Free trade for me, but not for thee

worldOne of the seemingly natural reactions to an economic downturn is protectionism. The Great Depression is the classic example where this reaction has had its most significant, and indeed, negative impact on recovery, further weakening exports, imports and trade generally. Many nations now resist this temptation in relation to the free trade of goods; however, free trade has rarely ever been extended to the persons entering the UK from outside the European Union. We ought to question this policy as it too is a barrier to recovery.

The coalition government has now limited the number of skilled workers who may enter the UK from outside the EEA to just over 20,000, down from over 100,000 in recent years. On September 12th, the Migration Advisory Committee advised that the shortage occupation list be revised down further limiting the types of skilled work migrants may undertake under the Tier 2 points based system. It should be acknowledged that the size of this potential segment of the population is less than 1% of the UK workforce and that skilled migrants no longer qualify for a work visa in their own right. That is, they will need to be sponsored by an employer to qualify. Further, these workers pay tax, contributing to the welfare state under which they have absolutely no recourse to public funds or benefits.

The juxtaposition is that while the UK has signed onto free movement for both skilled and unskilled labour within the EU they are now over compensating by actively restricting migrants that would actually contribute to an economic recovery.

A leading immigration expert has pointed out that overseas nationals that are sponsored by companies to migrate to the UK cost the employer three times as much as hiring a resident worker; evidence employers are doing so at their own cost and that their skills are much needed.

The free movement of persons has often been excluded from the free market debate as human capital has greater implications for the state than does say, raw goods. However, in a tertiary economy where intellectual power in the form of patents, research and development as well as skilled labour fuel economic recovery, government policy is out of synch with progressive policy. Say what you like about unskilled labour flowing in from across Europe, but to do so in relation to skilled labour disadvantages employers who require specific skills to drive growth and may not be available locally. It is time to develop our experiences from the past and apply them in a modern context.