What Impact Leaving the European Union Would Have on the UK Labour Market - Essay Example

Impact of Leaving the EU on the UK Labor Market

Abstract

The United Kingdom labor market has a strong relationship with the European Union and opting to exit may have serious effects on the same. However, there have been several arguments by various stakeholders of the possible effects that the UK’s economy may suffer by withdrawing from the European Union. The Britain economists argue that the move to exit the European Union may affect the economy in many ways ranging from loss of market for goods and services to high trading tariffs with the member states (Blanchflower and Lawton, 2009, p.182). As the referendum to decide whether the UK will stay in the European Union or leave is set on 23rd June, the question of the effects of the exit on the United Kingdom remains. The paper herein, therefore, examines and analyzes the possible effects that leaving the European Union may have on the labor market of the United Kingdom. The research first gives an overview of the contribution of the European Union on the national economy of the United Kingdom and then examines the effects of leaving the union. The research paper finally compares the benefits of staying in the European Union and the consequences of leaving the Union on the UK’s Economy. The information used in this research paper is obtained mainly from the literature done by other researchers on the relationship between the UK’s economy and the European Union.

Introduction

The study presents the main links between the United Kingdom’s labor market and the European Union. The report looks at the possible consequences that would arise if the UK were to exit the European Union and the immigration and trade controls that the country may face because of leaving the union. Recently, people born outside the United Kingdom are making part of the growing share of the total United Kingdom employment, which is a significant number of individuals born in the European Union (Barrell, FitzGerald, and Riley, 2010, p.374). The recent growth of the non-UK born employment is because of the laborers from the A8 accession member states that joined the European Union in the year 2004.

The total number of the general and the professional workers working in the United Kingdom from other established countries, which are members of the European Union, has increased. There has been a firm link between the EU labor supply and the UK labor supply in the recent years and experts argue that leaving the union can adversely affect the countries labor market. Immigration of workers across the EU member states to the UK labor market is a major issue that contributes to the general economic growth of the United Kingdom and the societal well-being (Barrell, FitzGerald, and Riley, 2010, p.377).

Effects of Immigration

If the referendum passes that the UK leaves the EU, then the move will trigger the government of the United Kingdom to change its immigration policies. In addition, the EU member states are likely to impose more strict laws governing the migration of its citizens to the UK after the exit (Del Boca, Pasqua, and Pronzato, 2009, p.148). Immigration is considered as one of the important factors that promote the tourism industry and increases the countries purchasing power as well as the net revenue hence critical in economic growth. Exiting then the European Union is likely to affect the immigration into and out of the United Kingdom, which will eventually have a significant impact on the country’s economy. Considering the EU treaty, the EU migrants are more likely to be employed in the member states than the workers born in the United Kingdom after the exit.

The migration of the workers across the EU national is important in maintaining the skills and competence in the workplaces as the native, or the UK-born workers are aging. According to a European Union report, the migrant workers make important contributions to the workforce of the United Kingdom. The report indicates that the number of non-UK-born workers employed in the UK has increased from two million in 2005 to about five million people by the year 2015 (Bergemann, and Van den Berg, 2008, p.389). The report also presented that the percentage of the non-UK-born workers working in the United Kingdom had doubled up from the 2.7 percent in the year 2005 to a 5.5 percent of the total UK employees in 2015.

Then EU native employees also had their labor market rise within the last decade by a significant three percent in the United Kingdom. When the EU received other membership countries, the UK did not put any restrictions to migration from these countries and the Romanian and the Bulgarian nationals could move freely to the UK. However, because of the high influx of the non-UK migrants, the government of the United Kingdom introduced restrictions on the types of jobs that these foreigners could take (Dhingra, Sampson, and Van Reenen, 2016, p.389). The local employers were supposed to obtain working permits while the migrants were supposed to get an accession worker card. Conversely, low-skilled workers have restricted to the original schemes in the agricultural, processing and manufacturing sectors. However, the restrictions were later lifted to offer equal rights to work in the UK just as the other EU citizens. Therefore, the research reveals that leaving the European Union would affect the free migration of the non-UK-born employees and the migration of the UK-born workers to other countries. The effect of the immigration pattern and the restriction of migration of other citizens in and out of the United Kingdom are likely to affect the labor market and the UK’s workforce significantly (Egan, 2003, p.30).

Impact on the Business

The leave campaigners argue that the bureaucracy imposed on the operation of the United Kingdom have hindered the country from formulating effective policies that can help it in driving economic growth. The European Union bureaucracies have significantly affected the industrial sector of the United Kingdom and the free trade permits that are governed by the tough laws created by then union thereby blocking the country from exploiting its full potential. The exit from the European Union may also be considered as a move to open up new global avenues for economic growth and integration with other countries (Swinbank, 2016, p.7). The move out of the union is also likely to control or block the influx of the Eastern European migrants who are coming to scrounge off the state of the county’s welfare. The emerging markets outside Europe form the primary reason why some people argue that UK would do better outside the EU than when it is still bound by its laws restricting its trading boundaries.

