Sharp fall in net migration since EU referendum suggests Britain’s labour market is being reshaped even before Brexit arrives

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A drop of over 100,000 in net migration over the last year shows that Britain’s labour market is already be reshaped before we leave the EU, and businesses need to start adjusting now to a new era of lower migration, the Resolution Foundation says.

Net migration fell by a third to 230,000 in the 12 months to June (down from a peak of 336,000 the year before). EU migration accounted for over three-quarters of this fall, with the decline being driven by fewer EU job-seekers coming to the UK to find work.

The Foundation notes that this fall may be partly driven by improving job prospects in the Eurozone, where unemployment has just fallen to a nine-year low of 8.9 per cent.

Resolution Foundation analysis of more recent data has found that the recent fall in migrant workers has been especially pronounced in London and among EU-born graduates, while the number of low and mid-skilled EU migrant workers continues to rise.

Stephen Clarke, Economic Analyst at the Resolution Foundation, said:

“Brexit was always going to radically reshape Britain’s labour market, but today’s migration figures suggest that change is already playing out. EU citizens may well be reacting to the Brexit vote, but they are also making choices based on the relative value of the pound and better job prospects in Europe.

“The significant fall in EU migration will be felt most clearly in areas like London, and in industries like food manufacturing and hospitality which tend to have high levels of staff turnover and are heavily reliant on migrant labour.

“Businesses across Britain need to prepare now for a new era of lower migration. This could include finding new ways to recruit UK-born workers – no mean feat in an already tight labour market – reskilling existing staff, or investing in more productivity enhancing technology.”

Commenting, Recruitment & Employment Confederation director of policy Tom Hadley says:

 “The news that more people from the EU are leaving the country and fewer are coming to the UK will be a concern for employers and should be a concern for government. Our data shows that candidate availability has been falling for four years. Employers will find roles even harder to fill as fewer people are coming to look for work. We need warehouse workers to pack up our deliveries, drivers to transport goods, and chefs and waiters in our restaurants. Employers will be hit hard at Christmas and no doubt the consumer will feel the effect as they end up paying more for products and services.

“The UK currently has a vibrant temporary labour market but as EU workers no longer feel welcome here it is under threat. We need this country to be an attractive place to work and live, which means the government needs to ramp up efforts on a Brexit deal that provides clarity for EU workers and assures them that they are valuable to this country. Post-Brexit immigration arrangements must also cater for temporary and seasonal workers to allow them to continue supporting the many sectors of our economy that rely on them.”

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