Yves here. As this post describes, diehard neoliberal Emmanuel Macron is tacking a smidge to the left by supporting the idea of restricting labor mobility to protect domestic workers. This populist measure is apparently intended to make the bitter medicine of labor market “reforms,” meaning the reduction of employee protections and bargaining rights, seem a tad less one sided.
One small correction to this article. Author David Llewellyn-Smith assumes that Brexit ending the free movement of EU immigrants into the UK workforce will reduce immigration overall. That’s far from a given. There are already more non-EU immigrants in the UK than ones from the EU. Moreover, readers reported that Europeans who were leaving out of concern for their future were being replaced with workers from non-EU members like Turkey.
By David Llewellyn-Smith, founding publisher and former editor-in-chief of The Diplomat magazine, now the Asia Pacific’s leading geo-politics website. Cross posted from MacroBusiness
A few months ago, French president Emmanuel Macron launched a new policy platform to protect France’s lowest paid from foreign competition:
Emmanuel Macron warned Europe must accept the UK was crashing out of the bloc because of worries about foreign workers undercutting wages.
The intervention is a striking departure from EU rhetoric since Britain’s Brexit vote a year ago which has been dominated by demands for the EU’s principles to be defended.
Mr Macron used his first newspaper interviews since winning the Elysee to endorse tightening up rules on freedom of movement.
He told the Guardian: ‘The great defenders of this ultra economically-liberal and unbalanced Europe – the UK – came crashing down on this.
‘What did Brexit play on? On workers from eastern Europe who came to take British jobs.
‘The defenders of the European Union lost because the British lower middle classes said: ”Stop!”’
Today he adds, via Reuters:
French President Emmanuel Macron on Wednesday won the support of two eastern European states in his campaign against EU rules on the employment abroad of workers from low-pay countries, calling the current system a “betrayal” of European values.
Macron has pledged to overhaul a system under which “posted” workers can be sent to other European Union states on contracts that must guarantee the host country’s minimum wage, but under which taxes and social charges are paid in the home nation.
He says the system creates unfair competition in wealthier nations like France and Austria, a country that borders four eastern European countries and where on Wednesday he met Chancellor Christian Kern, an ally on this issue.
Interestingly, he is also trying to liberalise the labour market internally tackle high unemployment:
Protests planned this week against President Macron’s key employment law reforms have been given additional impetus after he appeared to suggest that French workers opposing them are simply lazy.
Critics seized upon the remark to describe Mr Macron, a former merchant banker, as arrogant and out of touch with the concerns of ordinary families. Unions hope the row will bolster tomorrow’s nationwide protest marches against the labour law package.
Mr Macron’s reforms are designed to weaken unions and to give new powers to employers. In a speech in Athens on Friday, he underlined his determination to drive through a package he sees as vital in the struggle to reduce unemployment from 9.5 per cent to 7 per cent over the next five years.
Across the pond, an analogous set of compromises is transpiring for the globalist of all globalists, Tony Blair, has also joined the rush, via The Guardian:
Tony Blair declared a “renewed sense of mission” to fight against Brexit on Sunday as he insisted Britain could impose tough new restrictions on immigration without leaving the EU.
In the first of a series of interventions he plans this autumn as Brexit talks intensify, the former prime minister’s Institute for Global Change has published a paper setting out a series of ways in which the UK could restrict immigration within existing EU free movement rules.
Speaking on BBC1’s The Andrew Marr Show, Blair said: “If, for example, the anxiety is downward pressure on wages as a result of an influx of EU migrants coming and doing work, say in the construction industry, we have it within our power to deal with that through domestic legislation.”
…“If we want to deal with those questions, we can deal with them without the sledgehammer that through Brexit destroys the EU migration that we’ll actually need,” he said.
Speaking as parliament prepares for a showdown over the EU withdrawal bill on Monday, Blair urged politicians sceptical about Brexit to voice their concerns publicly.
“Brexit is a distraction, not a solution, to the problems this country faces. If members of parliament really believe that, then their obligation is to set out solutions that deal with the actual communities and problems people have, and not do Brexit which is actually going to distract us from those solutions.”
The report published by Blair’s institute, which is written by the former Downing Street adviser Harvey Redgrave, suggests migrants could be asked to show they have a verifiable job offer before they can travel to Britain, and could lose the right to rent a home or claim benefits if they do not have the right to remain.
It also points out that some EU countries such as Belgium have a tougher migration regime within the existing free movement rules, requiring new arrivals to register.
Blair’s proposals stop well short, however, of the crackdown recommended in a Home Office paper obtained by the Guardian last week, which suggested low-skilled workers would be unlikely to be allowed to stay for more than two years.
There is little doubt that Brexit is bad for the British economy. Customs costs alone are huge, via Politico:
The U.K. government faces a mammoth task to prepare the country for customs procedures after Brexit as 180,000 traders face making declarations for the first time, according to a new report from the Institute for Government think tank.
It says businesses face potential costs of between €4 billion and €9 billion, and there is little to indicate the U.K. will be ready to undertake a successful exit from the EU customs union.
Anyone that can remember pre-common market Britain will recall the gigantic queues that formed around the movement of goods and will understand this figure.
But there is no reason why limiting cheap foreign labour should hurt the economy. Indeed, it will be beneficial as it lifts pressure from wages and asset prices, helping domestic demand without damaging competitiveness. Companies will have to train, invest and automate instead, which will boost productivity. On balance, the currency seems likely to be weaker as well as credit weakens.
Protecting the lowly paid needn’t damage the economy overall but it does change the relative winners and losers within it.
Of course, in Australia, the mortgage imbalance is now so large that a similar move to limit the flow of cheap foreign labour is likely to slow the economy before things improve again. But the correction of that imbalance is unavoidable anyway so we might as well get on with it before gets worse and our own political economy boil-over makes for bad policy decisions like Brexit.