On June 23, 2016 Britain made history by voting to leave the European Union in what has come to be known as the Brexit. The pro-Brexit voting poll revealed two, not altogether surprising, demographic factors: The young and urban want to stay in the EU, while older, retired residents in mainly provincial and rural Britain have little faith in what the EU can deliver.
What is most ironic—if not tragi-comic—about this divide is that those who will feel the consequences of the exit the least managed to speak on behalf of the rest. The main Brexit argument rests on the assumption that the EU’s open borders have had disproportionate, largely negative impacts on the United Kingdom’s (UK) economy by allowing EU migrants to steal jobs from native workers. But the working-age voters, who are the primary competitors on the labor market, voted for EU migrants to remain in the national economy. Why?
Let’s compare some of the arguments made by the “Leave” team with some hard data.
Assumption 1: Migrants Are Taking Over the UK
Contrary to what you may have heard, the UK is not the main destination for migrants in the EU. According to the latest statistics from the House of Commons, foreign nationals accounted for 8.4 percent of the total UK population in 2015, which places the UK tenth among EU countries—behind Germany, Belgium, Austria, Luxembourg, and others.
Lest we forget, since the UK was never part of the Schengen-agreement, its borders have only been open to EU citizens, not to refugees and non-citizen residents of other EU countries. The UK’s refugee population is among the lowest in the EU, accounting for 0.19 percent of the total British population.
In fact, the number of non-EU migrants in Britain has fallen steadily since the early 2000s due to tightened immigration rules, while the number of EU migrants has risen exponentially. Out of the 3 million non-UK nationals currently working in the UK, 2 million are EU citizens.
Meanwhile, UK citizens have also benefitted from EU’s open-border policies. Between 2000–07, the UK accounted for the largest net outflow of domestic nationals in the EU, and there are currently 1.2 million Brits living in other EU countries. Last year, 630,000 came to the UK, while 297,000 Brits left the UK during the same time, leading to a net migration of 333,000.
Assumption 2: Migrants Are Stealing Jobs from the Brits
Yes, migrants come to the UK mainly to find work and yes, their employment rate is higher than among UK-born. But statistics show that this is not a zero-sum game. The national labor force has increased simultaneously with the increase in migration, reaching a record-high labor force in 2015.
A recent study from the London School of Economics (LSE) found that “EU immigration has not had significantly adverse effects on average employment, wages, inequality or public services at the local level for people born in the UK.” Separate studies by Migration Advisory Committee (MAC) and by researchers Rosazza-Bondibene and Portes (2012) found that immigration has no impact on UK-born employment. In addition, figures from the Migration Observatory at Oxford University show that wage effects of immigration are likely to affect migrants rather than UK citizens, as incoming and existing migrants compete for the same jobs.
In other words, migrants’ presence on the labor market does not come at the expense of national workers; rather, it increases national productivity, leading to an overall expanse of the labor market.
Assumption 3: Migrants Are Poor and Live Off Social Subsidies
Wrong: Migrants contribute more to society in terms of taxes and consumption than they take back, helping reduce the budget deficit. A recent study by UCL reveals migrants in the UK are less likely than nationals to receive state benefits or state credits. According to the UK’s Revenue and Customs control, those who arrived in Britain in the last four years paid £2.54 billion more in income tax and national insurance than they received in tax credits or child benefit.
Migrants in the UK also tend to be more educated and younger than their UK-born counterparts: 62 percent of EU migrants in the UK have a university degree, compared to 24 percent of UK-nationals. They thereby fit Oxford’s Migrant Observatory’s prediction that young, skilled migrants working in highly paid jobs are more likely to make a positive net fiscal contribution than those working in low-wage jobs or those with low employment rates.
The Brexit will change EU migrants’ status in the UK considerably. Currently, EU citizens in the UK have equal access to public services including health care and education, and they have unrestricted work permits. The question is whether the changed status will affect an exodus. Shutting down the pipeline of talented, specialist, and skilled labor employed in the public sectors will hit welfare services hard. The British health sector, which has been sustained by steady recruitment of doctors, nurses, and social care workers from the EU, would facing acute lack of manpower if migrants leave the country. Academics across the UK have warned that Brexit would cause a disaster for British universities, which depend strongly on the research exchange, funding support, and steady recruitment of talented students that comes with EU membership.
Assumption 4: Migrants Hurt the UK’s Economy
Quite to the contrary: Studies warn that ending free movement of labor will likely harm the national economy.
In the run-up to the Brexit election, a study by LSE’s Center for Economic Performance showed that reducing the migrant labor force would have a negative impact on the economy by: (1) curtailing the UK’s access to the EU’s Single Market; (2) lowering the GDP by lowering the labor force and employment rate, leading to a budget deficit, and; (3) lowering national productivity. The UK’s restaurants and midmarket retailers have also said leaving the EU could cut the flow of relatively cheap labor, leading to higher costs and a reduction in profits.
Moreover, several experts and financial institutions including Bank of England, International Monetary Fund (IMF), and Century Foundation fellow Jeff Madrick predict that the UK’s economy is at great risk of increased recession and austerity as Brexit will significantly decrease global trade and financial flows. As The Economist’s editorial board wrote earlier this year, Britain needs EU more than the other way around: The EU market accounts for half of Britain’s export, whereas Britain only imports 10 percent of EU goods.
Slowly realizing the shortcomings of their decisions, several “Leave” advocates are now starting to backtrack on their promises. After the voting results ticked in, British pro-Leave member of the European Parliament Daniel Hannan said, in reverse of his campaign promises, that Britain would have to accept the free movement of workers to keep the economy going.
If the negative economic predictions of Brexit come true, the UK might even end up inviting migrant workers back in to restart growth and production. But the EU’s young working force may have moved elsewhere by then.
In a general tide of anti-immigration sentiment sweeping across Europe, politicians in France, Netherlands, Italy, Austria, and Scandinavia are now threatening to follow in the UK’s steps and abandon the union. But history may well prove that migrant workers were Europe’s “big bad wolf”; the illusion of a threat and not the real problem.