than boost it, a major think tank has said in a demolition in one of the biggest arguments in favour of leaving the EU.

Brexiters claimed during the campaign that the influx of EU workers to Britain was suppressing wages and stricter immigration control once we are outside the EU would address this.

But research by the Resolution Foundation, published today, finds that, while fewer immigrants would likely mean a slight increase to wages, this would not be “significant” and would be offset by the bigger hit wages would take by the pound’s fall in value and slower economic growth.

Resolution Foundation

The Foundation tried to work out how hourly pay would be different if there had been no migration from the EU to Britain and if net migration had been only 99,000.

David Cameron famously committed to bring net migration to below 100,000 in 2011. It went on to rise to record highs of more than 330,000. 

The Foundation’s research found that hourly pay would have been only £0.03 higher without immigration and £0.02 higher if net migration had been 99,000.

The research also looked at how the earnings of British-born workers in various professions would have affected by the same scenarios.

It found variations, with some professions having slightly higher pay - the most being £0.03 more an hour for “managerial occupations” without immigration. Meanwhile, people working in skilled trades would receive £0.04 less in hourly pay in the same situation.

Resolution Foundation

“While it is wrong to say migration had no effect on the earnings of native workers, specifically for those in low-paying sectors, the effect was very small,” the research said.

“A fall in inward migration will not significantly help boost wages, which are more likely to be suppressed by sterling’s depreciation in the short term and the wider impact of Brexit on growth in the years ahead.”

This conclusion contradicts claims by the Leave campaigners, who said Brexit would raise wages by reducing the number of immigrants competing for jobs.

In March, Lord Rose made comments conceding there could be a rise in low-skiller labour wages but said this was “not necessarily a good thing”.

Lord Rose chaired Britain Stronger In Europe and his comments were seized upon by his opposing side.

Ukip MEP Jane Collins said: “Because of mass migration wages have been pushed down to the very minimum and people are still choosing between heating and eating.

“That’s without even going into those British people who have been desperately seeking work... 

“They might not be so good for big business which won’t be able to exploit the free movement of labour the EU brings them but it’ll be a huge bonus for everyone else.”

Brexit campaigner and Tory MP Steve Baker said: “A vote to remain is a vote to continue a migration policy which discriminates in favour of EU citizens at the expense of lower paid workers.”

In its editorial backing Brexit, The Sun said staying in the EU meant “being powerless to cut mass immigration which keeps wages low”.

Reacting to The Resolution Foundation research, Green Party leader Natalie Bennett said: “Voters were sold a lie during the EU referendum. In spite of all the evidence to the contrary, the Leave campaign fought the referendum on the argument that lower migration means higher wages -  an argument that came at a high price, sowing division in our communities.”

The Resolution Foundation also said the jobs sectors that depended heavily on immigrants would need help doing with the shock of Brexit.

Jeremy Durkin/PA Wire
Food manufacturing is among the industries highly depend on immigrants that could suffer 'short term and sever damage' from Brexit, the research warned

More than 30% of people working in food manufacturing, clothing manufacturing and domestic service are immigrants and the government must to act to safeguard their rights and prevent those industries from suffering “short term and severe damage”, the think tank said.

Its research said: “Given the fact that migrants in these sectors earn a lot less than average native wages it is unlikely that these sectors will be able to substitute migrant for native labour without rethinking their business models.

“Therefore the government will need to ensure that these sectors are central to its new industrial strategy, including looking at how they can invest in skills and labour-saving technology.”

HuffPost UK approached the new Brexit Department for a response to the research but received a response from the Treasury instead.

A spokeswoman said: “Since the great recession the UK employment rate has grown more than any other G7 country, living standards have reached their highest ever level and for almost two years wages have risen faster than prices – and will be helped further by the new National Living Wage which came into force this April. 

“But there is more to do to build and economy and country that works for everyone and not just a few, and as our economy adjusts to a new post-EU reality we are determined to do exactly that.” 

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