Lyndsey Kramer

 

As Brexit draws nearer, the spotlight has fallen on attaining and maintaining future economic prosperity. Discussions in this area have tended to focus on trade negotiations. However, growth relies on numerous factors.

 

This article examines an economic factor that appears overlooked in much of the current debate: the movement of EU workers in response to economic downturns. Specific focus is given to the eight countries known collectively as the Accession 8 countries, (A8), which joined the EU in 2004, and Latvia as a case study.

 

In this article, economic growth is linked to the ability to retain workers. Here there is a scrutiny of the movement of workers away from the UK, and the reduction in migration to the UK. Targeted social policies, that create a ‘harsh environment’ for migrants, are considered. It is argued that a flexible workforce supports economic growth and its loss can exacerbate an economic downturn. Hence, any potential hostile social policies combined with a deceleration in the UK economy or economic growth in an origin country, could lead to the loss of workers which in turn affects UK growth potential.

 

A useful way to measure A8 immigration to the UK is by referring to UK National Insurance applications.To be able to work legitimately in the UK it is necessary to have a National Insurance (NI) number. There are benefits to working legitimately and paying taxes in the UK, for instance, full access to social provision after three months for EU citizens. Therefore, applying for a NI number provides wider opportunities for work and benefits.

 

In 2008 to 2009 the number of applications for NI numbers from A8 countries was 291,247. As demonstrated in Fig.1 below, since that high, there has been a continued decrease in NI applications from EU workers arriving from A8 countries. Application numbers have dropped further from 201,649 in 2013 to 84,636 in 2018. This is a 76% drop in applications. 

 

Extrapolated data from UK Government DWP (2018). https://stat-xplore.dwp.gov.uk/

 

My own initial empirical findings are from Latvians who describe leaving Latvia as a result of the 2008 economic crisis. This ties with Hazans’s observation that: ‘The most recent wave of emigration is associated with the economic crisis,’.

Latvian emigration has decreased since 2013. Reflecting the economic acceleration in Latvia and corresponding opportunities. Fig. 2 below demonstrates the reduction in applications for NI numbers from Latvians.

 

Data extrapolated from UK Government DWP (2018). https://stat-xplore.dwp.gov.uk/

 

The number of UK NI applications from Latvians have decreased from 13,186 in 2013 to 5,244 in 2018. This represents a 40% drop in applications over the five-year period 2013 – 2018.

 

To put this into a broader temporal context, from the first full calendar year of EU membership, 2005, Latvian national insurance applications in the UK have gone from 13,516, to a high of 28,293 in 2010 and since 2013 applications have declined. This can be argued to reflect Latvian economic recovery after the devasting recession of 2008 in Latvia.

 

Within a trading bloc like the EU, one might be forgiven for thinking that all countries would have a comparable experience of economic downturns. However, certainly in the case of the A8 countries; the 2008 economic downturn was worse than in many other EU countries. As fledgling capitalist countries, they suffered more. Going from post-command economy highs to large drops in GDP after 2008. As illustrated by the OECD & Professor Hazans from the University of Latvia,  at the end of 2009, Latvian GDP was 24% lower than the pre-2008 high.

 

Since 2000, Latvia has lost 9.1% of its population, this includes approximately 14% of its workforce. This depopulation is described by Hazans as having a detrimental effect on economic growth in Latvia. Another interesting point about this argument, is his reflection on the reduction in the birth rate as happening at the same time as emigration. However, it is not a leap of logic to link this to the status of the emigrants. Latvian children are being born in the diaspora.

 

It can be concluded, that corresponding with economic growth, Latvia has started to experience less emigration. This has resulted in a reduction of Latvian workers applying for NI numbers and working in the UK. Arguably, this reduction could increase if EU workers are presented with Social Polices that are hostile.

 

In terms of the age of Latvian, (and A8), workers applying for NI numbers, the largest group are those aged 18 – 24. Therefore, social policies that are ageist, for example the minimum hourly wage policy in the UK, could lead to a loss of workforce, potentially threatening UK economic growth. Combine minimum wage policy with any future hostile UK government policy in the area of visas and the right to stay, further potential issues exist.

 

The minimum wage of £7.70 an hour, for those aged seventeen to twenty-five years, equates to £16,016 per annum, (with a forty-hour working week). This would mean young workers and especially those with families, could be in a situation where they are unable to meet the criteria to remain as workers in the UK. Arguably, this would be detrimental to sustained growth.

 

Lyndsey Kramer is a PhD sociology research student at The University of York. Current research includes a qualitative study of Latvian worker migration to the North of England. Lyndsey teaches Social Policy and Social Science at The University of York. Image credit: CC by freeimage/Flickr.