Britain’s waning appeal to Europeans

BRITAIN’S FUTURE relationship with Europe is still uncertain after the overwhelming defeat of Theresa May’s deal in Parliament on January 15th. The worry for many British employers is that further messy negotiations and hostile political rhetoric will make it ever harder to attract skilled European workers.

A sharp decline in the number coming is visible. Surveys of airport passengers show that net EU immigration in the 12 months to June 2018 added up to an estimated inflow of 74,000 people, compared with 189,000 in the year before the June 2016 Brexit referendum.

But those figures do not make any distinction between skilled and unskilled workers. An alternative approach is to look at data compiled by LinkedIn, a website that is used by more than 590m workers worldwide, mostly well-paid white-collar ones, to share contact details and employment histories. All LinkedIn users record their location when they join.

These data can be analysed to measure the attractiveness of the British labour market in two ways. First, they can be used to see if members in other countries are searching for jobs in London (the most attractive British city for overseas workers). The numbers show a clear, but not catastrophic, decline in Britain’s appeal. London at the start of 2016 was the target of 15% of job hunts by workers from other countries in the EU; the proportion has since fallen to 12.6%.

Rival European cities, such as Amsterdam, Paris and Berlin, have all increased their share of job searches to compensate for London’s decline. But Europeans have not been discouraged altogether from moving across the Channel. London remains the most popular city for job searches.

Another way of looking at the numbers is to see how many LinkedIn members move to a new country (this relies on the workers updating their profiles). On this basis, there was a fairly sharp, 10% decline in the number of EU citizens shifting to Britain in 2017, followed by a rebound back to 2016 levels last year.

But the fall and rebound are not adjusted for the fact that LinkedIn membership has increased by over a quarter since 2016. Britain has lost “market share” of skilled immigration, attracting 20.8% of intra-EU moves in 2018, down from 23.6% in 2016. Another way to gauge performance is to look at net inflows. Those to Germany from other EU states have risen by 19% since 2016, while the Netherlands has gained 29%, and France 21%. Britain managed a net gain of 1% over the period.

Britain is still attracting workers from outside the EU, although its relative appeal has declined in this respect as well. Between 2016 and 2018 the number of LinkedIn members from outside the EU moving to Britain rose by 17%, but Germany, France and the Netherlands all achieved percentage rises more than twice as large.

Of course, Britain has not yet left the EU, nor has it announced the exact terms on which European workers will be able to move to the country in future. Initial policy indications are confusing. The government wants lower overall immigration, and will require existing EU residents to jump through bureaucratic hoops to stay in the country. At the same time, it says it wants to attract skilled workers. But Europeans may opt to stay in the EU, where they enjoy the benefits of free movement, rather than risk relying on the hospitality of a British government in a febrile political environment.

So it would not be surprising if future data from LinkedIn showed a further deterioration in the appeal of Britain to skilled Europeans. And that would be a great shame, as the country has a long history of benefiting from European migration, whether it be Flemish weavers in the 14th century or the Huguenots who subscribed 10% of the founding capital of the Bank of England. London is a much more cosmopolitan and attractive city after decades of European immigration than it was when Bartleby started work here in 1980.

More broadly, the data demonstrate that social networks are a valuable source of information about economic and social change. Some hedge funds already look at satellite views of shopping-mall car parks for clues about economic activity, or monitor social media to gauge public attitudes towards famous brands. Perhaps one day, central banks will comb job websites to gauge the state of the labour market before they make their interest-rate decisions.

This post was originally posted at https://www.economist.com/business/2019/01/19/britains-waning-appeal-to-europeans.

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