:00:00. > :00:00.the UK to set up home. But there have been votes to change all of
:00:00. > :00:00.that for Brexit. In this week's Talking Business, we
:00:00. > :00:35.look at the future for freedom of movement.
:00:36. > :00:38.Welcome to London. I'm Tanya Beckett. In the treaty, the European
:00:39. > :00:40.Union outlines for freedom is necessary for a single market, the
:00:41. > :00:48.free movement of goods, services, capital and labour. But able weight
:00:49. > :00:51.of anti-immigration feeling in the UK and other EU countries six to
:00:52. > :00:58.undermined the founding principle. What does that mean for the way we
:00:59. > :01:02.work and do business? There were 3.3 million EU nationals living in the
:01:03. > :01:07.UK, and one third of them in London. On average they tend to be younger,
:01:08. > :01:12.better educated and more highly skilled than indigenous Britons. And
:01:13. > :01:15.they are more likely to be employed according to government figures.
:01:16. > :01:20.Some employers say that these workers felt the skills gap in the
:01:21. > :01:25.economy but there is also evidence that migrant labour has depressed
:01:26. > :01:28.wages for low skilled workers. In the UK. With me now, a panel of
:01:29. > :01:36.guests each of whom have lived or worked overseas. Alexander is an
:01:37. > :01:41.entrepreneur who founded hassle .com, an online marketplace for
:01:42. > :01:45.cleaners, Professor Kristian is a director for the centre of research
:01:46. > :01:49.and analysis on migration at University College London, and Nina
:01:50. > :01:54.is the chief economist of a company that looks at the impact of economic
:01:55. > :02:00.and social policy. Welcome. Christian, is it possible to say
:02:01. > :02:05.whether immigration is generally a net benefit, if you look at a
:02:06. > :02:10.broader con me or not? -- economy. It depends which immigrants are
:02:11. > :02:14.going and what immigration we are looking at. Of course, it has
:02:15. > :02:23.changed our times dramatically. If you go back to the 1960s and 1970s,
:02:24. > :02:27.European countries needed and and skilled -- and a skilled workers,
:02:28. > :02:32.now we need skilled immigrants to fill those skill gaps.
:02:33. > :02:36.There are winners and losers, not everybody necessarily gains from
:02:37. > :02:46.migration. Some people may the end competition with immigrants which
:02:47. > :02:53.happens with distribution -- BN competition. And others may be
:02:54. > :02:58.benefiting. Nina, we have a situation where there is a level
:02:59. > :03:01.playing field with EU workers and non-EU workers, how does that affect
:03:02. > :03:06.the picture? Clearly there is a question about what kinds of workers
:03:07. > :03:10.firms will be able to recruit. More likely than not you would probably
:03:11. > :03:14.end up with some sort of system skewed towards higher skilled and
:03:15. > :03:19.higher paid workers, that is OK if you are a firm who hires those kinds
:03:20. > :03:22.of workers but actually, for firms in the accommodation and food
:03:23. > :03:27.sector, they are dependent on the lower skilled end and probably will
:03:28. > :03:31.not be able to fill those jobs any more if we don't have freedom of
:03:32. > :03:34.movement. Does the picture vary according to whether you are talking
:03:35. > :03:38.about low skilled or high skilled labour coming in, or is it necessary
:03:39. > :03:42.across the board if you are going to have net economic impact which are
:03:43. > :03:46.positive? Nina pointed out sunning important.
