Back in April I blogged about how the number of EU workers in the UK had changed between the referendum and the end of 2018 and concluded that while higher-skilled jobs in the UK continued to be attractive to people from around the EU, lower-skilled ones had become less so. This seemed to be particularly true for people from Poland, as their economy at home strengthened.

This is an updated rehash with a further two quarters data to take us up to Apr-Jun 2019. There won’t be any more data at this level of detail published by ONS this side of the election (though there will be headline numbers next week) and there have been changes since the last blog, so the subject seems worth another look now. As before, the context is whether a Brexodus and fall-off in new arrivals has led or might be leading to a shortage of EU nationals working in UK, what with all the uncertainty and hostility generated by the referendum and subsequent developments.

Looking simply at ‘Western Europeans’ and ‘Eastern Europeans’, the numbers working in the UK do appear to have been differently affected by the referendum and developments since. Western Europeans don’t appear to have been much affected. Of course, a flattish series doesn’t mean that no one has left, but it does mean that for anyone stopping work in the UK, someone else has started. Caveats always apply re Labour Force Survey sample size and confidence intervals, but at this level of aggregation they aren’t material. On the other hand, the number of Eastern European workers climbed by a not inconsiderable 200,000 from early 2016 to a peak in Jul-Sep 2017 before gently giving up much of that gain over subsequent quarters. However, they’ve perked up again this year to return to very near their previous peak.

When looking at the mix of Eastern European workers, the picture is a bit different. On these data, the number of Polish workers peaked just after the referendum and fell from then until reaching a stable level at the beginning of 2018. But this fall was more than made up for by an increasing number of Romanians and Bulgarians which growth tapered off during 2017 but ticked up again in 2018. Other Eastern Europeans didn’t vary by anywhere near as much. But all three groups have increased this year. So compared with the time of the referendum overall both Western and Eastern European numbers are essentially unchanged, but a loss of Poles has been balanced by a gain of Romanians and Bulgarians. So far so anodyne. As to how the recent bounce-back in Poles can be squared with IPS figures that show net emigration of Poles, it’s possible that the increase is explained by people who came from Poland as children now entering the labour market for the first time. But if one group is simply replacing another, why do we still hear complaining from businesses?

As before, from the perspective of occupational groupings the picture is quite interesting. Compared with the beginning of 2016, EU employment has fallen in Skilled Trades and in Elementary Occupations, in both cases driven by falling numbers of workers from everywhere else in Europe apart from Romanians and Bulgarians. It would have fallen in Process, Plant and Machine Operatives driven entirely by falling numbers of Polish workers if it had not been for a much larger increase in numbers of Romanians and Bulgarians that turned it into a rise of some size. On the other hand, employment in the three higher-skilled occupational groups increased by nearly 100,000 in total.

For context, we can look at how these changes fit into overall change in employment in the UK. Over the past three years most growth has been concentrated in (essentially) higher skilled work. Employment has fallen in in Skilled Trades Occupations and Sales and Customer Services. The fall in the latter is almost entirely accounted for by falling employment of UK-born workers, presumably a reflection of ‘High Street bloodbaths’ as a number of high-profile retailers collapsed. And most of the fall in Skilled Trades Occupations has been among the UK-born, which might well suggest similarly a drop in demand rather than a squeeze on supply, as whereas people in Skilled Trades Occupations may well move to another employer, they are not as likely to switch occupations as people in most other groups, precisely because they have a particular skilled trade. It’s of passing interest that the number in Elementary Occupations has not actually fallen, as employment of migrant workers in this sector from outside the EU has edged up.

So, has there been a big Brexodus? Not very meaningfully. At the whole economy level, the number of EU workers hasn’t changed much since the referendum. There are signs that more people have been leaving the UK from some sectors than have been replaced in these sectors by other new EU arrivals. There are few signs of progress up the occupational ladder. The implication is that while higher-skilled jobs in the UK continue to be attractive to people from around the EU, lower-skilled ones have become less so, except for people from Romania and Bulgaria. Of course, this isn’t necessarily anything to do with a newly hostile environment or ‘uncertainty’. If that were so, one would expect all groups to change similarly, as the ‘unwelcoming’ would likely be as ill-disposed to Lithuanians, Hungarians et al as to Poles.

Instead the interruption to trend Pole-wise just seems rather more likely to reflect changes in the Polish economy than anything else. For example, the decline of Polish workers was very much associated with the strengthening of the Zloty against the pound, and that decline largely halted when it stopped strengthening (and since then the Zloty has trended gently downwards as the Polish worker decline gently reversed).

The fact that prospects in Poland for Poles might have become more attractive may well have made life more difficult for some UK employers in specific sectors but that seems to be no more than a function of the fact that these employer offers didn’t change in response. UK employers have been very happy to take advantage of differentials in job availability and wage levels between the UK and some other EU countries, but those differentials were bound to narrow sooner or later whether the UK stayed (or stays) in the EU. These differentials remain very wide though between the UK and Romania and Bulgaria.

Overall are employers suffering? Well, employers’ recruitment intentions are as low as they’ve been in a long time (outside the recession following the Great Financial Crash) while recruitment difficulties are as high as they’ve been since 2001. The chart shows an unprecedented divergence between the two series over the past two years. It’s hard to say which is chicken and which egg.

Generally, increases in employment intentions means employers are going to be seeking more workers and recruitment difficulties then increase as employers compete for available workers. It’s possible that the causality has switched and recruitment difficulties have led employers to scale back their intentions to recruit. But as any job can be filled if the employer offers enough in pay, one implication is that they just don’t want to raise wages and so are sitting on their hands — perhaps until the outcome of Brexit becomes clearer….

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