Saturday, 16 September 2017

Employment up, pay down

The mystery of why Brexit hasn't affected the economy is no mystery. Brexit hasn't happened yet, and Mrs May still hasn't told us anything except that it will happen. Quite what that means no-one seems to know, not even our own chief negotiator, Mr Davis.

Of course the referendum result has affected the economy - the pound has crashed to levels unseen since we were the sick man of Europe. Oddly it has also created a real mystery, while the rate of pay is going down employment is going up.

This is very hard to explain while ignoring the context. We have almost full employment in the UK. As the pool of the unemployed shrinks it becomes harder to find someone to take the job you are offering, so wages are expected to rise.

One possibility is that with welfare cuts people can't afford not to work. Another is that the internet allows employers to advertise more widely and prospective employees to find suitable jobs more quickly.

Neither of those possible explanations seem to cover the actual situation though, as much of the growth has been in skilled occupations.

One obvious solution that has not been suggested is that - as shown by comparing Germany with the UK - immigration creates jobs, skilled jobs. With more people we need more professionals and tradesmen - doctors, plumbers, teachers...

The irony is that that was what a number of Leavers complained about - there not being enough professionals to go around (doctors, plumbers, teachers...). If only they had had a bit of patience then demand would have brought them what they wanted, and it could have been their own children who were given the chance of making good, of stepping onto the ladder of a professional career.

I can safely risk a prediction here - if we do restrict immigration then unemployment will rise. Why is that safe? Because Mrs May says immigration levels might well remain the same post-Brexit, so we will never know.

No comments:

Post a Comment