Pay rise disappointment looms for workers after Brexit vote, warns report


Workers expecting to receive a pay boost following a potential drop in migration after the UK's vote to leave the European Union are likely to be disappointed, according to a new report.

The Resolution Foundation has concluded a cut in migration could deliver a small boost in the pay of some low-paid British-born workers.

However, any increase is likely to be undermined by a weakening of wage growth forecast by the Bank of England in the wake of Brexit.

Stephen Clarke, policy analyst at the Resolution Foundation, said: "The impact that recent widespread migration has had on British-born workers is hotly disputed.

"While there has been no effect on wages overall, increased migration has caused a slight drag on wages for some low-paid British workers.

"However, those expecting a wage boost off the back of a post-Brexit fall in migration are likely to be disappointed.

"Any such gains will be dwarfed by the losses caused by the post-referendum slowdown in the economy."

The report, to be published on Tuesday, examines the impact of migration on the labour market over the last decade when the share of migrants in the population increased from 10% in 2004 to 16% in 2016.

It combined that with an assessment of how meeting the Government's ambition of cutting migration numbers to the tens of thousands could affect future earnings and employment.

The report shows that the increase in migration has had no impact on the wages of British-born workers overall but it has impacted on the earnings of some occupations like skilled trades.

Migration levels were one of the key issues during the EU referendum campaign.

The report shows reducing migration to the tens of thousands immediately could boost the wages of British workers in sectors most affected by migration by between 0.2% and 0.6% by 2018.

But those increases would be dwarfed by the 2% downgrade to average wage growth which has been forecast by the Bank of England.

While cuts in migration are not expected to have much of an effect on the earnings of British workers overall, the report stresses the need for the Government to move quickly to address post-Brexit challenges faced by businesses.

The report points to sectors like food manufacturing, clothing manufacturing and domestic personnel services as those which could potentially be harmed by lower levels of migration.

It suggests replacing migrant workers with British-born workers is unlikely to be a realistic solution given apparent disparities in pay between the two groups.

The Foundation wants the Government to come up with a plan to help low-paying sectors adapt to the post-Brexit world.

It wants ministers to guarantee the rights of existing migrants to continue to work in the UK and to help industries move to support more highly paid roles.

The report also suggests that any new post-Brexit migration system is likely to include a role for more temporary workers and, as a result, more of an emphasis will need to be placed on enforcement of labour market rules.

It calls for the creation of a single enforcement unit with greater resources than the three existing enforcement agencies to prevent new types of illegal migration to the UK.

Shadow chancellor John McDonnell said the report showed the Conservatives' "low-wage, low investment" economy was unable to deal with the fallout from Brexit.

"It is no good Tory ministers trying to scapegoat migrants for the failures of their policy. We need an emergency programme of investment to create jobs and lay the foundations for high-skill, high-wage economy we deserve," he said.

"It's time for Chancellor Philip Hammond to stops putting Britain on hold until he can make a decision, instead he should reject Tory austerity spending cuts and commit to a major programme of investment in infrastructure to rebuild and transform Britain, so no one and no community is left behind."