By Phillip Souta
By Phillip Souta
UKIP’s latest claim, made rather ominously on 1 April by Tim Congdon, is that the UK’s membership of the EU has not been good for jobs in Britain. This is a serious allegation, but it does not stick.
Congdon establishes as his target the claim that British withdrawal from the European Union would put at risk 3 million British jobs. He goes on to make number of statements which he intends to build on that.
These are as follows: firstly, in the first decade of European Community membership employment in Britain fell; secondly, that “[n]et, no male jobs have been created in Britain” since accession to EC in 1973; and thirdly, over recent years, the increase in the employment of foreign workers in Britain has resulted in “a loss of jobs for people of British birth.”
The first is finding that employment in 1983 was lower than in 1973. In 1972, unemployment in the UK topped one million for the first time since the 1930s, and ten years later in 1983 it rose to above three million. Drawing conclusions from this raw data about the relationship between UK membership of the then EC and job creation or losses is problematic.
For a start, Congdon pays no attention to the wider context of government policy and international economic conditions during the somewhat stormy first decade of British membership.
In the early 1970s, Keynesian approaches to economic management, which for much of the post-war period included a commitment to full or near-full employment, continued to influence government thinking. The 1972 ‘Barber boom’, named after the then British Chancellor, Anthony Barber, is one of the best-remembered examples of this type of approach.
In the early 1980s, the context is very different. Most obviously, the West was in the midst of a sharp recession where GDP fell by 5.9 per cent between 1980 and 1982. It resulted in much higher rates of unemployment than had been the case a decade previously. Britain, which had a comparatively weak economy at the time, suffered particularly badly.
The domestic context was also very different. Crucially, Keynesian policies had been replaced by the monetarist ideas of the first Thatcher government.
There is nothing in Congdon’s statistics to indicate that the high levels of unemployment in 1982 might have been as a result of EC membership. Rather, the coincidence draws attention to the difficult circumstances of the UK’s early years of membership, and why it was a worse moment to seek to reap the potential economic advantages than would have been the case if the UK had joined in the late 1950s or early 1960s.
Congdon’s next point, that “[n]et, no male jobs have been created in Britain since our politicians decided that we should join the European Construction”, is similarly flawed.
Once again, he makes assertions about the relationship between EU membership and EU-related job creation without offering proof. A weakness of Congdon’s analysis is that his static perspective does not allow for changes in employment patterns over time.
For example, today, manufacturing accounts for a smaller proportion of total UK employment than was the case in 1973, whereas services accounts for a larger proportion.
In the same way, Congdon’s figures say nothing about the types of jobs British people were and are doing, and how linked they are to Britain’s trade with the EU.
Finally, there is Congdon’s proposition that the arrival in Britain of workers from other member states has led to a loss of jobs for British-born workers. Again, this dramatic conclusion is not established by Congdon’s figures.
That a worker from overseas finds a job in the UK does not mean that it is automatically at the expense of a British-born worker. She or he may be filling an important skills gap or there may be an insufficient supply of local labor. In short, that job may not exist had the overseas worker not come to Britain to do it. Congdon is relying on discredited theory that in any given economy there is a “lump of labour.”
Not only does that worker then make a contribution to British economic output, they also contribute to government revenue through taxation.
Those opposed to EU membership point to Norway and Switzerland – which are not EU members but are allowed to access the single market under negotiated agreements – to argue that withdrawal from the EU would not harm the British economy.
What they do not acknowledge, however, is that those countries are required to accept practically all EU regulation relevant to the single market (as well contribute to the EU budget). The difference is that because they are not members of the EU, they cannot participate in the EU institutions, and therefore cannot influence or shape that regulation.
As a member of the EU, Britain – along with other member states that share a more liberal economic outlook, such as Sweden, Germany and the Netherlands – is able to negotiate and influence the development of EU legislation, ensuring that British interests are taken into account and, where necessary, protected.
If Britain were to leave the EU, it might still be able to trade freely within the single market, but it would leave it entirely to others to determine the regulations that Britain would eventually have to accept – however damaging to British interests they may be.
This political argument – the importance of Britain remaining a member of the EU so that it can help to shape its development – has always been intimately connected with the economic argument, that free trade and the single European market is beneficial enhances the competitiveness and export potential of British industry.
Three million of the UK’s roughly 29 million jobs are directly linked to UK exports to other members of the EU. Many of those jobs would be put at risk by the import tariffs and other disadvantages the UK would have to deal with as an outsider. Congdon ignores this danger, and the danger of UK isolation outside the mainstream.
