01/10/2016 Talking Business

the UK to set up home. But there have been votes to change all of

that for Brexit. In this week's Talking Business, we

look at the future for freedom of movement.

Welcome to London. I'm Tanya Beckett. In the treaty, the European

Union outlines for freedom is necessary for a single market, the

free movement of goods, services, capital and labour. But able weight

of anti-immigration feeling in the UK and other EU countries six to

undermined the founding principle. What does that mean for the way we

work and do business? There were 3.3 million EU nationals living in the

UK, and one third of them in London. On average they tend to be younger,

better educated and more highly skilled than indigenous Britons. And

they are more likely to be employed according to government figures.

Some employers say that these workers felt the skills gap in the

economy but there is also evidence that migrant labour has depressed

wages for low skilled workers. In the UK. With me now, a panel of

guests each of whom have lived or worked overseas. Alexander is an

entrepreneur who founded hassle .com, an online marketplace for

cleaners, Professor Kristian is a director for the centre of research

and analysis on migration at University College London, and Nina

is the chief economist of a company that looks at the impact of economic

and social policy. Welcome. Christian, is it possible to say

whether immigration is generally a net benefit, if you look at a

broader con me or not? -- economy. It depends which immigrants are

going and what immigration we are looking at. Of course, it has

changed our times dramatically. If you go back to the 1960s and 1970s,

European countries needed and and skilled -- and a skilled workers,

now we need skilled immigrants to fill those skill gaps.

There are winners and losers, not everybody necessarily gains from

migration. Some people may the end competition with immigrants which

happens with distribution -- BN competition. And others may be

benefiting. Nina, we have a situation where there is a level

playing field with EU workers and non-EU workers, how does that affect

the picture? Clearly there is a question about what kinds of workers

firms will be able to recruit. More likely than not you would probably

end up with some sort of system skewed towards higher skilled and

higher paid workers, that is OK if you are a firm who hires those kinds

of workers but actually, for firms in the accommodation and food

sector, they are dependent on the lower skilled end and probably will

not be able to fill those jobs any more if we don't have freedom of

movement. Does the picture vary according to whether you are talking

about low skilled or high skilled labour coming in, or is it necessary

across the board if you are going to have net economic impact which are

positive? Nina pointed out sunning important.

-- something important. UK sector is producing blueberries which can also

be sourced from Poland. In order to be competitive for a blueberry

producing company in the UK, the company has to produce them for at

least the same price as the Polish company. Paying higher wages would

of course seriously harm the possibility and in all European

countries we have workers coming from eastern countries to do this

kind of work for wages which allow companies to be competitive. And to

add another point, a lot of these workers are highly flexible. For

example, seasonal fruit picking is the obvious example where you have

people prepared to come over for a short period of time and return

afterwards. What happens to those sorts of workers? Fruit picking is

an example and it happens across sectors, becoming temporarily when

firms he would otherwise be at full capacity. It's a net benefit to the

economy. As someone who founded a business, you are very dependent on

EU workers. It is essential for you, why? In the technology sector, 65%

of my workforce who worked on the platform doing marketing,

engineering and customer service were from outside of the EU. It is

not just what we are selling but the business's make up. We are having

this discussion in the context of the fact the UK has voted to leave

the EU, Brexit. This will have an impact but we are not entirely sure

what it will be on access to the UK for EU workers. But, if you look at

the UK as a whole, how has it been affected I access to that workforce?

Well, for an entrepreneur of a firm, it is advantageous to have access to

a pool of workers of 500 million, rather than 60 million. From the

perspective of firms, to be able to source skills and necessary skills

from a larger pool is clearly an advantage. The EU is giving that

advantage, and the other point is under free mobility, there is no red

tape. I can see you nodding, it's easier to hire those in the EU from

outside? It costs nothing, if I chose to hire a French developer, it

costs me the airfare versus one from the UK, if you can find one, we did

try to hire someone from Israel, outside of the EU, six months and

?10,000 later I gave up, because of the red tape. People would argue

that it would be easier once we treated everyone the same but, in my

experience of the Visa Systems, the minute you put any kind of red tape

that, it is costly and takes a long time, and it holds young companies

or fast-growing companies like mine was, it holds them back. One of the

issues raised with regards to immigration in the UK is the

so-called fiscal burn. There's been a lot of debate about benefits, for

example, off to immigrants and whether they pay their way, however

you want to define that. What is your research tell you? That's an

important aspect and the public is very concerned about it. We have

done research for the UK, and we have found immigrants from European

countries in particular pay far more in terms of taxes than what they

take out interns of transfers and benefits. -- in terms. There are

clear fiscal net contributions to the UK system. Why is that the case?

