What an invitation! Seeing as I’ve written all of this before, probably multiple times, I’m going to add emphasis so you get it. I have solidarity with anyone afflicted. Those that cannot scroll up are perhaps the most afflicted of all in the age of tablets and mouse-wheels. Here goes.
The basic principle of supply and demand in the context of Brexit is that as a commodity in demand becomes scarcer, the price of that commodity goes up. When supply of a demanded commodity is bountiful, the price will dive. In bountiful commodity land, a buyer that doesn’t like one price can seek a supplier more to his or her liking.
Labour is a commodity, like anything else. Prior to the adoption of freedom of movement, the supply of labour was limited to British workers or non British workers with a key skill. After the adoption of freedom of movement and the early accession of Eastern European states, the supply of labour became everyone in the European Union, regardless of skill level.
Moreover, a combination of economic chasms between British and Eastern European take-homes and our cultural allure (not least getting to learn the world’s most widely spoken language) made the United Kingdom a particularly attractive place to work for much of that European Union labour.
The supply of labour went up massively, with millions of aspiring Eastern European workers coming to work here, as anyone in their position would.
The problem with that is when British unskilled workers demanded things, such as wages they could actually live on, the supply of replacement labour made it easy for their employers to refuse.
What’s happening now, as your own ONS figures show, is that EU migrant workers are returning home. The supply of labour is diminishing, yet labour is still in demand.
Applying the principles of supply and demand, that a demanded product becomes more expensive as supply contracts, it means wages go up. Employers have to pay more for labour than they did when labour was bountiful.
Further, some employers that have big demands may even consider the radical possibility of training talent to create their own supply. That’s already happening too. Apprentices and vocational qualifications are back in vogue for the first time since about 2007
Fancy that.
Supply and demand as applied to labour, as applied to the heyday of the European Union. It’s a repeat, for sure, but it isn’t getting any less right. It has basically applied for all of recorded history, so I have a little faith.