Resolution Foundation argues Brexit won't solve the low-skilled pay squeeze

Jake Cordell
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The Resolution Foundation do not believe Theresa May's policy of lower immigration will secure a better future
The Resolution Foundation do not believe Theresa May's policy of lower immigration will secure a better future (Source: Getty)

Reducing levels of migration will do little to end the pay squeeze for low-income workers, new research by a leading think tank has found.

A report published today by the Resolution Foundation claims while net migration has reduced earnings for some people in the UK, a tighter, post-Brexit clampdown on the numbers of people coming into the country will not solve the problem.

Instead, it believes less migration “will throw up a number of significant new challenges” for the UK economy and hit industries that typically rely on a large migrant workforce.

The report’s author, Stephen Clarke said: “While it is wrong to say that migration had no effect in reducing earnings, specifically for those in low-paying occupations, the effects are small and reducing migration will not reverse the earnings squeeze.”

Read more: Refugee crisis could help Europe's ailing economies

At an aggregate level, the think tank calculated that with no net migration, average hourly earnings in the UK would be 6p higher than they are now. However, because migrants, particularly from the newest EU countries take lower-paid jobs than UK natives and other migrants, this “does not mean any workers would have actually had higher pay”. Instead, there would have been fewer people working in low-paid sectors, thus raising the average.

In some specific sectors, particularly skilled trades, the think tank found migration has exerted a very modest downwards push on the wages of UK workers. Even so, the pay squeeze in areas such as customer service, administration, and social care cannot be explained by migration alone.

For instance, between 2009 and 2016, pay fell by 9.7 per cent in “caring and leisure service occupations”. The Resolution Foundation estimates 1.4 per cent was the effect of migration, while the remaining 8.3 per cent is explained by other factors. Similarly for those in skilled trades - where migration has had the biggest drag on earnings - net migration accounts for just 2.1 per cent of the five per cent fall in real income.

Clarke added: “Increased migration did drag on earnings in some sectors, but these small effects do not explain and were in fact dwarfed by the general pay squeeze experienced during the same period.”

As the government prepares to start negotiations on untangling the UK from the EU and remains committed to reducing migration, the think tank warned: “The government should not expect a fall in migration to ameliorate let alone solve the ongoing squeeze on earnings, a squeeze that may last longer in the wake of the country’s vote to leave the EU.”

The report comes as leading Brexit campaigner, Labour MP Gisela Stuart, launched a project with the British Future think tank to help secure the rights of EU citizens currently leaving in the UK.

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