Driving Production Abroad

It’s difficult to know where to begin with latest policy by the Home Office to effectively put a block on low-skilled labour from Europe. Let’s start with the hypocrisy of it. The Migration Advisory Committee (a public body that advises government on migration issues sponsored by the Home Office) wrote a report in 2018 on the impact of European Economic Area migration in the UK. I won’t bore you with all the details but in summary:

• No evidence to suggest that EU migrants drive down wages or take British jobs. No drop-off in training or selection of British workers
• Productivity – EU migrants tend to be very productive – they work harder than British workers
• Tax & Benefits – in all, EU migrants pay in £2300 more each per year than they take out so they are not a drain on public resources. In total that adds up to £4.7bn into the coffers every year.
• Is there a public service burden?

o NHS – EU migrants are net contributors rather than takers. They tend to be young and healthy.
o Schools – EU migrants kids tend be high achievers and there is no evidence they’ve damaged the outcome of British kids
o Crime – no significant effects on crime rates
o Social Housing – tend to rent. Marginal evidence that EU migrants push up house prices.

So, EU migrants are a force for good? You would think so but the recommendations from the report were that we should allow greater access for high skilled workers and severely restrict access to low-skilled workers earning less than £30K/year. The Road Haulage Association called it “ignorant and elitist”.
I suppose we should at least be grateful that the government have lowered the threshold to £25,600 but the problem remains, where are we going to find workers from for our industry? I don’t accept the argument that we simply pay Brits more. Here’s a controversial statement for you:

“British workers are among the worst idlers in the World – too many people in Britain prefer a lie-in to hard work”

Anyone who runs a packhouse or employs workers in agriculture will sympathise with that statement. We have an onion packhouse in Lincs. Standing on a cold, dusty production line picking off rotten onions – not the nicest job but someone has to do it. Our Eastern European percentage of the labour force floats between 90 and 100% – Brits simply do not want to do this kind of work. So, back to the statement above – never a truer word said in my opinion. But who said it? It’s from a book called Britannia Unchained written by five Conservative MPs including Dominic Raab the Foreign Secretary and Priti Patel the Home Secretary. You couldn’t make it up!

I was over in the States recently and labour was the hot topic there. Since Trump has restricted the flow of Mexican labour, pay rates have shot up to around $18/hour. But offering Americans more money isn’t the solution they tell me. Americans like Brits simply don’t want to do agricultural/packhouse work which has led to a shortage of labour and rising costs.
I think the inevitable medium to long-term impact of this is to further drive production abroad. We already import 67% of our fresh fruit & veg – a figure that I can only see increasing. Veg production in the UK is already at a stage where the UK grower is making negligible/negative returns. Government policy like this will tip many growers into thinking “I’ve got better things to do with my time, land and money than to grow veg”. The irony of this is we have a government pushing for carbon neutrality while advocating a policy that will inevitably lead to an increase in imports.

What’s the solution? Robotics/mechanisation is the obvious one but it’s a slow burn. This problem is already upon us and about to get a shot in the arm from government policy in a matter of months, not years. I don’t think any amount of political lobbying will push the government to change its mind. Agriculture was around 6% of GDP post-war – we’re now around 0.6% which makes us insignificant. It’s noticeable that for the new points-based system crucial extra points are available for working in a sector with shortages which currently includes nursing, civil engineering, psychology and classical ballet dancing – absolutely no mention of agriculture. So I think we need to be realistic….accept it….and above all…..budget for it properly and charge customers for it accordingly. We need to reverse the tide and start pushing some inflation back into fresh produce. Let’s end on a brighter note – perhaps this is the excuse we’ve been looking for to push back and say “enough is enough!”.

Regards,

Tim O’Malley
Nationwide Produce PLC
tim@nationwideproduce.com