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20/09/2016
1
The Labour Market Implications of Brexit
o Brexit and the Labour Market – John FitzGerald, TCD and ESRI
o The likely effects on the workplace –All
o Panel discussion – joined by Ronan Hill of Morgan McGinley & Terence McCrann of McCann Fitzgerald
20/09/2016
2
Brexit and the Labour Market
John FitzGeraldTCD and ESRI
8th September 2016
Outline
• Labour market trends• British Isles Labour Market?• Brexit• Brexit and the Labour Market
20/09/2016
3
20000
25000
30000
35000
40000
45000
50000
55000
60000
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
tho
usan
ds
EU 15, Labour Market, Lower Secondary Education
Labour supply Employment
0
10000
20000
30000
40000
50000
60000
70000
80000
90000
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
tho
us
an
ds
EU15, High School
Labour supply Employment
20/09/2016
4
20000
25000
30000
35000
40000
45000
50000
55000
60000
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Th
ou
san
ds
EU15, Tertiary Education
Labour supply Employment
Education – cohort of 1951-5
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Educational Attainment, birth cohort 1951-55
Lower Secondary High School Tertiary
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5
Education – cohort of 1981-5
Unemployment Rate% of Labour Force
0
2
4
6
8
10
12
14
16
18
20
1998Q1 2000Q1 2002Q1 2004Q1 2006Q1 2008Q1 2010Q1 2012Q1 2014Q1 2016Q1
Men Women All
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6
Annual Net Emigration % of Population 15-34
-7
-6
-5
-4
-3
-2
-1
0
1
2
3
4
Republic of Ireland Northern Ireland
Annual Net Emigration% of population 20-34
-10
-8
-6
-4
-2
0
2
4
6
1987 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015
UK Other
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7
Annual Net Emigration% of population 20-34
2009 2010 2011 2012 2013 2014 2015Average
2009-2015Males 0.6 2.1 1.7 2.9 2.0 1.9 1.5 2.5Females 1.6 1.2 0.2 1.1 -0.5 0.9 0.3 1.0
Unemployment Rate% of Labour Force
0
2
4
6
8
10
12
14
16
18
1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015
Ireland UK
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Relative wage ratesIreland Part of British Isles Labour Market
0.4
0.5
0.6
0.7
0.8
0.9
1
1.1
1926 1931 1936 1941 1946 1951 1956 1961 1966 1971 1976 1981 1986 1991 1996 2001 2006 2011
Wage Rates, Manufacturing: Ireland relative to UK
Proportion of Population in Education%
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016Males15-19 77.1 80.5 83.7 86.2 87.1 87.6 88.9 89.4 88.5 88.720-24 20.9 22.9 26.2 32.3 33.0 37.2 38.4 40.4 37.9 38.525-29 4.8 5.4 5.7 6.9 6.6 7.1 10.4 10.4 11.1 12.0Females15-19 86.8 86.3 88.0 89.3 88.7 90.7 90.6 91.4 91.8 90.820-24 26.5 27.2 27.6 31.1 33.9 38.1 40.1 39.7 41.0 42.125-29 5.3 5.8 4.5 4.7 5.3 6.9 8.3 8.1 7.2 8.1
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Irish Labour Market 2016-21
• Continuing economic growth?• Employment predominantly for well educated• Crisis - higher participation in education
– Will it persist
• If growth continues:– Rapid growth in construction?– return to full employment and to immigration?
• Implications of Brexit?
Brexit• Brexit – negative impact on UK economy
– Bad for financial sector– Bad for manufacturing of transport equipment
• E.g. Airbus, Nissan etc.– Will be negative for FDI seeking access to EU market
• E.g. Indian investment• Brexit – minuses and pluses for Irish economy
– Probably positive for financial sector– Negative for smaller firms exporting
• E.g. food processing– Pluses and minuses on FDI
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ESRI Conclusions on Labour Market• Large migratory flows between Ireland and the UK
continue and these flows are related in part to economic conditions.– Net flows from Ireland to the UK increase when the Irish
unemployment rate rises relative to the UK rate. This suggests that the closure of the UK labour market for emigrants from Ireland would tend to put upward pressure on unemployment rates and wage rates in a future downturn.
