What freedom of movement could mean for UK jobs, wages and unemployment

Andy Burnham has called for the country to have an “honest discussion” about returning to free movement with the European Union. While he has pledged to “never move ahead of the British public when it comes to Brexit”, his comments have split his own MPs and been heavily criticised by opposition politicians. But how could a return to free movement impact UK jobs and workers? Shorts The sectors that would be able to fill shortages Freedom of movement is a core principle of the European Union. It allows citizens of EU member states – as well as citizens of European Economic Area countries such as Iceland and Norway – to travel, live, work and study in any other participating country without needing a work permit. While the UK voted to leave the EU in 2016, access to freedom of movement officially ended in 2020 with the introduction of the Immigration Bill. The largest decline in EU employment was in London, which saw a 10 per cent drop from June 2019 and June 2021, a report from the Migration Observatory found. The drop in hospitality workers in the capital was just under 30 per cent, according to the independent research project, run by the University of Oxford. Ben Brindle, a senior researcher at the Migration Observatory, told The i Paper industries where “low-skilled jobs make up a bigger share in the sector” would benefit the most under a return to free movement. This is because they would have a bigger labour market to recruit from. “For instance, hospitality and transport before Brexit were able to recruit EU citizens, but when the post-Brexit system came in, it took a route out for low-skilled EU migration and we saw the hiring in those jobs fall,” he said. Naomi Smith, CEO of Best for Britain – a campaign group formed to stop Brexit – added workers in the creative sectors, who had seen their “opportunities curtailed drastically”, would also “see a disproportionate gain”. “We often hear about people mentioning touring musicians and touring artists, but actually that conceals the extent of that network,” she said. “If you’re putting on a performance, you have your crew, make-up artists, fashion stylists. So, everything from catwalk shows through to major productions and orchestras being able to travel.” The workers that could see wages squeezed But Robert Armstrong, head of finance and research fellow at the right-wing Institute of Economic Affairs think-tank, said increased immigration “keeps wages lower by increasing labour supply”. He said that “entry-level service sector jobs” could be most impacted. Such jobs include hospitality, food and shop workers. Despite widespread shortages after Brexit, companies did not significantly increase wages to attract staff, a 2023 report from the Migration Advisory Committee, an independent body that advises government, found. However, they did improve working conditions and change recruitment strategies to focus on UK-born workers – meaning progress in these areas could stall if freedom of movement returned. But Brindle said the “evidence suggests there shouldn’t be much of an impact on UK workers. Because the number of jobs in the economy isn’t fixed, if you have more migration of a certain type of worker, it can increase the competition but it can also increase demand because migrants are consumers themselves”. Smith added that since Brexit, the minimum wage has also risen, with more employers now paying the living wage. The jobs that could be harder to get Job vacancies are now at their lowest level for five years this year, with a big drop-off in roles for young people. Small firms blamed rising labour costs as a key reason in scaling back their hiring, the Office for National Statistics (ONS) found. This means any increased competition for UK jobs could make it harder for young people to get their first job or the unemployed to find work. Almost one million 16- to 24-year-olds in the UK are currently not in education, employment or training (Neet). ONS data from June showed the professional services, retail and hospitality all saw large drop in vacancies. Armstrong said there “clearly isn’t a lack of low-skilled labour in the UK. Our main problem is employing that labour. Employment costs on businesses are too high and so are personal taxes which is driving higher unemployment”. He also said the UK’s “high level of unemployment and high level of taxation on both employer and employee, [means] it is conceivable that few Europeans are tempted to the UK in the short term”. “The more [that] come, the more competition young Brits will face for their first job. If the PM wants to help young Brits he should make it cheaper to hire them by removing taxes, not seek to bring someone cheaper in from abroad.” But Smith added return of freedom of movement would “grow the economy because we won’t lose out on opportunities for people to cross the border to work and study”. “Once we have more growth in the economy and we have more certainty for businesses, you will also see investment begin to increase within the UK economy as well,” she added. The workers who could leave the UK Brindle said “we know very little about UK emigration”, but said there is still “normally a higher earnings potential in the UK”. But Smith pointed out the “economies of countries like Spain and Poland are growing far faster than the UK’s at the moment” – meaning they may be more attractive to Brits looking for better job opportunities abroad. Smith said: “It’s not just one door opening for Britain, it’s 27 doors opening for young Brits. There are potentially those who may be unemployed here and they will have the opportunity to work on a project in Spain, France, Italy, Germany or wherever.” She added service jobs “outweigh manufacturing so hugely within our advanced economy, that having the ability to send your teams to work for offices in and around the EU will be huge. “We’re talking about things like architecture, accountancy, business consulting, banking. They will find this absolute mana from heaven.”