Vir Cantium

I'm right, you know …

On British Jobs for British Workers, Nigel Farage is Half Right

A debate has been rumbling for the last few days sparked off (or given a boost) by the comments of David Frost – no, not him, but the Director General of the British Chambers of Commerce. He has said that there is…

… a problem with youth unemployment but they could not afford to ignore cheaper skilled foreign workers.

Mr Frost said employers needed the “best people” and identified what he said were the problems with too many of Britain’s youth, in an interview with BBC Radio 4’s Today programme.

He said businesses expected “young people to come forward to them who are able to read, write, communicate and have a strong work ethic and too often that’s not the case”.

The problem's not just the level of her wage, it's her value for money (Pic. credit: phillips.blogs.com)

And so, today on LBC radio, Nigel Farage, the death-defying leader of UKIP, gave a short interview on the subject. Nigel highlighted the open labour market that has existed between the UK and EU since 2004. This, he pointed out, has led to an oversupply of labour and thus reduced wages and indigenous labour being crowded out.

Well, I have a lot of time for Nigel Farage and what he said is not wrong. There has clearly been an increase of supply to the labour market, so he’s half right. However, he has, I fear fallen into the trap that UKIP often falls foul of, and that is to reference everything to Europe.

Don’t get me wrong, Europe is not a single issue – it underlies many problems and issues that many would put higher up their list of criteria in those few quiet moments in the polling booth. However, if UKIP is to be seen as more than a single issue party then it has to walk the tightrope of showing just how EU membership negatively affects so many other areas – the economy, law and order, the environment – while shaking off the “only about Europe” image.

So, to the issue at hand: while there has undoubtedly been an increase in supply, there has also been a restriction of demand and an artificial inflation of the cost of labour – even though the workers have seen little of those increase costs in their take-home pay. This has then led to reduction in the value for money that indigenous British labour has to offer.

Employer’s NI, employment regulation (again, owing much to the EU, which should have made it a natural point for Nigel to make), the level of benefits and the minimum wage have all contributed to a market where the cost of labour has increased in those areas where British workers would predominate – anything much above the level of cleaner/fruit picker/hole digger, especially given that Brits have largely priced themselves out of those more menial jobs as well.

So increased labour costs lead to reduced demand, but the problem is exacerbated when employers find that the British applicants for jobs are not worth the extra they are demanding. I have a client who has time and again found that his Eastern European workers are worth the hassle of the language barriers, since they are just keener and harder working than their British counterparts – and harder working doesn’t necessarily mean wiling to work longer, just better.

The Polish immigrant worker offers better value for money at the minimum wage than the Brit demanding £10 per hour. The Brit’s idea of the price of his labour is referenced to factors such as his neighbours’ income, what he could get on the dole for no effort and the median wage (and bear in mind all levels of pay are driven up by the legal national minimum). Some of the causes of this are cultural and some are down to educational standards, sometimes it’s a combination of these – look at how many school leavers expect to end up with a degree and wouldn’t dream of getting their hands dirty, or – gulp – serving people. Yet there is a clear driver in the consequences of government intervention in the labour market – be that government in London or Brussels.

The bottom line is that restricting foreign labour would serve to reduce supply, but British workers cannot expect such a measure to automatically force up the price of labour to their benefit, for it is already too high for employers. If the cheaper labour can’t come here, we may find that businesses will simply move to where the cheaper better value for money labour is.

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