Several reasons for that, one of those being that they draw less on

benefits, and another very important reason is that they have high

participation rates, the sheriff workers or people who come from EU

countries in the workforce are higher than the native native

workers -- share of workers. It increases their contribution. Nina,

is there any need for UK workers to feel their jobs are being taken by

immigrants? It's that feeling of threat isn't it, sometimes? Yes, I

would imagine there are individual circumstances where people may be up

against workers from overseas but, if you look in the aggregate at the

kind of whole picture, you find that there is pretty much no link between

unemployment and immigration. It's quite hard to say that jobs are

being threatened, and let's not forget that a lot of workers and

migrants come over here and create jobs and set up new companies. They

provide prosperity for an area. It's not a one-way street. Do you think,

Alex, the government fails to communicate exactly what Nina and

Kristian are saying here? Without a doubt. I think there's a

misconception that, and it was definitely in the run-up to Brexit,

immigrants were taking jobs but the Wall Street Journal did a great bit

of analysis where they overlaid immigration rates and also jobs that

had left the region and gone to somewhere like China. There was no

link between high levels of immigration and Brexit, but a

correlation between high levels of job outsourcing overseas and Brexit.

This is not a conversation on the around immigration but globalisation

and how we have left behind generations of people who are not

equipped for the current modern world of work. With technology we

have hundreds of thousands of jobs open we do not have English people

who have been coming out of university or retraining, able to

fill those jobs. That is why companies like mine have to look

overseas for talent to stay competitive and build valuable

companies. Thanks for now. Later in the programme we will look

at the potential impact of tighter Visa rules on firms trying to

recruit and retain staff. First, our comedy consultant takes a

light-hearted look at what tougher immigration rules could mean for

workers and businesses in Ireland. He has this week Talking Point.

I'm looking at Labour across borders, but first I need to find a

border. They're with me... It's around here somewhere...

-- bear with me. We are coming up to the border between the Irish

Republic and the North of Ireland, which is in the UK. We are coming up

to the border, and we've passed it already. You would not even know it

was there. The only way you would know is that the speed limit has

changed from calamitous power to miles per hour.

They used to be a hard border but since 1994 and the Belfast peace

agreement, that's all changed and people on both sides of the border

move freely every day to work and play.

However, something has threatened to rain on the parade of free movement

of labour between North and South and that rainy shower is Brexit.

Hardening of the border is inevitable and Brexit. Economic

activity, and any change in the nature of the border as it currently

operates between the UK and Ireland can have an effect, particularly at

a local level. This is done dork, a town four miles from the border of

Northern Ireland and the Irish Republic. I've come here to see what

people are thinking about the Brexit effect. OK, so there's no hard

border yet, this is all conjecture about the future, there are no

soldiers with guns or spears to stop me from crossing across the border

but as the dark clouds of Brexit gather in this area, there's a real

fear about the of Brexit and the return of a hard border on the work

lives of people here. It's no coincidence that the major town

suffering over the last few decades are border towns. It tells you the

economic impact border has, it kills trade, and makes life more difficult

because it imposes barriers. What about the impact of Brexit and

possibility of a new hard border on the lives of ordinary people, people

who come from the north across the border to work at large companies

like PayPal behind me. PayPal came to Dundalk in 2011. A company like

that employers approximately 10 cents of the workforce from abroad

-- from the north. But there are many travelling north

to south every day. That will cause strife if we have a hard border. The

free movement of people and labour is extremely positive. It encourages

people to participate in activities either side of the border. I'm on

this side of the border to -- border to show that there was no way rain

can be stopped. Imagine if you years' time cues here

at immigration? But is not just to stop people getting to and from work

of the principle of the free movement of labour is under attack

in the USA and all over the industrialised world.

The omnipresent Colin with his own take on free movement. There are

more of his short films available on the website. Other

-- our guests are still here in the studio. Alex, let's start with the

idea that you can tailor immigration in a way that the people coming into

the country, the workers coming into the country, sort of plug holes. I'm

talking about a points system and it has been discussed, what you think?

Controls must be carefully considered. Right now, let me make

the point, BCG came up with an interesting study recently that

demonstrated the Internet contributes over 10% to the UK

economy every year, and that growing. Second behind property.

Outstripping manufacture and retail. The UK has to look carefully about

what it wants to be when it grows up and I argue that we should be and

fast becoming a digital nation and if we want to be that and on the

cutting edge, we need immigration to plug the holes and secondly, we had

to invest heavily in our education system which is currently failing

those people going through it and coming out the other side. What do

you think of the idea of a points system, it seems like a blunt tool?