:03:47. > :03:58.-- something important. UK sector is producing blueberries which can also
:03:59. > :04:02.be sourced from Poland. In order to be competitive for a blueberry
:04:03. > :04:08.producing company in the UK, the company has to produce them for at
:04:09. > :04:17.least the same price as the Polish company. Paying higher wages would
:04:18. > :04:20.of course seriously harm the possibility and in all European
:04:21. > :04:24.countries we have workers coming from eastern countries to do this
:04:25. > :04:29.kind of work for wages which allow companies to be competitive. And to
:04:30. > :04:34.add another point, a lot of these workers are highly flexible. For
:04:35. > :04:37.example, seasonal fruit picking is the obvious example where you have
:04:38. > :04:42.people prepared to come over for a short period of time and return
:04:43. > :04:46.afterwards. What happens to those sorts of workers? Fruit picking is
:04:47. > :04:49.an example and it happens across sectors, becoming temporarily when
:04:50. > :04:58.firms he would otherwise be at full capacity. It's a net benefit to the
:04:59. > :05:03.economy. As someone who founded a business, you are very dependent on
:05:04. > :05:09.EU workers. It is essential for you, why? In the technology sector, 65%
:05:10. > :05:12.of my workforce who worked on the platform doing marketing,
:05:13. > :05:16.engineering and customer service were from outside of the EU. It is
:05:17. > :05:20.not just what we are selling but the business's make up. We are having
:05:21. > :05:26.this discussion in the context of the fact the UK has voted to leave
:05:27. > :05:32.the EU, Brexit. This will have an impact but we are not entirely sure
:05:33. > :05:36.what it will be on access to the UK for EU workers. But, if you look at
:05:37. > :05:44.the UK as a whole, how has it been affected I access to that workforce?
:05:45. > :05:50.Well, for an entrepreneur of a firm, it is advantageous to have access to
:05:51. > :05:55.a pool of workers of 500 million, rather than 60 million. From the
:05:56. > :06:03.perspective of firms, to be able to source skills and necessary skills
:06:04. > :06:09.from a larger pool is clearly an advantage. The EU is giving that
:06:10. > :06:18.advantage, and the other point is under free mobility, there is no red
:06:19. > :06:23.tape. I can see you nodding, it's easier to hire those in the EU from
:06:24. > :06:30.outside? It costs nothing, if I chose to hire a French developer, it
:06:31. > :06:38.costs me the airfare versus one from the UK, if you can find one, we did
:06:39. > :06:43.try to hire someone from Israel, outside of the EU, six months and
:06:44. > :06:47.?10,000 later I gave up, because of the red tape. People would argue
:06:48. > :06:52.that it would be easier once we treated everyone the same but, in my
:06:53. > :06:57.experience of the Visa Systems, the minute you put any kind of red tape
:06:58. > :07:02.that, it is costly and takes a long time, and it holds young companies
:07:03. > :07:07.or fast-growing companies like mine was, it holds them back. One of the
:07:08. > :07:11.issues raised with regards to immigration in the UK is the
:07:12. > :07:16.so-called fiscal burn. There's been a lot of debate about benefits, for
:07:17. > :07:20.example, off to immigrants and whether they pay their way, however
:07:21. > :07:25.you want to define that. What is your research tell you? That's an
:07:26. > :07:31.important aspect and the public is very concerned about it. We have
:07:32. > :07:37.done research for the UK, and we have found immigrants from European
:07:38. > :07:42.countries in particular pay far more in terms of taxes than what they
:07:43. > :07:47.take out interns of transfers and benefits. -- in terms. There are
:07:48. > :07:52.clear fiscal net contributions to the UK system. Why is that the case?
:07:53. > :07:56.Several reasons for that, one of those being that they draw less on
:07:57. > :08:02.benefits, and another very important reason is that they have high
:08:03. > :08:08.participation rates, the sheriff workers or people who come from EU
:08:09. > :08:14.countries in the workforce are higher than the native native
:08:15. > :08:18.workers -- share of workers. It increases their contribution. Nina,
:08:19. > :08:22.is there any need for UK workers to feel their jobs are being taken by
:08:23. > :08:28.immigrants? It's that feeling of threat isn't it, sometimes? Yes, I
:08:29. > :08:32.would imagine there are individual circumstances where people may be up
:08:33. > :08:37.against workers from overseas but, if you look in the aggregate at the
:08:38. > :08:41.kind of whole picture, you find that there is pretty much no link between
:08:42. > :08:44.unemployment and immigration. It's quite hard to say that jobs are
:08:45. > :08:48.being threatened, and let's not forget that a lot of workers and
:08:49. > :08:53.migrants come over here and create jobs and set up new companies. They
:08:54. > :08:59.provide prosperity for an area. It's not a one-way street. Do you think,
:09:00. > :09:02.Alex, the government fails to communicate exactly what Nina and
:09:03. > :09:07.Kristian are saying here? Without a doubt. I think there's a
:09:08. > :09:13.misconception that, and it was definitely in the run-up to Brexit,
:09:14. > :09:16.immigrants were taking jobs but the Wall Street Journal did a great bit
:09:17. > :09:22.of analysis where they overlaid immigration rates and also jobs that
:09:23. > :09:29.had left the region and gone to somewhere like China. There was no
:09:30. > :09:32.link between high levels of immigration and Brexit, but a
:09:33. > :09:37.correlation between high levels of job outsourcing overseas and Brexit.