The new markets, which are currently dominated by countries such as the United States, China, and the UK, feel they can operate the same way. However, many businesses in the United Kingdom would not admit that exiting the European Union is to their advantage. Conversely, other firms hold that they would prefer negotiating with non-European countries as a UK entity than when under the union. The businesses are likely to gain free and easy access to the international markets especially the emerging markets without the interference of the European Union (Gee, Rubini, and Trybus, 2016, p.55). For example, the EU has recently done badly in the emerging markets such as India and China and the businesses argue that they could establish better deals as UK entities and not as the EU partners. Exiting the EU would have a significant impact on the UK’s business by letting them operate freely free from bureaucracy and restriction, especially the financial services to work on global platforms. Exiting the EU will free the businesses in the UK from the proposed financial transaction tax by the EU, which is one of the main worries of most business in many cities (Dhingra, Ottaviano, and Sampson, 2015, p.22). The latter has a significant potential of driving the financial business outside the European Union and evade the EU rules that are affecting most businesses in the cities.

However, the exit may also affect the economy and the business sector negatively in various ways. For example, the coalition government has put its main focused on a renewed concentration on the manufacturing and the industry in the UK after realizing that the country over depended on the service sector. Therefore, economic experts see that an exit from the union may pose a significant threat to the country’s old industry renaissance (Piris, 2016, p.78). For example, looking at the motorcar industry, most of the companies are foreign-owned with most of it coming from the Asian money. The EU plays a critical role in facilitating such investments into the UK and therefore leaving it may significantly affect the country’s business.

Impact on the Global Integration

Exit from the European Union has a likely impact on the global reputation of the United Kingdom and compromise its commitment to global integration. The move to leave the union may diminish the position of the UK in the world, damage its economy and contravene the ambitions and the qualities that mark the UK as a respectable global nation. Apart from having a greater financial and economic impact on the United Kingdom, the move is also likely to mark some moral fail by the country (Piris, 2016, p.78). The United Kingdom will be viewed to having failed morally and showed a sign of retreat from the crucial step of the British internationalization. Having been in the EU for quite some time now, the United Kingdom has become tied up with the union that leaving it will have severe and intolerable impacts on the country’s operations. The UK-born workers working in other EU region are also likely to be affected by the move to leave the union as some may be deported back to the UK, and this may destroy the image of the country.

According to Piris (2016, p.78), the UK economy is considered as one of the powerhouses in creating jobs as the EU struggled to restore the financial stability, offering work to citizens from all the twenty-eight member blocks of the EU. UK has been recognized as one of the leading labor markets that supports millions of people from all over the EU region and therefore leaving the union is likely to impact negatively on the lives of the majority.

Impact at the Workplace

UK is one of the countries that for many years have been boasting of having the most alluring labor market in the EU region. The region is considered ideal for many employees due to the English language, which is taught in most of the world, and flexible labor laws that allow the employees to cope. The country also offers an ideal settlement places such as London City that are large and can hold many employees (Barrell, FitzGerald, and Riley, 2010, p.379). Exiting the EU will mean exiting of all the foreign workers since the country will be forced to amend its local labor laws different from the EU requirements. The latter may have a severe effect on the economy of the nation as the purchasing power is likely to reduce by a significant percentage. The processing and the manufacturing industries that have for long enjoyed the availability of cheap labor may also face challenges of less workforce.

The departure from the EU trading bloc could complicate the region’s struggles in dealing with unemployment in the years to come. It is still not clear the steps that would be adopted to ensure that the EU workers join the UK workforce, as the UK is still not entirely comfortable with its labor market pull. If the UK leaves the bloc, it would probably tighten up its immigration laws as mentioned earlier to restrict the number of European workers passing through its borders. Most of the workers are likely to go back to their home countries if the UK government signs out of the EU block, as they would not feel professionally protected by the EU rules and regulations.

Conclusion

The leave campaigners argue that UK is no longer benefitting from the EU as it used to before and continuing to stay in the eurozone will make it lose even more. However, even if the UK did not manage to secure a free-trade deal with the EU, it may not be as disastrous as the stay-campaigners claim. The leave campaigners argue that leaving the union will create employment opportunities for the local people by blocking the free migration of the EU workers into the country.

If the referendum of the next year’s election passes that the UK should exit the EU, the country is likely to suffer from a short time economic shock that may cripple its operation. The economic collapse would affect the UK’s labor market, the manufacturing, and the processing industry as well as the financial sector. The UK-born workers working in other countries within the EU region are likely to face deportation and loss of jobs, which may create unemployment back in the UK. However, exiting may have several significant advantages on the UK such as having a free trade, creating and controlling their business policies and even creating jobs for the local people by controlling immigration.