Migration plans alarm business groups

Construction site Image copyright Getty Images

It appears to fulfil the government's pledge to end uncontrolled migration from the EU while not shutting the door to workers the economy needs.

However, business groups are concerned that these proposals seek to make it much harder to bring in unskilled than skilled workers when both are needed, while enlisting companies themselves as a proxy border force to ensure compliance.

Both of those prospects will alarm big and small businesses alike. The Food and Drink Federation said today that the government paper "shows a deep lack of understanding of the vital contribution that EU migrant workers make - at all skill levels - across the food chain".

Previously, the trade body revealed that 36% of its members said their businesses would be unviable without access to EU labour. Nearly all of this would be classed as unskilled and therefore require companies to justify the economic need to hire abroad and place a time limit on any EU workers employment.

Thirty per cent of construction firms surveyed by the Royal Institution of Chartered Surveyors said hiring non-UK workers was important to the success of their businesses. That's not surprising given that 8% of the workforce - nearly 200,000 workers - are from the EU and most in the industry think that RICS estimate is on the low side.

Even for highly skilled workers and their employers, there will be concern about proposals to make it harder to bring in family members to work. Many teachers and academics come to expensive university towns and rely on their spouse being able to work to afford high housing costs.

In July Jeremy Corbyn said that the "wholesale importation of underpaid workers from central Europe had destroyed conditions for workers - particularly in the construction industry".

Since then, Keir Starmer has indicated that Labour would seek to remain inside the single market and the customs union during any transition period after Brexit in March 2019. According to Brussels, that is impossible without freedom of movement.

This draft paper also seems to contradict Philip Hammond and Amber Rudd, who spent the summer reassuring business that EU workers could still come to the UK after March 2019 - as long as they registered when they arrived.

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Many will think this proposal is an 81-page way of saying "British jobs for British workers" and will welcome the additional pressure it will put on businesses to employ and train workers at all skill levels.

However, it's not as if there are lots of spare UK workers available to take up these jobs and new ones if, as everyone hopes, the economy grows.

Unemployment is at its lowest level since 1975 and there is a growing consensus within the Bank of England that there is little - if any - "spare capacity" in the labour market.

What that means is that we are at the point when any additional growth from here starts to push up wages (good), prices (not so good) - and prompt the Bank of England to start raising interest rates(whether that is good or bad depends on whether you are saver or borrower).

Autumn chill

Whether these proposals will see the light of day is unclear. But what is emerging is that the decade-long rising tide of immigration from the EU has already stalled - and in the case of central and eastern Europe started to reverse - as the mood music and financial rewards for coming here become less attractive. That fact has been welcomed by government.

It is worth remembering this document came out of the Home Office - Theresa May's old stamping ground and comfort zone. Before the election it was clear that when it came to immigration, in the perceived tussle between the needs of business and the concerns of voters, the voters won.

Since her majority was cut it seemed that business was welcomed in from the cold by Philip Hammond. The government's reluctance to distant itself from this leaked paper is causing an autumn chill in many offices, factories and building sites today.

The leaked government proposals to curb immigration from the EU has sent a shiver down the spines of some business groups. It is being treated with caution by some who are not convinced it represents the government's latest thinking on this key issue, but it is the clearest indication yet of its direction of travel and the government has certainly not disowned it today.

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