:09:38. > :09:41.This is not a conversation on the around immigration but globalisation
:09:42. > :09:46.and how we have left behind generations of people who are not
:09:47. > :09:50.equipped for the current modern world of work. With technology we
:09:51. > :09:55.have hundreds of thousands of jobs open we do not have English people
:09:56. > :09:58.who have been coming out of university or retraining, able to
:09:59. > :10:03.fill those jobs. That is why companies like mine have to look
:10:04. > :10:07.overseas for talent to stay competitive and build valuable
:10:08. > :10:11.companies. Thanks for now. Later in the programme we will look
:10:12. > :10:15.at the potential impact of tighter Visa rules on firms trying to
:10:16. > :10:20.recruit and retain staff. First, our comedy consultant takes a
:10:21. > :10:25.light-hearted look at what tougher immigration rules could mean for
:10:26. > :10:33.workers and businesses in Ireland. He has this week Talking Point.
:10:34. > :10:36.I'm looking at Labour across borders, but first I need to find a
:10:37. > :10:42.border. They're with me... It's around here somewhere...
:10:43. > :10:47.-- bear with me. We are coming up to the border between the Irish
:10:48. > :10:51.Republic and the North of Ireland, which is in the UK. We are coming up
:10:52. > :10:55.to the border, and we've passed it already. You would not even know it
:10:56. > :10:59.was there. The only way you would know is that the speed limit has
:11:00. > :11:03.changed from calamitous power to miles per hour.
:11:04. > :11:07.They used to be a hard border but since 1994 and the Belfast peace
:11:08. > :11:11.agreement, that's all changed and people on both sides of the border
:11:12. > :11:14.move freely every day to work and play.
:11:15. > :11:21.However, something has threatened to rain on the parade of free movement
:11:22. > :11:28.of labour between North and South and that rainy shower is Brexit.
:11:29. > :11:31.Hardening of the border is inevitable and Brexit. Economic
:11:32. > :11:40.activity, and any change in the nature of the border as it currently
:11:41. > :11:48.operates between the UK and Ireland can have an effect, particularly at
:11:49. > :11:52.a local level. This is done dork, a town four miles from the border of
:11:53. > :11:56.Northern Ireland and the Irish Republic. I've come here to see what
:11:57. > :12:00.people are thinking about the Brexit effect. OK, so there's no hard
:12:01. > :12:05.border yet, this is all conjecture about the future, there are no
:12:06. > :12:09.soldiers with guns or spears to stop me from crossing across the border
:12:10. > :12:13.but as the dark clouds of Brexit gather in this area, there's a real
:12:14. > :12:21.fear about the of Brexit and the return of a hard border on the work
:12:22. > :12:27.lives of people here. It's no coincidence that the major town
:12:28. > :12:32.suffering over the last few decades are border towns. It tells you the
:12:33. > :12:35.economic impact border has, it kills trade, and makes life more difficult
:12:36. > :12:41.because it imposes barriers. What about the impact of Brexit and
:12:42. > :12:45.possibility of a new hard border on the lives of ordinary people, people
:12:46. > :12:51.who come from the north across the border to work at large companies
:12:52. > :12:56.like PayPal behind me. PayPal came to Dundalk in 2011. A company like
:12:57. > :13:01.that employers approximately 10 cents of the workforce from abroad
:13:02. > :13:06.-- from the north. But there are many travelling north
:13:07. > :13:10.to south every day. That will cause strife if we have a hard border. The
:13:11. > :13:23.free movement of people and labour is extremely positive. It encourages
:13:24. > :13:27.people to participate in activities either side of the border. I'm on
:13:28. > :13:30.this side of the border to -- border to show that there was no way rain
:13:31. > :13:38.can be stopped. Imagine if you years' time cues here
:13:39. > :13:42.at immigration? But is not just to stop people getting to and from work
:13:43. > :13:46.of the principle of the free movement of labour is under attack
:13:47. > :13:55.in the USA and all over the industrialised world.