And short-sighted? In principle it is a wonderful idea, you have a

system that allows you to tailor immigration precisely to the needs

of the economy but, that same principle. In practice, the needs of

the economy first must be understood and communicated to those people who

set up a points system, and that takes time. We are in dynamic

competition with the rest of the world. These processes could be very

detrimental for companies who need skills now and not next year, after

the points system has been adjusted in the way that those skills are

considered. Red tape, that we introduced with a

points system in particular, if we want to apply it to European

workers. So that suggests really that our labour needs are very

fluid, particularly in a modern and fast moving developed economy?

That's absolutely right, and really what you want is some kind of

flexible system that allows firms to hire the people they want when they

want. The points-based system to me is bureaucratic, let's face it. It's

bureaucratic. You need to go through applications and see who fits

freezer requirements, etc. It does not fit the dynamic economy.

-- fits the requirement. Where have you seen a fact? Across-the-board

and digital. Talk to 16-year-olds not long ago, I asked them what jobs

they wanted to do, and it was banking, lawyers, teachers.

Not one of them knew what a full stack developer or a performance

manager was. There is a massive shortage of these

jobs and that's before we get into machine learning, and AI. Cutting

edge stuff, only a handful of universities, pockets of people

around the world, can do that. If the UK wants to stay at the

cutting-edge, we must bring those resources to the UK to develop those

kinds of technologies. With my company, I had engineering vacancies

for six months at a time. We recruited across the UK and Europe

and I ended up with a development team that is 85% European. On the

skills point, one issue some sectors have is that they are essentially

stuck in a Catch-22 situation, you won not getting enough UK graduates

and skilled workers coming through the education system but you

do have a shortage of teachers of that as well. So we need to make

sure that there are teachers available... Can it be done? I think

so but you cannot really do without migration, even if it is just in the

short-term, to get the numbers up so that we can start training people to

the levels we actually need. It sounds a little bit like the in

economy is in some way dysfunctional -- like the UK economy.

Is it a normal situation or is it deficient? After 1989, we saw the

world growing and competition between countries, which before we

had two different parts of the two blocks.

It has created much more dynamics in International business, and the

Bruton has become shorter, demand for skills came up cricket and the

debate cannot be separated when we talk about skills with a domestic

production of skills with universities and schools. In the UK,

we need to do much better than we are doing at the moment. But, apart

from that, all developed countries are very heavily dependent on being

able to source skills from other countries than their own at the

moment. Nina is vigorously nodding! Do you think as and when Britain

leaves the EU we will be faced with a situation where the government has

Turner take action? -- has to take action? Yes, and the

biggest challenge will be for the firms taking on low skilled workers,

it is hard to see how they win under a system where freedom of movement

is taken away. I think they will have to adapt,

whether it is being paid more, it's difficult if you are competing

overseas in manufacturing, for example. Or you need to think about

automation. Be less reliant on the skilled

workers and more reliant on Middle skilled and high school workers

which would be a big challenge for firms, I think. Do you think that

business has to fundamentally adjust the model in order to accommodate

what we might well see, which is the turning off of taps when it comes to

access to EU workers question might guess, but I think we have an

obligation as businesses to do so. Whether we leave the EU or not, we

must match supply and demand in the workforce, there is a great plethora

of jobs out there which are well paid. There is this disenfranchised

popular wrists who do not want to do low skilled work, who can blame

them? The education system must be rethought at every level, we had to

retool these people to do different jobs in the workforce.

And how we educate the population, to ensure that we are not dependent

on migration and we are producing the right people for the right jobs

here in the UK. Nina, much has been said around the low skilled end of

the workforce and the concern has been, I think this has been fairly

compensable, there has been pushing down of wages that that end of the

spectrum. Would wages go back up if we no longer had access to those EU

workers who were doing the low skilled jobs? You are right, there

has been some limited effect in the terms of wages of those killed

workers. Yes, it is possible, I think some firms would want to

respond by paying more to attract workers if they could not rely on

overseas workers so much. However, in a competitive industry, you

cannot do that. You need to keep an eye on your costs, you are competing

with firms overseas and I think in some sectors, what they are probably

going to end up doing is rely less on those low skilled workers and

rely on things like machinery, more automation and technology, and that

will be the way out. Thank you to all of you very much.

That's all from Talking Business in London, join us next week when

Michelle Fleury will be in New York, looking at the backlash against

international trade agreements. Goodbye.