The U.K. Will Miss Its Low-Skilled Immigrants
Once the U.K. exits the European Union, about 590,000 people who live there now -- citizens of other EU countries -- will no longer be eligible to stay. Most likely, the majority of those who go will be relatively low-skilled workers. Bankers and software developers probably will find a way to remain, as they are in demand. The preference for high-skilled immigrants over low-skilled ones is not entirely rational, however, and its practical application may have unintended consequences.
When people demand immigration curbs, they usually mean barriers against lower-skilled immigrants. That's a consensus in Western societies that transcends education and wealth levels, as well as ideological boundaries. Researchers found this consensus to hold in the U.S. as well as European countries.
Older studies attributed this bias to economic competition, yet that doesn't explain why highly skilled locals also prefer highly skilled immigrants, who could be potential competitors in some pretty tight job markets, such as academia. People who feel personally threatened because they work in down-trending industries or live in economically depressed areas are more likely to resent low-skilled immigration. The intuition is wrong, though. According to a 2015 paper by Mette Foged of the University of Copenhagen and Giovanni Peri of the University of California, Davis, the arrival of low-skilled workers from other countries doesn't increase unemployment among low-skilled locals, but instead pushes them toward more training and better jobs.
There are three other likely explanations for the animus against low-skilled immigrants that show up in different studies. One is that these migrants are perceived as a net drain on welfare states (in fact, immigration has a tiny net fiscal effect). Another focuses on "deservingness": People see residence in their countries as a reward for achievement. There's also the "norm-based" explanation: a skilled immigrant is more likely to have good paperwork and a job offer, and he or she likely speaks the host country's language and will be quicker to adapt.
In other words, the effects on competition and welfare are overstated, and "deservingness" and "norms" are irrational biases.
Governments, however, don't ask these questions, they just act on the consensus: The EU and the U.S. have easier procedures for high-skilled immigration. Easing the requirement for tech workers in particular is seen as an important contributor to competitiveness. Israel has just announced that it'll ease visa rules to fill a 10,000-job shortfall in the local tech industry, and the U.K.'s post-Brexit immigration policy will probably also focus on drawing in programmers and tossing out plumbers and waiters.
According to the U.K.'s Social Market Foundation, of the 3.55 million EU citizens now living in Britain, more than 1 million don't have permanent resident status. By the end of 2019, when the country should be out of the EU, about 590,000 will not have been in the U.K. long enough to qualify for permanent status. A disproportional number will be from Romania, Spain, Hungary, Greece, Italy and Bulgaria. These are low-income or high-unemployment countries that supply relatively low-qualified labor to the U.K. -- or at least people who end up taking low-qualified jobs. Their departure will be in line with Prime Minister Theresa May's immigration policy for non-EU countries that came into effect this year: immigrants can only stay if they earn a minimum of 35,000 pounds ($46,550) a year, 8,000 more than the average salary.
If this requirement is applied to EU citizens, many U.K. citizens will see what Muscovites saw in late 2014 and in 2015, when a steep drop in oil prices drove down the ruble's exchange rate. Low-skilled workers from former Soviet republics started leaving in greater numbers and coming in smaller ones. For example, in 2014, net immigration from Uzbekistan approached 37,000 people. In 2015, it turned negative: Russia lost almost 21,000 Uzbek nationals.
What followed was not exactly a disaster, but it was noticeable. The Central Asian immigrants had collected garbage, swept the streets, waited tables, worked at supermarket checkouts. Muscovites grumbled about them, and many demanded that the government introduce visas for them (high-skilled immigrants, of course, could keep coming visa-free). Now, garbage cans were suddenly overflowing, yards were unswept and sprinkled with trash. Fewer cash registers were open in stores. Cafes had "help wanted" signs in their windows, and you had to wait longer for a coffee. Things were not running as smoothly as before.
Locals didn't fill the jobs left by migrants. Such work was beneath them. Businesses, though, weren't prepared to pay higher wages in the midst of a depression.
Luckily for Muscovites, Russia remained better off economically than the neighboring countries, and total net migration stayed positive for the year. New arrivals soon filled most of the low-paying jobs. The crisis was relatively mild.
The U.K. is going to have it worse if it insists on closing its borders to the low-skilled. The economy, already weighed down by Brexit concerns, won't be able to accommodate the higher wages necessary to attract locals to the jobs vacated by immigrants. And locals will experience a drop in well-being. All the programming talent in the world won't replace missing waiters and plumbers; their rarely appreciated contribution to daily life is something that societies lose when low-skilled immigration dries up.
Since the Brexit vote, the number of hate crimes against immigrants has shot up in the U.K., especially in areas that voted "out." Immigrants may be relieved to leave these inhospitable parts of the country. Locals, however, will miss them very soon -- if they give themselves the trouble to wonder why their life is suddenly less comfortable.
This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.
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