New immigration rules could cause more inflation than Liz Truss’ mini budget

Since the new one-size-fits-all immigration rules were announced last week, we’ve been gauging reaction from across the meat industry. It’s highlighted what could turn out to be a serious unintended consequence, not just for our industry and any other sector that relies on migrants to fill job vacancies but right across the whole UK economy.

The issue nobody is talking about is how this might spark a raft of Equal Pay Claims under the Equality Act 2010, as existing workers in the UK seek to be paid an equal salary for the same work as their newly arrived overseas colleagues.

Like Liz Truss’ mini budget that set off a chain of chaos and lit the blue touch paper on rampant inflation last year, the Government has once again announced a seismic policy change without having produced any impact assessment of the damage it could cause. We calculate for our sector alone this could cost hundreds of millions of pounds.

This proposed £38,700 threshold to employ a recruit from overseas could cause havoc across factories, offices, pubs, restaurants, warehouses, call centres, shops….the list goes on. Existing UK workers will have the legal right to demand a similar salary uplift, completely distorting the standard market rate for jobs across the UK and massively disadvantaging companies outside of the South East. It has the potential to completely up-end the current regional, skills and experience-based salary system that’s determined what Brits get paid for decades.

Not ‘Levelling Up”…. inflation for British consumers
And, before the Government start trumpeting such a consequence as ‘levelling-up’ or a ‘high-wage, high-skill economy’, what this will actually mean is a large and sudden inflation shock as we pay significantly more for lower skills and less productivity; more than we would have been paying British workers if we could recruit them.

Despite current competitive rates of pay that are well above the official Government ‘going rates’, companies (not just in the meat industry) find it impossible to fill all their vacancies from the pool of people in the UK, who are either not willing, not able, or not in the right location to take up these positions. So, we need migrants.

These credible concerns were raised almost instantaneously after the announcement and illustrate how businesses might be forced to react when ill-thought through Government policy comes into contact with commercial reality.

Two consequences, neither of which is good.
If it’s allowed to pass into law and companies continue to bring in overseas workers, British consumers will be hit with steeply rising costs from some of the key food, retail, hospitality and manufacturing sectors and the UK will become less competitive on the international export market.

A more likely scenario is that it will go the other way. We’re hearing from businesses that filling these vacancies will become completely unviable under the new rule. If they can recruit neither British nor overseas workers they’re left with one choice – contract their business and reduce the amount of food they produce. This would be anti-growth for UK Plc. and damaging for the economy.

We can only urge policy makers to suspend this plan immediately, engage with businesses in every corner of the UK and produce a properly worked-out impact assessment on businesses and consumers before committing to anything.

If they don’t, companies and overseas workers (including ones already in the UK) will be forced to act now based on the worst-case scenario. So, the damage will start well before the new rules are implemented.