Why free movement is important

FREE-MOVEMENT

The key dilemma for the Brexiters is over whether or not to preserve freedom of movement with the EU. Some seem to think we can bring in border controls (yet somehow avoid a hard border in Northern Ireland) and still be part of the European free trade area. But we can’t.

In short the UK can either go for the Norway model, i.e. no restriction on Europeans coming into the UK to work, you pay nearly the same you currently do to be a member of the European free trade area, you just loose your right to have any say in any future changes to how its organised. Or you can chose to be outside the European free trade area and take your chances. You’ve got to pick one, you can’t have both. Brexiters don’t seem to get this point, and don’t understand that free trade can’t function without freedom of movement, here’s why.

Well for starters there’s an ideological issue here. Restricting freedom of movement amounts to setting up a trade barrier at Dover. You’re telling employers they can no longer hire the best person for the job. You can’t take on Jerzy the nice hard working Polish guy with recent work experience in this field and a CV to die for. No, you have to hire Plank from the local job centre who has no relevant experience and likes to sniff glue. Bosses aren’t going to like it when the gov’mint starts looks over their shoulder and tells them how to run their business. Restricting employment for a company is like imposing a capital control on them. Already, even in academia, we’ve been finding it near impossible to recruit new staff, except by essentially throwing money at people, hiring them on temporary contracts at a very high rate of pay (which is probably not the best way to spend tax payers money). Inevitably some employers will move to Europe to allow them to recruit more freely.

Then there are the practical implications. We can “pretend” to be strict on immigration, but without proper border controls, people will leak in and just get jobs in the black economy. If there’s anything worse than Eastern Europeans coming in and working for minimum wage over UK citizens, its the poor and the desperate from all over the world being smuggled in by people traffickers (i.e. more money to organised crime) and probably working for well below the minimum wage, making it impossible for UK citizens to find work in certain sectors. So you’d need pretty rigid border controls, which will be expensive and will come with a host of unintended consequences (notably for Northern Ireland).

Inevitably if a company sending its product to Europe and its going to regularly get stuck for several days clearing customs, well obviously its not going to be able to compete with a European competitor, who can reliably deliver within a 24 hr turn around. Keep in mind many manufacturers currently rely on Just In Time processes, which means parts are moved from one factory to another, perhaps in another country, on the assumption that they will arrive promptly, with little delay. Given that 68% of the UK’s car production is destined for sale in the EU, often using parts manufactured in the EU, its going to be all too tempting to shorten supply lines by just moving the factory to the continent.

And also consider that if the French follow through with their threat and end current border control rules, the first time all of those refugees in Calais will meet a British border guard is after they make over the Channel, so “the Jungle” camp will simply be relocated to Kent.

And how does a company get its stock into Europe? If the UK restricts EU citizens right to work and free movement, the EU will respond in kind. So either the truck driver will need a work visa for both regions, or they’ll have to meet up on a cross channel ferry and secretively transfer cargo between two trucks. And btw if they have to pick one country to base their drivers in (then apply for work visas in the other) will they pick the UK (and have to pay drivers more) or some Eastern European country? Won’t want to be working for Stobart right now!

Also when you buy a product or service it often comes with an after a range of after sales support. If a company’s employees need a work visa to go to Germany to do tech support, how long do you think before either the company sacks its tech support in the UK and hires someone in Germany to do it. Or the German customer goes with an EU supplier, because even thought they are more expensive, they can guarantee support. UK companies will be forced to compete on price alone, which might be easy at the moment with the low value of the pound, but difficult if the pound recovers. And obviously Chinese and Indian can offer a substantially lower cost than any British firm. Keep in mind, I’ve seen several situations in industry over the years, where a contract went to an EU based supplier over a non-EU one, even thought the non-EU one was cheaper, simply because we knew we’d get better after sales support from the EU based bid.

Also there are laws and rules that come into play here. What’s worrying airlines and banks and why some are threatening to walk if the UK leaves the EU free trade area, is they may not have a choice in the matter. The laws that govern their operations, quite apart from good business practice, more or less obliges them to move the provision of those services to within the EU free trade area if Britain leaves.

Yes there is some wriggle room on immigration that the Europeans can offer. They could apply some window dressing that looks like immigration controls (but isn’t). For example by restricting migrants access to the UK benefits system. However that will likely be counter productive, given that the vast majority of EU migrants work and pay taxes (restricting their access to benefits will simply encourage those that can to not pay taxes and work in the black economy). Given that EU states will respond in kind, which could send waves of UK citizens heading here (so we’d see a small drop in EU citizens looking to work and meet skills shortages cancelled out by hordes of pensioners moving back so they can claim benefits here), the likelihood is such measures would leave the UK worse off financially.

Bottom line, Theresa May has to decide who is she going to betray. The businesses and middle class voters who put the Tories in office last election, or the swivel eyed Daily Mail reading neo-fascists, who voted for Brexit. She’s got to pick one, she can’t keep both groups happy.

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5 thoughts on “Why free movement is important

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