Recently on this site, Kristian Niemietz argued that the reforms to low-skilled immigration would ultimately lead to fewer pubs and fewer restaurants. As a pub and restaurant fan, I am pleased to say that while this is one possible outcome, it is not inevitable.
The issue is that the piece only takes into account the immigration reforms in isolation. While they do amount to a labour supply shock, there are several possible responses to this.
One option would be for businesses to invest in machines and technology to replace some or all of the labour they are missing out on. Given longstanding concerns about UK productivity, this is probably no bad thing. But it is not enough on its own – there are no robot waiters ready to step in and save restaurants and pubs.
But another option is to invest in underutilised parts of our own existing potential labour supply. The ONS estimates there are 800,000 young people aged 16-24 currently not in employment, education or training (NEET). This represents the equivalent of several years’ worth of immigration, and of course there’s a steady pipeline of teenagers needing jobs in the years ahead, over and above those that will already transition from education to employment. How can we ensure more of these young people work in the roles that employers currently fill through immigration?
For a start, it’s worth saying that this will cost money. Clearly, the reason we currently have low-skilled immigration is because it is easier and cheaper for businesses to use than making use of the pool of available young people. But this is, at least in part, the rationale for the policy change – it forces us as a society to invest more in an active labour market policy.
This investment is necessary because many young people sit just outside of employment. Maybe they need a confidence boost to persevere with a job search and to be able to take those early steps into the world of work. Maybe they need slightly more support to actually decide what kind of work they want to do, and find it.
Sometimes the barriers to employment are bigger and aren’t actually about work at all. For example, some young people have caring responsibilities or health conditions which can require in-work support and job flexibility. Some young people know what apprenticeship they want to, do but need their maths GCSE to be able to start it. There are many specialists in the charity, public and private sectors who can deliver the many different types of support needed.
My organisation, Impetus, funds a charity called Resurgo, which has expanded throughout London and beyond to reach 780 young people a year. Next week we’re publishing research that shows that the young people Resurgo work with are around twice as likely to successfully transition into the workplace as their peers without that help.
Paying for all this work does not necessarily need to be a dramatic additional cost on taxpayers, since it generates increased tax revenues in the short term. And in the long term you can expect to see significant savings by avoiding the worse health and work outcomes of young people who spend much of their youth being out of work and education.
In some places, its already happening. The Greater Manchester Combined Authority is calling for project proposals to do exactly this work. And we could look to allow businesses to spend some of their apprenticeship levy on things like work readiness, and more support at the start of an apprenticeship to help young people succeed.
Both Home Secretary Priti Patel and Business Secretary Alok Sharma are former Ministers for Employment. They’ve both heard from support providers about the challenges they face, and seen first-hand how disjointed Whitehall is on some of these issues. I know “more joined up government” is an eyeroll-inducing cliché, but this agenda touches on conversations about inclusive growth, levelling up, shared prosperity. Immigration reform makes it even more imperative that the government develops a coherent and cross-cutting strategy, rather than allowing six different departments to continue operating in isolation.
And one part of that strategy has to be in-work progression. We’re talking about 800,000 young people who seem to have been largely forgotten. We can’t simply move them all from being out of work to being in low-skilled employment and then forget about them again. These jobs need to be first jobs, that lead on to somewhere better. That’s what I suspect happened to most people reading this article. It’s certainly what you’d want for your own kids.
The government has made a decision about the future of low-skilled immigration. But change can present opportunities as well as challenges. So let’s work to support young people into work – and then let’s all go down the pub to toast their success.
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