Dear Priti Patel: There's no such thing as 'low-skilled' labour

The government's plan to overhaul Britain's immigration system has more holes than a Swiss cheese. According to a briefing document released by the Home Office yesterday, "non-skilled" workers will be unable to live and work in the UK and anyone wanting to move here must have a job offer on a salary of at least £25,600.

There are obvious issues here. Business leaders have already warned of labour shortages in vital sectors such as food and agriculture. Stores on the high street could close down as a result of the plans. The repercussions for social care would be unthinkable. With unemployment at a record low, how is the government expected to fill the gaps?

Priti Patel says there are 8m people aged 16 to 64 in the UK who are currently "economically inactive". Given the fact there are only around 1.5m people classed as unemployed at the moment, where are the others going to come from? Students? The elderly? The disabled? David Cameron used draconian welfare measures to force vulnerable people into low-paid work during his time as prime minister. It is alarming to think what measures Boris Johnson might take when faced with actual labour shortages.

But consequences aside, the government's immigration reforms are built on outdated notions about the workforce anyway. By setting a minimum salary for migrants to be permitted to work in the UK, Downing Street and the Home Office are attempting to block what they see as an influx of "low-skilled" labour.

But "low-skilled" labour doesn't exist. Jobs people tend to see as low-skilled or unskilled – high street retail, hospitality and care work – are in fact highly demanding and require skillsets many people simply don't have. Workers in customer-facing roles require empathy; the ability to multitask; in many instances a level of patience most couldn't muster if their lives depended on it. Waiting staff in busy environments need to be physically fit and quick on their feet all while retaining a customer-friendly demeanour. All this applies to care workers at an even higher level. A degree in financial maths and an internship at Goldman Sachs couldn't prepare you in the slightest for the kinds of things carers have to do on a daily basis. Why then, do we keep referring to these everyday superheroes as low-skilled?

One need only look at the data to see how gruelling "unskilled" work is. A 2015 study by Southern Medical University in China found that jobs with little situational control and high demand, such as waitressing, may be more stressful than those with high situational control and high demand, such as teaching. Worse still, a 2017 study by the University of Manchester found that low-paid jobs could be worse for workers' health than unemployment. Low-paid workers must tolerate a level of stress in and outside of the workplace higher earners seldom experience.

And these jobs aren't just incredibly demanding – they're also the backbone of Britain's economy. Baristas, bartenders, retail staff and carers: these are all the face of the businesses and services British people use and enjoy every day. They are a fundamental part of our lives; many of them are filled by workers who come from abroad. Under these reforms, the government is essentially turning around to those workers and saying: "Not interested. Move along. You don't matter anymore."

Once freedom of movement ends, the consequences of Boris Johnson's immigration overhaul will quickly become apparent. Until then, however, progressives must categorically reject discussions on migration framed around "low-skilled" workers. All labour is skilled labour – it's time we started saying as much.

Boris Johnson's 'global talent visa'

Simon Jenkins published a very good piece in the Guardian the other day on the government's plans to introduce a 'global talent visa' next month.

The visa, in Boris Johnson's words, is aimed at attracting "the world's scientists and mathematicians" to work in the UK after Britain leaves the European Union in two days' time. The imperialistic connotations are not lost on Jenkins, who is worth quoting at some length:

By what right does Britain slam the door on “untalented” economic migrants from the world’s poorer countries, while boasting it will raid their reserves of scientific talent? The NHS already devastates the medical graduate pools of India and Africa. Now Britain is to poach whatever scientists they have left. This is aid-in-reverse: “soft power” at its crudest and most imperial.

There is no rhyme or reason to the new populism. It is driven by chauvinism and outdated cliches. Britain does not “need” more scientists. It needs what its employers will pay to recruit. A Tory government should accept that the labour market knows best. Britain’s economic performance – and its wider culture – has long benefited from immigrants, be they rich or poor at the point of entry. Turning them away makes no sense.

This isn't the only problem with Johnson's talent visa. If you accept the premise there is a skills shortage in the British sciences, then surely the best solution would be to give the UK's STEM graduates a reason to stick at it. Indeed, a 2018 joint-study into STEM graduates by the universities of Leicester and Warwick found that the problem wasn't a lack of numbers, but that only half of them ended up working in a job related to their course.

If Brexit does cause a brain drain in the sciences – and many fear it will – then it will become increasingly important to nurture the UK's young talent and make it worth their while to pursue STEM careers. This is especially true of the medical field and the NHS.

Carney knows the Bank of England is out of options – but that won't stop it cutting rates

Two important and contradictory stories about the Bank of England have come out in the past fortnight. The first came when Mark Carney, who finishes his tenure as the BoE's governor in March, admitted to the Financial Times that central banks were running out of ways to fight recession. Carney even suggested it was time for governments to consider using their fiscal arsenals to tackle downturns – though he did stop short of anything concrete, because, in his words, "it's not [central bankers'] job to do fiscal policy".

