Skill Formation, Immigration and European Integration: The Politics of the UK Growth Model

ABSTRACT

While a reluctant European player now heading for the Exit, the UK was also an enthusiastic adopter of several key EU economic policies – namely, the skills and technology policies of Agenda 2020 and labour mobility. These initiatives worked with existing British policy, and structural biases, to exacerbate the already bifurcated structure of UK capitalism – between the high-paid technology and financial services sector on the one hand, and low-cost, low-wage sectors on the other hand. In particular, and central to the argument of this paper, immigration from Eastern and Central Europe after 2004 helped to sustain low-cost manufacturing and services industries by undermining firms’ incentives to invest in training. This combined with endemic failures in the UK’s skills system, which is heavily geared towards producing graduates with general skills but neglects the needs of mid and lower segments of the labour market. EU integration, therefore, exacerbated cleavages over skills between high- and low-productivity sectors and may have contributed to social divisions that led to Brexit.

KEYWORDS:

• Comparative political economy
• skills policy
• immigration
• liberal market economies
• United Kingdom

Disclosure statement

No potential conflict of interest was reported by the author.

Notes on contributor

Steve Coulter LSE Fellow in the Political Economy of Europe.

Notes

1. The definitions of skill levels used throughout this paper are based on classifications used by the UK Commission on Employment and Skills, which delineates skills by level of educational attainment and/or job role, with ‘high’ skills being professional, Scientific or managerial jobs requiring a degree; ‘medium/intermediate’ skills being technical and clerical jobs requiring post-16 education; and ‘low’ skills being manual, care or hospitality roles requiring only basic schooling.

2. Theresa May, Peston on Sunday, ITV 3 July 2016.

3. New coordinating institutions include Technology Strategy Boards, which are explicitly modelled on Germany's Fraunhofer Institutes, and a Business Bank and Green Investment Bank along the lines of Germany's KfW.

4. ‘Mandelson praises eastern Europe workers filling employment vacuum.’ Guardian, 9 March 2009.

5. Mervyn King, speech given at Salts Mill, Bradford, Yorkshire, 13 June 2006.

6. The main exception to this is the UK automotive industry, which has recovered to become a net exporter in 2012 for the first time since the 1970s and has been a beneficiary of extensive intervention in supply chains.