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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

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Page 1: The Labour Market Implications of Brexit - CIPD · The Labour Market Implications of Brexit o Brexit and the Labour Market – John FitzGerald, TCD and ESRI o The likely effects on

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

Page 2: The Labour Market Implications of Brexit - CIPD · The Labour Market Implications of Brexit o Brexit and the Labour Market – John FitzGerald, TCD and ESRI o The likely effects on

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

Page 3: The Labour Market Implications of Brexit - CIPD · The Labour Market Implications of Brexit o Brexit and the Labour Market – John FitzGerald, TCD and ESRI o The likely effects on

20/09/2016

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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

Page 4: The Labour Market Implications of Brexit - CIPD · The Labour Market Implications of Brexit o Brexit and the Labour Market – John FitzGerald, TCD and ESRI o The likely effects on

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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

Page 5: The Labour Market Implications of Brexit - CIPD · The Labour Market Implications of Brexit o Brexit and the Labour Market – John FitzGerald, TCD and ESRI o The likely effects on

20/09/2016

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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

Page 6: The Labour Market Implications of Brexit - CIPD · The Labour Market Implications of Brexit o Brexit and the Labour Market – John FitzGerald, TCD and ESRI o The likely effects on

20/09/2016

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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

Page 7: The Labour Market Implications of Brexit - CIPD · The Labour Market Implications of Brexit o Brexit and the Labour Market – John FitzGerald, TCD and ESRI o The likely effects on

20/09/2016

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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

Page 8: The Labour Market Implications of Brexit - CIPD · The Labour Market Implications of Brexit o Brexit and the Labour Market – John FitzGerald, TCD and ESRI o The likely effects on

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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

Page 9: The Labour Market Implications of Brexit - CIPD · The Labour Market Implications of Brexit o Brexit and the Labour Market – John FitzGerald, TCD and ESRI o The likely effects on

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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

Page 10: The Labour Market Implications of Brexit - CIPD · The Labour Market Implications of Brexit o Brexit and the Labour Market – John FitzGerald, TCD and ESRI o The likely effects on

20/09/2016

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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

Page 11: The Labour Market Implications of Brexit - CIPD · The Labour Market Implications of Brexit o Brexit and the Labour Market – John FitzGerald, TCD and ESRI o The likely effects on

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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

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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

Page 13: The Labour Market Implications of Brexit - CIPD · The Labour Market Implications of Brexit o Brexit and the Labour Market – John FitzGerald, TCD and ESRI o The likely effects on

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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

Page 14: The Labour Market Implications of Brexit - CIPD · The Labour Market Implications of Brexit o Brexit and the Labour Market – John FitzGerald, TCD and ESRI o The likely effects on

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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

Page 15: The Labour Market Implications of Brexit - CIPD · The Labour Market Implications of Brexit o Brexit and the Labour Market – John FitzGerald, TCD and ESRI o The likely effects on

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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