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Employers Wonder Who Will Make the Coffee in a Britain After Brexit

From baristas to builders, Britain’s economy leans heavily on overseas labor.

Anthony Mansell, the only British barista at a Costa Coffee shop near London’s financial district, worries about what might happen if the U.K. votes to leave the European Union. All his co-workers are from other EU countries, including Italy, Spain, Bulgaria and Portugal.

“Not many English people come to the shops looking for jobs,’’ Mansell said. “I’m voting to stay in. I’d have no friends otherwise.”

migration surge

It’s not just Costa, a competitor to Starbucks Corp., that relies on migrants. The U.K. employs 2.2 million workers from elsewhere in the EU, including strawberry pickers, truck drivers, construction workers, hotel cleaners and sandwich makers. With unemployment running at 5 percent, the lowest since 2005, businesses say they could face staff shortages if the U.K. votes to leave the EU in next week’s referendum and ends the free movement of labor.

Polls have shown that concern with immigration was behind a recent surge in support for so-called Brexit, with voters worried that workers from abroad are undermining wages and taking jobs from Britons. Former London Mayor Boris Johnson, citing figures showing net migration to the U.K. rose to 330,000 in 2015, the second-highest level on record, has said a vote to leave the EU is “the only way to take back control of immigration.”

The debate has been tempered by the killing Thursday of Labour lawmaker Jo Cox, who campaigned for Britain to remain in the EU and argued forcefully that Brexit was not the way to deal with concerns about immigration.

Beer Mats

Costa’s shops span the U.K. from London to less affluent post-industrial cities and seaside towns where polls show stronger support for leaving the EU. Costa parent Whitbread Plc assumes that employees from continental Europe wouldn't immediately be affected by a "leave" vote, but the company is concerned about longer-term uncertainty, Alison Brittain, Whitbread's chief executive officer, said on a call with reporters Tuesday. Whitbread backs staying in the bloc, but others in the hospitality industry take the opposite view.

“I think what has happened until now, in terms of immigration, has been an economic benefit,” said Tim Martin, founder of pub operator JD Wetherspoon Plc, who distributed 200,000 beer mats urging customers to vote to leave. “But we’re full.”

U.K. employers created more than 400,000 jobs in the past year and if growth continues at that pace, the country won’t have enough workers to fill them, said James Hick, managing director at employment agency Manpower, which places 30,000 people a week in U.K. jobs. Unemployed British workers are in the wrong parts of the country or have the wrong skills, he said, and the idea that migrants are taking their jobs is “a total fallacy.”

Beer mats arguing for a Brexit sit in a pile at The Knights Templar pub, operated by JD Wetherspoon Plc, in London, U.K., on Wednesday, June 1, 2016. U.K. Prime Minister David Cameron said he'll hold a long-pledged referendum on the U.K.'s membership of the European Union on June 23. Photographer: Simon Dawson/Bloomberg
Beer mats arguing for Brexit at The Knights Templar pub, operated by JD Wetherspoon, in London.
Photographer: Simon Dawson/Bloomberg

“British businesses need the free movement and flexibility that EU membership brings,” he said.

Workers from other EU countries are helping Britain deal with another complaint of the “Leave” campaign -- that immigration is worsening the country’s housing shortage. More than half the construction workers in London, which is pockmarked with projects ranging from apartment towers to a new underground rail line, are migrants, according to the National Institute of Economic and Social Research, or NIESR.

“The housebuilding market relies upon labor from Europe,’’ Stephen Stone, chief executive officer of homebuilder Crest Nicholson Holdings Plc, said on Bloomberg Television.

Supermarket Berries

In the seaside towns of Kent, southeast of London, euroskepticism runs high. But the verdant region, just across the English Channel from France, also includes employers like PrepWorld, where workers don red hair nets and rubber gloves to pack berries for U.K. supermarkets, including Tesco Plc and Marks & Spencer Group Plc.

Less than 5 percent of the workforce at PrepWorld's fruit packaging facility in Kent is British.

Less than 5 percent of the workforce at PrepWorld's fruit packaging facility in Kent is British.

Source: PrepWorld

Benjamin Olins, PrepWorld’s managing director, said less than 5 percent of the 300 workers are British, with the rest coming mostly from Eastern Europe. He said that if the U.K. cuts off the supply of EU workers, the business would face higher costs. 

“If you can’t get ahold of the workforce or you have to pay workers much more, you have to pass along those cost increases to consumers," Olins said. "In Kent, labor is in short supply."

The proportion of EU migrants working in food and drink manufacturing has soared since 2004, when the British government allowed citizens from eight new EU member states, including Poland, to work freely in the U.K. In 2014, workers from those countries made up 21 percent of the workforce in food and drink manufacturing, up from zero in 2004, according to the NIESR.

“EU immigration has had a very significant impact on the U.K. labor market over the last 10 years, so reversing that would have a significant impact too,” said Jonathan Portes, an economist at the institute. “The idea that reducing EU immigration would be some sort of panacea for low-skilled U.K. labor is probably wrong.”

60,000 Drivers

Trucking companies have tried to attract British workers but can’t keep up with demand for drivers to deliver food to supermarkets and beer to pubs. Of 290,000 drivers of heavy trucks in the U.K., 60,000 -- about 20 percent -- are from other EU countries, mostly Eastern Europe, according to the Road Haulage Association.

“If it were not for these 60,000 drivers, the U.K. economy would grind to a halt within days and we wouldn’t see food in the shops,’’ said Jack Semple, director of policy at the association. “We need to have drivers. Where are they going to come from?”

Brexit Watch: The pound, the polls, and the probability of Brexit, all in one place

U.K. Independence Party leader Nigel Farage and other “Leave” campaigners have said EU citizens currently working in the U.K. should be allowed to stay in the event of Brexit, though they have vowed to curb the flow of newcomers. Some countries outside the EU, like Switzerland, have negotiated the free movement of labor across borders.

Some migrant workers say they’re doing the jobs that British citizens don’t want to do. On a rainy afternoon in June, Constanza Martinez, a Colombian-born manager at an East London branch of sandwich chain Pret A Manger Ltd., said finding staff if Britain restricts EU citizens from working in the U.K. will be difficult.

“We don’t have many British people apply for jobs," she said. “Normally British people don’t like the job and they quit."

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