The real Brexit Debate: Fairness between Consumers and Producers

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August 10, 2017 by Paul Goldsmith

consumer producer

Since the Brexit vote, there has been a lot of talk about effect of immigration controls on our public services and many industries that rely on cheap labour. This is understandable as what we wouldn’t want to happen is to become unable to fill our job vacancies because of a political decision we made. But the tale of the possible impact of Brexit on our workforce assumes that pay and working conditions stay the same even if immigration decreases. This misunderstands the balance we have in this country between producers and consumers and mispredicts what would have to happen if the endless supply of workers prepared to work for less money and in worse conditions dries up.

Jeremy Corbyn waded into this debate recently. Speaking on the Andrew Marr show, the Labour leader said that after leaving the EU, there would still be European workers in Britain and vice versa. But he added: “What there wouldn’t be is the wholesale importation of underpaid workers from central Europe in order to destroy conditions, particularly in the construction industry.” He went on to explain that in the future, foreign workers would “come here on the basis of the jobs available and their skill sets to go with it. What we wouldn’t allow is this practice by agencies, who are quite disgraceful they way they do it – recruit a workforce, low paid – and bring them here in order to dismiss an existing workforce in the construction industry, then pay them low wages. It’s appalling. And the only people who benefit are the companies.”

Two conversations I had in the past year whilst researching for my book illustrate this point in different ways. One was with a senior manager at a recruitment firm, bemoaning the 250,000 job vacancies on his books, caused by the jobs not being high enough pay, with good enough working conditions, and in the right location for many British people, thus requiring more immigration. However, he wryly observed that if the supply of cheap labour from Europe dried up, maybe companies would have to pay more, provide better working conditions, and locate in the right place.

Let’s extend this to our public services. Many people say that our schools and hospitals for example rely on immigration. Maybe Brexit would force a new reckoning, in which we are asked through taxation to fund higher pay, better training and better working conditions now that our public services cannot rely on the endless supply of cheap labour with lower standards. Given income tax is progressive, this would put a larger burden on those with higher incomes, but that is fair, isn’t it?

The second conversation was with a Marxist activist, who was campaigning for Uber and Deliveroo and other gig-economy services to increase pay and improve conditions for their workers. I asked whether the public would accept the higher prices that would have to be charged if costs rose for these companies, and the activist pointed out that the vast majority of their users were middle class with a higher income and so could afford those higher prices, enabling those who serve them to have a sensible living standard. It was hard to argue against that, because again, that’s fair, isn’t it?

Globalisation has brought many benefits, but they are not distributed fairly within countries and between countries. One of the reasons the dominant London bubble was so surprised by Brexit was that they don’t live lives in which globalisation brings such costs. But if you work in construction outside London and have seen your pay almost halve, or if you are a fisherman and have seen your catch more than half, you might not be a big fan of the EU. We who benefit from the EU (and I am one of those) need to learn from this soon as the Brexit that is delivered will need to take account of the whole population, not just us.

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One thought on “The real Brexit Debate: Fairness between Consumers and Producers

  1. Tim Harrison says:

    Guardian writer John Harris – who eloquently reported from the front line of low-wage rural migrant employment ahead of the referendum (and is quoted in your book) – sees a vision of “stupidly increased food miles and basic fruit and veg suddenly refrigerated to within an inch of its life and transported across time zones” if the current army of international strawberry pickers disappears. Doubling wages to make such jobs attractive to Brits will make it impossible for UK food producers to compete.

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