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posted on 14 May 2016

Fact Check: 790,000 New Jobs By 2030 If UK Remains In EU?

from The Conversation

-- this post authored by Abigail Marks and Mike Danson, Heriot-Watt University

Remaining in Europe will create an extra 790,000 UK jobs by the time these kids grow up, so whatever they want to be, they will have the best opportunities to get on in life if we stay in the EU.

Britain Stronger in Europe ad campaign

This prediction, which comes from a report by the Centre for Economics and Business Research (CEBR), published last October, assumes something which may never happen - namely that the European Single Market will be completed. The CEBR's broader claim is that the EU's current project to complete the single market in areas such as transport, tourism, energy and online trade will lead to increased UK GDP of €275 billion (£218 billion). The report translates this into the 790,000 jobs.

The trouble is that many of the changes are likely to be resisted by the public because they will cost jobs - initially at least - particularly in sectors that have already suffered over the past few decades, such as energy. To realise the further integration involved, we would need to see a significant change in the national psyche. If we managed this, we would still be at a disadvantage compared to other EU countries because the benefits depend on the free movement of labour. The fact that the UK is not within the Schengen area or the eurozone makes these difficult to realise.

Even then, the savings are only of direct benefit to the profit margins of the companies that manage to survive the increased competition. Completing the single market won't benefit workers as such. Reducing the number of "national" producers across 28 member states to allow the strongest companies to freely expand means redundancies as duplicated jobs are removed. This is similar to what has already happened in the EU. Over the last 25 years, under the Maastricht Treaty, there has been job creation in the UK but the labour market has been hollowed out at the same time. We have lost traditional craft and manufacturing jobs to more competitive EU neighbours, while our market-oriented approach and poorer employment protection led to employers generating lots of low-paid services jobs.

To ensure a benefit from completing the single market to the population of the UK as a whole, profits from the companies who were benefiting would need to be reinvested for the common good. This would require a clear strategic plan for the economy, as opposed to just leaving it to market demand. We would recommend an apprenticeship system that led to sustainable careers, paralleling similar schemes in the Nordic countries, Switzerland and Germany. But even then, these schemes have been established for decades and are strongly culturally embedded.

It would help if Britain were closer to the Nordic social model, where there is greater empowerment within the workforce and wages are at a reasonable level. This means that employers have to invest in their labour, and apprenticeships are an important part of the picture. The UK stands out as having one of the largest gender pay gaps in the EU15, and it clear that the most successful economies not only have wage equality but also high levels of union representation and collective bargaining.

The apprentice (and the other one). Phovoir

None of this is an argument for leaving the EU. If the UK did so, it would take an awfully long time to put in place new trade agreements and the impact on the economy in the interim would be catastrophic.

Verdict

Realising 790,000 jobs from continued EU membership by 2030 depends on completion of the European Single Market. Achieving that depends on getting a deal past the eurosceptic UK public and converting economic growth into jobs with a major strategic plan. It is certainly not as simple as saying that the jobs will come if we vote to remain on June 23.

Review

Nigel Driffield, Professor of International Business, University of Warwick

I largely concur with the comments. The essential premise of the argument is one around trade creation. At present, particularly in public procurement and infrastructure projects, the EU is some way off completing the single market. While the spirit of the single market is that equal opportunities are afforded to all EU member states when firms are bidding for such contracts, in practice there is sufficient wiggle room to allow governments to emphasise regional development or other strategic priorities when allocating contracts.

There is a view that the UK is somewhat "fairer" on this say than Germany, such that German firms win UK contracts but seldom the reverse. This however is a feature of the austerity and efficiency that is emphasised in UK procurement rather than anyone else not playing by the rules.

But as the comment also notes, trade creation implies a degree of trade competition, and there will doubtless be some "losers" - some UK firms will gain from further moves to a single market, while others lose out to EU competitors. This I assume is the reference to the job losses, and the degree of migration that might occur. When steel plants closed in Scotland and steel workers moved to Northampton in search of work, this was seen as normal, but for trade creation to yield benefits in full this requires, as the author notes, movement of labour across the EU. In many countries this is seen as problematic at the present time.

The ConversationAbigail Marks, Professor of Work and Employment Studies, Heriot-Watt University and Mike Danson, Professor of Enterprise Policy, Heriot-Watt University

This article was originally published on The Conversation. Read the original article.

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