Beyond Brexit: Why the message of open trading contradicts cuts in net migration

So it was no surprise back in 2001 when the National Records of Scotland predicted a further decline of 120,000 to 4.9 million by 2016. They were out by half a million. The most recently estimate for the number of people living in our country is 5.4m.

What made the difference? Improving economic performance in Scotland and increased access to our labour market for workers from poorer parts of the world, notably Eastern Europe, made Scotland an attractive place to seek work.

Read more: Beyond Brexit - Scottish passport plan could allow Scots to keep working and living in Europe

Has this reversal in its demographic trends improved Scotland’s economic performance? It is clear that migrants have played an important role in filling labour shortages where it is hard to find native workers - such as in hospitality and tourism. Others have taken seasonal jobs in Scotland’s important agriculture and food sectors. Migrants have also made significant contributions in construction, financial services, higher education and the NHS. They also play an important role in transferring technology, skills and business connections across borders. These effects are vital drivers of Scotland’s future economic growth.

Some argue that migrants have had a negative effect on opportunities for native Scots in the labour market.

The evidence for this is not strong. Scotland’s unemployment rate for June-August 2016 was 4.6 per cent. This is very low by Scotland’s historical standards and compares well with the EU average of 10 per cent. In contrast, during years of net emigration in 1970s and 1980s, Scotland’s unemployment rate was well above the UK average. Substantial net immigration to Scotland began in 2003. From 1992, when consistently reliable unemployment data became available, until 2003, Scotland’s unemployment rate averaged 8.1 per cent, above the UK average. Since 2003, when the inflow of overseas migrants really began, Scottish unemployment has averaged 6.1 per cent, exactly equal to the UK average.

Read more: Beyond Brexit - Scottish passport plan could allow Scots to keep working and living in Europe

There is also little evidence that immigrant labour has driven down the wages of less skilled workers in Scotland – those on low wages. Since 2003, weekly earnings of the poorest paid 10 per cent of Scottish workers have increased slightly faster than those of the typical (median) worker.

Westminster intends to reduce net overseas migration to the UK to the “tens of thousands”. Setting a net migration target is a hostage to fortune because it requires government control over outflows of migrants, as well as inflows.

In the absence of mass emigration by Brits, the only way for the Government to achieve its target would be to bear down even more heavily on migration into the UK. In 2015, Scotland accounted for around 6 per cent of total net overseas migration into the UK of 330,000. Reducing this to less than 100,000 would likely mean that Scotland’s net migration from overseas would be cut to just a few thousand. That is not enough.

Given that deaths currently exceed births in Scotland, the only way in which our population could continue to increase would be if we have net immigration from the rest of the UK. This flow has been in Scotland’s favour over the last five years but has only averaged 6000. Thus, a drastic reduction in net migration to the UK combined with recent trends in births, deaths and migration from the rest of the UK, is likely to slow and possibly end, Scotland’s population growth.

Read more: Beyond Brexit - Scottish passport plan could allow Scots to keep working and living in Europe

The economic consequences for Scotland of the reduction in migration are likely to be pervasive: businesses will find it difficult to fill vacancies with appropriately skilled and competent staff. Problems will be particularly acute in agriculture, food processing, hospitality, construction and in the health service, where recruitment difficulties are widespread and likely to worsen as many of the baby-boomer generation retire.

Scottish higher education will also be affected by the unwillingness of the UK Government to exclude foreign students from the net immigration target. Even though the evidence suggests that foreign students are unlikely to overstay their courses, this valuable source of foreign earnings is likely to further decline.

It is difficult to see how the message of being an open trading nation can be consistent with the proposed cut in net migration. Scotland’s economy does not have a particularly strong export record: reducing its access to foreign workers and their expertise will make it even more difficult to expand its external trade.