• Simulating the effect of an inflow of 60,000 labour force participants in Ireland i.e. ‘non-outflow’ due to migration restrictions, shows that wages in Ireland would fall by almost 4 per cent.
Possible Labour Market Effects
• Pretty negative for UK economy in long-term– Restriction on immigration - labour supply
• Irish?
– Overall negative effect on employment
• Ireland – on balance negative for economy– Possible wins – financial sector– Could affect labour market behaviour in future
• Depends on agreed outcome
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Brexit – Negotiating Objectives
• Top Irish priority – Northern Ireland– However, Ireland needs to remember that Northern
Ireland is UK’s responsibility– Objective: do not destabilise through new borders
• Brexit – may result in a customs border• Brexit – Can there be free movement of people?
– Building a wall on the island to stop people moving would be unacceptable (and impracticable)
– Need to find an alternative
Free movement of people?• Today Ireland has a joint opt out from Schengen
with UK– Need to negotiate a continuing opt out for Ireland to
permit possible continuing common travel area• Continuing common travel area?
– Today similar visa arrangements in Ireland and UK– In future what Ireland requires from UK:
• No visas for EU citizens• Continuing similar visa arrangements?• The onus of adjustment must be on the UK• Ireland has EU obligations which we have no wish to change
and cannot change
20/09/2016
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Right to Work
• Essentially separable from right to enter• In practise there could be problems for the UK
– If Ireland admits people who travel to the UK and work illegally this is a UK problem, not an Irish problem
– UK must act to deal with any problems they perceive through internal action – e.g. ID cards
Right to Work
• Right to work of Irish in UK?– Highly likely continuing rights for those Irish already
working there. Also possibly for other EU citizens– EU citizens moving to UK in the future will probably be
subject to work permits– Irish citizens?
• Right to work of British in Ireland– Almost certainly will continue.
• e.g. Debarring Unionists with British passports impossible
20/09/2016
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Effects on Labour Market
• Scenario 1:– Irish can continue to move to work in UK (and vv)– EU citizens restricted entry into UK to work– Could see more immigration into Ireland– Wage rate effects in UK?
• Scenario 2:– Irish moving to work in the UK in the future require
permits– This could impact on domestic labour market,
especially in a downturn.
Migration flows within EU
• Will also affect migration flows within the EU• Less movement from Central Europe – Ireland
remains open• Less opportunity for highly skilled EU15
migrants in UK• Uncertain long term impact – probably more
immigration to Ireland if economy continues to grow
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Possible movement of some activity from UK to Ireland
• If Financial sector in UK loses out– Movement of activity to other locations in EU– Frankfurt, Paris, Luxembourg, Dublin
• Would have implications for domestic infrastructure– e.g. need a lot of office space– Well paid workers would need housing– Could put pressure on housing market etc.
Conclusions• Not a good outcome• On most issues negotiations will be between EU
and the UK• On free movement – necessary bilateral talks• Will take many years to play out
– This gives time to reap some benefits– Time to deal with some costs
• Labour market – may or may not still be part of a British Isles Labour market– Depending on the outcome it could significantly affect
the behaviour of the Irish labour market in the future
20/09/2016
15
Effects on the workplace• How has the UK decision to leave the EU
effected your workplace to date, if at all?
• In the short to medium term what do you see as the implications of Brexit for your workplace – both potential positive and negative effects
Supports• What kind of resources / information will help
support the HR profession in Ireland to adjust to Brexit?
Panel
John FitzGerald, TCD and ESRIRonan Hill, Morgan McGinley
Terence McCrann, McCann FitzgeraldMary Connaughton, CIPD
Keep in touch
CIPD Ireland (Official)
CIPD Ireland
@cipd_ireland@MaryConnaughto1
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