Immigration restrictions in the UK, introduced after it left the European Union, have led to a shortage of 330,000 workers in the country. Sectors with a low-skilled workforce, such as retail, hospitality, transport and warehousing, are particularly affected by the end of the free movement of people between the UK and the EU. This was reported by the London think tank Center for European Reform (CER).
The UK has lost about 1% of its workforce due to the impact of Brexit, according to think tank economists. Although leaving the EU led to an increase of 130,000 workers outside the EU, stricter immigration rules led to 460,000 fewer workers coming from the EU, economists said.
The British government vowed to curb the supply of cheap labor from Europe when it introduced a new immigration system after Brexit. At the time, current Prime Minister Rishi Sunak’s Conservative Party pushed to leave the EU, but the current government is now struggling to deal with the economic fallout from that decision.
Labor shortages are also contributing to strong wage growth in the UK, making it harder for the Bank of England to fight inflation. “A combination of higher wages and prices and lower output is likely, especially in jobs that are difficult to automate,” warn ERC economists.
Britain’s largest employers’ organization CBI called on the government in November last year to admit better-skilled migrant workers to tackle the country’s economic woes. According to the organization, labor shortages lead to more stagflation. This is a situation where high inflation slows economic growth and unemployment remains high.
The British farmers’ trade association NFU has also called on the government to be flexible with visa rules for foreign workers. Due to the exit from the EU, many workers, mainly from Eastern Europe, have returned to their country and British agriculture is heavily dependent on foreign workers.
Source: BNR
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