The second story came a few days later, when news came that BoE policymakers were considering cutting interest rates again should the economy fail to bounce back after a dismal performance towards the end of last year. Carney said in a speech two days after the FT interview that the central bank was prepared to take "prompt" action if things don't improve.

Carney seems to know the horse he's flogging is dying – though he doesn't think central banking is a spent force yet. What else is there to be done? All eyes on Sajid Javid: March's Budget will determine whether the government will rise to the challenges ahead.

The Brexit Recession, the Bank of England and the Tories

With his newfound majority, and barring some sort of freak scandal in the next few weeks that brings down the government, Boris Johnson will pull Britain out of the European Union on 31 January.

Let's be clear: Johnson's Brexit deal – which he cobbled together as prime minister after relentlessly attacking the slightly better deal of his predecessor, Theresa May – is a bad deal. Non-tarriff trade barriers will increase as a result of Britain exiting the customs union, with aggregate trade expected to fall 13%. GDP per capita is expected to fall 6.4%. Income-per-capita is expected to be 2.5% lower under his deal than it would if Britain remained in the EU. In real terms, this means UK citizens will be an average of £2,000-a-year worse off.

If that wasn't bleak enough, things look worse when you put Johnson's Brexit in the broader context of the global economy. Right now, the global economy is in what the IMF has called a "synchronised slowdown". In October, the organisation downgraded growth to 3% – the slowest since the financial crisis – owing to geopolitical tensions, increased barriers to trade and a sharp decline in manufacturing output.

Britain is already feeling the effects of the global slowdown and prolonged uncertainty. Growth was just 0.3% in the third quarter of 2019, and in the last quarter the economy slowed even more. The Bank of England estimates the UK grew just 0.1% in the final three months of last year. We're already teetering around the edges of a recession – so what's going to happen when we leave the EU at the end of the month?

One thing is almost certain: if Britain were to leave the EU without a deal this month, we'd go into recession. Under Johnson's Brexit deal, however, the UK will keep its current trading relationship with the EU until the transition period ends on 31 December. This will give the government some time to draw up a new trade agreement with the EU. But as mentioned earlier, any agreement would throw up more barriers to trade – and 11 months is an extremely tight deadline to finalise an agreement. It's unlikely the Brexit uncertainty will abate now the election is over, because the next questions are these: will an agreement with the EU be finished by the deadline, and if so, what will that agreement look like?

Threadneedle Street and the Conservative Party

If the global slowdown continues, and Johnson fails to finalise a deal by the deadline (not to mention draw up trade agreements with other countries), a recession isn't at all out of the question. And should one come to pass, the UK will be in an extremely weak position to do anything about it.

The reasons are twofold. First, there is precious little room for monetary policy to move in order to stimulate the economy. Interest rates are currently at 0.75%, which (needless to say) is very low. Any further reduction could scare off lenders and any stimulus would be minimal at best. Despite being originally intended as an emergency step, the Bank of England is still carrying out QE, leaving the central bank poorly-equipped to handle another downturn.

The second reason follows from the first. Ineffective monetary policy logically calls for more robust fiscal policy to counter economic crises. But let's not forget who's calling the shots. After a decade in power, the Tories have starved the UK of public investment. Despite interest rates that would have any sensible government jumping at the chance to borrow, the Conservatives have refused to take the opportunity, leaving infrastructure crumbling, public services in crisis and the private sector sheepish. The Tories' fiscal record since 2010 should unnerve anyone thinking about what the next recession might look like in the UK.

Now, it is true the Tories pledged to increase spending on infrastructure and the NHS in the election campaign. But how much that calms your nerves depends on how much you trust the Conservative Party to carry out its pledges. Take housing, for example. In 2015, David Cameron pledged to build 200,000 'starter homes' by 2020. How many were actually built? Zero. Or how about George Osborne's 'Northern Powerhouse' initiative, ostensibly aimed at revitalising the north of England? The north-south divide has widened, and public spending cuts have undermined the project significantly. More money for the NHS and infrastructure would be a welcome change for public services on their knees, but whether the Conservatives will actually pay up remains to be seen.

The Brexit Recession and Public Opinion

For nearly 10 years, the Tories have always had an answer when challenged about their economic record: that Labour left the country in such a poor state any failures under the Coalition and beyond were simply a result of Gordon Brown's handling of the public finances. 

Up to now, that strategy has paid off emphatically. But if Johnson's Brexit leads the UK to another recession, will it work then? That remains to be seen, but I err on the side of optimism. It will have been 12 years at least since the financial crisis when that happens, and I suspect the public will begin to point their fingers at the Tories if things start to go wrong.

With that in mind, Labour supporters have cause for a sort of bittersweet optimism. But who knows? The Tories have an 80-seat majority. Right now the left should strap in and brace for the journey ahead.