UK regions face population decline if EEA migration ends – Financial Times

The population in some parts of the UK could shrink if net immigration from the European Economic Area ended, the first official inquiry into the needs of the British labour market has warned.

The interim findings of the Migration Advisory Committee’s report, published on Tuesday, show employers hire workers from the EEA — the EU plus Norway, Iceland and Liechtenstein — because they are better qualified and more motivated than UK workers.

The committee also points out that wages may play a greater role in the recruitment of staff from European countries than many businesses claim.

“The MAC view is that from the economic perspective . . . it is sometimes possible to hire a given quality of worker for lower wages if they are an EEA migrant than if they are UK-born,” the report says.

According to the committee’s research, workers from countries that were EEA members before the EU’s eastward expansion in 2004 earn an average of 12 per cent more than UK-born workers; those from new member states, such as Poland, earn 27 per cent less.

The pay differentials do not necessarily imply that immigration has pushed down the wages of UK-born workers, the report adds.

“To the extent that EEA migrants are paid lower wages than the UK-born, this may result in lower prices, benefiting UK consumers,” the report says.

Amber Rudd, home secretary, commissioned the MAC last July to investigate the impact of leaving the EU on the UK’s labour market, and to assess the immigration needs of the economy. The interim findings are largely based on a collation of employer responses to the committee’s calls for evidence.

However, the report includes warnings of the potential effect on the UK economy of a complete halt to net immigration from the EU.

“[Office for National Statistics] projections suggest that if the EU net immigration was zero, the population in Scotland, Wales and Northern Ireland would stop growing and even fall in the next 20 years,” the report says.

It points out that immigration is helping offset the damaging effects of an ageing population. In what the committee calls an “extreme assumption”, the report says that if net immigration from the EU ended, the proportion of older people in the UK would grow sharply. The ratio of over-65s to people aged 16 to 64 would rise by nearly 50 per cent, from 293 per 1,000 in 2018, to 432 per 1,000 in 2039.

The committee’s interim findings are likely to add to pressure for the government to ensure the UK’s labour market remains reasonably open after the country leaves the European Union in March next year. A decline in the number of EU migrants arriving in the UK since the Brexit referendum has already pushed employers to seek more workers from beyond the EEA, triggering caps in the numbers of “Tier 2” visas issued to skilled migrants.

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