With millions in profits, we don't need mass migration to increase GDP

With millions in profits, we don’t need mass migration to increase GDP

Would you like to work for one of Britain’s biggest fashion retailers? If so, Next is looking for staff at its warehouse in Dearne Valley near Rotherham. “You could walk five miles a day!” tweets its ad, “constantly pushing and pulling large tote boxes on treadmills and working on your feet.” The shift starts at 5am, so you will need your own transport. And the starting salary? A princely price of £9.80 an hour, 30p above minimum wage. Maybe more, if you’re lucky. But I’m not sure to bet on it.

But it looks like Next is struggling to fill those vacancies. Nearby Asda is offering £10.10 an hour to shop online at its store in town, or £12.64 to be a salesperson. Why break your back on a 5 a.m. shift for so much less money? It’s a tough market. Could warehouses need to offer more competitive salaries? But Lord Wolfson, managing director of Next, asks a different question: where have the Poles gone? There is only one answer, he says: import more workers. And quickly.

The noble lord was on television today, painting a picture of a country now on its knees for lack of immigrants. “We have people lining up to come to this country to pick crops that are rotting in the fields, to work in warehouses that otherwise wouldn’t be usable,” he said. “And we don’t let them in!” And yes, he was – once – a big Brexiteer. “But it’s certainly not the Brexit I wanted, or even a lot of people who voted for Brexit.” This is where I have to disagree with him.

Perhaps the main reason people voted for Brexit was a sense that globalization was in danger of taking a wrong turn, allowing employers (and politicians) to neglect whole swaths of the population. The NHS has been one of the worst: half of new registered nurses last year came from abroad. The fact that we are not training enough nurses to staff our own National Health Service is almost the very definition of myopia. Would it have hurt so much to train more here? Too many employers have become dependent on importing rather than training workers. Or save money on machines by using cheap humans instead (we are one of the least automated G20 countries).

Instead of doing the hard work of hiring the long-term unemployed, British employers were able to pick up the phone from an agency in Gdansk, which would then hover over whoever was needed for warehouse shifts. Cheaper? Certainly. Did it make our clothes cheaper? Most likely. But good for the country? Absolutely not.

In the two decades before Brexit, two-thirds of job growth was attributable to foreign-born workers, so the ‘job miracle’ did not help housing estates in periphery as much as it could have done. The indisputable progress made by David Cameron’s welfare reform has been wiped out by the lockdown and there are now 320,000 fewer workers than before the pandemic. It’s like losing a city the size of Bristol from the economy. No wonder GDP has stagnated.

The funny thing is that Brexit has not slowed the influx of migrants. Visas are being issued at the rate of 8,500 per week at last count, the highest on record. The newcomers are more skilled, which is perhaps what annoys Lord Wolfson: there isn’t as much fodder in the warehouses these days. But he should direct his anger at the dysfunctional welfare system.

Take Rotherham, whose citizens show so little enthusiasm for Lord Wolfson’s 5am shifts. Some 16% of the city’s working-age population receive unemployment benefits. So here’s the puzzle: how can mass job vacancies and mass unemployment coexist in the same city? What can be done to help people on social assistance to work? Higher salaries, of course. But they also need more active government help, whether with skills or medical conditions. Remember there are seven million people on the NHS waiting list.

Rotherham is by no means a welfare black spot. In many of our major cities – Birmingham, Glasgow and Liverpool, to name but a few – 20% of the working-age population now receive unemployment benefits. In Middlesbrough it’s 23%. In Blackpool, 25%. Across the UK, that’s 5.3 million people: a staggering and outrageous figure that is almost entirely glossed over in political debate because the data exists in fragments that no one in Westminster has yet added up.

The Conservatives have taken a see-no-harm approach, boasting that unemployment is near a 50-year low (technically true, if you take a narrow definition). “Rishi will probably continue to use this boast, even though we all know it’s nonsense,” said someone who recently advised the prime minister on the matter. “People won’t see it’s over five million [on out-of-work benefits] because Universal Credit made it all harder to understand. Even the Labor Party believes it is just three million – a figure Alison McGovern, the shadow jobs minister, used in parliament last week.

Many of the five million will be genuinely unable to work: long-term sick, or perhaps on the ever-growing NHS waiting list. But Sunak should be optimistic that at least a million people can get back to work. It will be difficult, but it is not clear that he has other options. We are probably already in a recession that will only be made worse by the tax hikes expected in his fall statement next week, so moving people from benefits to work will be one of the few tools he he remains.

I would go further and say that his only hope for adequate economic growth is to recognize and then reduce the benefit backlog. No country can prosper properly by neglecting 13% of its population. This is one of the fundamental truths that the Brexit vote was supposed to force politicians and businesses to confront: we have people here, ready to work. But they need training and encouragement – ​​from business, government or both. To ignore them, and import workers instead, would not only be an economic failure, but also a moral failure.

As Sunak plans his fall statement, he should see the massive unemployment figure as the foundation for an economic recovery. With enough imagination, there will be ways to help people get back to work. The economy needs them, and they need the economy. We will see next week if the Prime Minister is able to bring them together.


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