:13:56. > :14:01.The omnipresent Colin with his own take on free movement. There are
:14:02. > :14:06.more of his short films available on the website. Other
:14:07. > :14:15.-- our guests are still here in the studio. Alex, let's start with the
:14:16. > :14:19.idea that you can tailor immigration in a way that the people coming into
:14:20. > :14:23.the country, the workers coming into the country, sort of plug holes. I'm
:14:24. > :14:31.talking about a points system and it has been discussed, what you think?
:14:32. > :14:39.Controls must be carefully considered. Right now, let me make
:14:40. > :14:42.the point, BCG came up with an interesting study recently that
:14:43. > :14:46.demonstrated the Internet contributes over 10% to the UK
:14:47. > :14:51.economy every year, and that growing. Second behind property.
:14:52. > :14:55.Outstripping manufacture and retail. The UK has to look carefully about
:14:56. > :14:58.what it wants to be when it grows up and I argue that we should be and
:14:59. > :15:03.fast becoming a digital nation and if we want to be that and on the
:15:04. > :15:08.cutting edge, we need immigration to plug the holes and secondly, we had
:15:09. > :15:12.to invest heavily in our education system which is currently failing
:15:13. > :15:17.those people going through it and coming out the other side. What do
:15:18. > :15:21.you think of the idea of a points system, it seems like a blunt tool?
:15:22. > :15:27.And short-sighted? In principle it is a wonderful idea, you have a
:15:28. > :15:31.system that allows you to tailor immigration precisely to the needs
:15:32. > :15:35.of the economy but, that same principle. In practice, the needs of
:15:36. > :15:40.the economy first must be understood and communicated to those people who
:15:41. > :15:44.set up a points system, and that takes time. We are in dynamic
:15:45. > :15:50.competition with the rest of the world. These processes could be very
:15:51. > :15:54.detrimental for companies who need skills now and not next year, after
:15:55. > :16:01.the points system has been adjusted in the way that those skills are
:16:02. > :16:05.considered. Red tape, that we introduced with a
:16:06. > :16:10.points system in particular, if we want to apply it to European
:16:11. > :16:15.workers. So that suggests really that our labour needs are very
:16:16. > :16:18.fluid, particularly in a modern and fast moving developed economy?
:16:19. > :16:22.That's absolutely right, and really what you want is some kind of
:16:23. > :16:27.flexible system that allows firms to hire the people they want when they
:16:28. > :16:32.want. The points-based system to me is bureaucratic, let's face it. It's
:16:33. > :16:35.bureaucratic. You need to go through applications and see who fits
:16:36. > :16:43.freezer requirements, etc. It does not fit the dynamic economy.
:16:44. > :16:49.-- fits the requirement. Where have you seen a fact? Across-the-board
:16:50. > :16:53.and digital. Talk to 16-year-olds not long ago, I asked them what jobs
:16:54. > :16:57.they wanted to do, and it was banking, lawyers, teachers.
:16:58. > :17:01.Not one of them knew what a full stack developer or a performance
:17:02. > :17:06.manager was. There is a massive shortage of these
:17:07. > :17:11.jobs and that's before we get into machine learning, and AI. Cutting
:17:12. > :17:15.edge stuff, only a handful of universities, pockets of people
:17:16. > :17:19.around the world, can do that. If the UK wants to stay at the
:17:20. > :17:27.cutting-edge, we must bring those resources to the UK to develop those
:17:28. > :17:32.kinds of technologies. With my company, I had engineering vacancies
:17:33. > :17:35.for six months at a time. We recruited across the UK and Europe
:17:36. > :17:43.and I ended up with a development team that is 85% European. On the
:17:44. > :17:48.skills point, one issue some sectors have is that they are essentially
:17:49. > :17:51.stuck in a Catch-22 situation, you won not getting enough UK graduates
:17:52. > :17:57.and skilled workers coming through the education system but you
:17:58. > :18:04.do have a shortage of teachers of that as well. So we need to make
:18:05. > :18:09.sure that there are teachers available... Can it be done? I think
:18:10. > :18:13.so but you cannot really do without migration, even if it is just in the
:18:14. > :18:17.short-term, to get the numbers up so that we can start training people to
:18:18. > :18:25.the levels we actually need. It sounds a little bit like the in
:18:26. > :18:34.economy is in some way dysfunctional -- like the UK economy.
:18:35. > :18:40.Is it a normal situation or is it deficient? After 1989, we saw the
:18:41. > :18:46.world growing and competition between countries, which before we
:18:47. > :18:50.had two different parts of the two blocks.
:18:51. > :18:58.It has created much more dynamics in International business, and the
:18:59. > :19:04.Bruton has become shorter, demand for skills came up cricket and the
:19:05. > :19:08.debate cannot be separated when we talk about skills with a domestic
:19:09. > :19:13.production of skills with universities and schools. In the UK,
:19:14. > :19:17.we need to do much better than we are doing at the moment. But, apart
:19:18. > :19:22.from that, all developed countries are very heavily dependent on being
:19:23. > :19:29.able to source skills from other countries than their own at the
:19:30. > :19:33.moment. Nina is vigorously nodding! Do you think as and when Britain
:19:34. > :19:38.leaves the EU we will be faced with a situation where the government has
:19:39. > :19:41.Turner take action? -- has to take action? Yes, and the
:19:42. > :19:47.biggest challenge will be for the firms taking on low skilled workers,
:19:48. > :19:50.it is hard to see how they win under a system where freedom of movement
:19:51. > :19:55.is taken away. I think they will have to adapt,
:19:56. > :19:59.whether it is being paid more, it's difficult if you are competing
:20:00. > :20:04.overseas in manufacturing, for example. Or you need to think about
:20:05. > :20:08.automation. Be less reliant on the skilled
:20:09. > :20:10.workers and more reliant on Middle skilled and high school workers
:20:11. > :20:16.which would be a big challenge for firms, I think. Do you think that
:20:17. > :20:20.business has to fundamentally adjust the model in order to accommodate
:20:21. > :20:26.what we might well see, which is the turning off of taps when it comes to
:20:27. > :20:30.access to EU workers question might guess, but I think we have an
:20:31. > :20:34.obligation as businesses to do so. Whether we leave the EU or not, we
:20:35. > :20:37.must match supply and demand in the workforce, there is a great plethora
:20:38. > :20:42.of jobs out there which are well paid. There is this disenfranchised
:20:43. > :20:47.popular wrists who do not want to do low skilled work, who can blame
:20:48. > :20:51.them? The education system must be rethought at every level, we had to
:20:52. > :20:54.retool these people to do different jobs in the workforce.
:20:55. > :20:59.And how we educate the population, to ensure that we are not dependent
:21:00. > :21:03.on migration and we are producing the right people for the right jobs
:21:04. > :21:07.here in the UK. Nina, much has been said around the low skilled end of
:21:08. > :21:12.the workforce and the concern has been, I think this has been fairly
:21:13. > :21:16.compensable, there has been pushing down of wages that that end of the
:21:17. > :21:20.spectrum. Would wages go back up if we no longer had access to those EU
:21:21. > :21:24.workers who were doing the low skilled jobs? You are right, there
:21:25. > :21:28.has been some limited effect in the terms of wages of those killed
:21:29. > :21:31.workers. Yes, it is possible, I think some firms would want to
:21:32. > :21:37.respond by paying more to attract workers if they could not rely on
:21:38. > :21:40.overseas workers so much. However, in a competitive industry, you
:21:41. > :21:45.cannot do that. You need to keep an eye on your costs, you are competing
:21:46. > :21:48.with firms overseas and I think in some sectors, what they are probably
:21:49. > :21:54.going to end up doing is rely less on those low skilled workers and
:21:55. > :21:57.rely on things like machinery, more automation and technology, and that
:21:58. > :22:06.will be the way out. Thank you to all of you very much.
:22:07. > :22:10.That's all from Talking Business in London, join us next week when
:22:11. > :22:14.Michelle Fleury will be in New York, looking at the backlash against
:22:15. > :22:25.international trade agreements. Goodbye.