Brexit: a surfeit of negativity

16/08/2016

Benefits would fail to compensate for the reduction in real incomes caused in the short term by the higher inflation triggered by a falling pound, and in the long term by a slowdown in the economy's growth rate.

The Resolution Foundation also warns that achieving the government's target of cutting annual net migration from more than 300,000 to the tens of thousands would present serious challenges for companies that rely on low-paid migrant workers – and could force some of them out of business.

What intrigued me about the Guardian report, though, is the picture illustrating it – a happy bunch of migrant workers in a vineyard in Sussex hand-picking grapes - "one of many food and drink manufacturers that rely heavily on migrant workers" says the caption.

This comes just as the legacy media is telling us that sales of English sparkling wine are up. In 2015, 37 new wine producers and vineyards opened in England, reflecting the growing recognition of home-grown produce.

In my illustration, however, you can see the antidote to labour shortages – a mechanical grape harvester. I personally first came across one of these in southern France in the mid-90s, where nearly all the crop locally is mechanically picked, and something like 60 percent of the national crop is harvested by machine, cutting costs by half.

Traditionally, the crop was picked by migrant workers from Spain who used to cross the border for the harvests, moving north as the grapes ripened. But now they have been replaced by technology. To my great amusement, most of the machines are made by American-owned companies, which puts the French harvest at the mercy of their transatlantic cousins.

The point, of course, is that as circumstances change, economies adapt. Exactly the same process is happening in the US wine industry - driven by higher labour costs and restrictions on the use of immigrant labour.

The statistics are quite remarkable. Between 1975 and 1995, the percentage of wine grapes harvested by machine increased from less than 10 percent to about 70 percent, with the most mechanical harvesting in the San Joaquin Valley. Four hand harvesters can pick about one acre of grapes per day; a mechanical harvester, which uses a crew of five to harvest around the clock, can harvest 10 to 20 acres per day.

Grape harvesters at that time cost $100,000 to $200,000 each, but they could harvest wine grapes for $15 to $25 per ton, compared to $35 to $50 per ton for hand harvesting.  But it is not only the cost. Speed is also an issue, getting the harvest in quickly while it is in peak condition.

Back in the UK, this process of replacing labour with machines can be seen across the board. In car manufacture, for instance, as the cost of labour has become a key factor in the face of international competition, we have seen more intensive use of robots – alongside other cost-saving techniques.

What the Guardian piece thus demonstrates is not objective reporting but simply a reflection of the pessimism that represents an attempt to over-complicate Brexit, in the vain hope of reversing the referendum result - "catastrophising Brexit", as Pete puts it.

Typically, therefore, the Independent makes a big deal of this, headlining: "Reduced immigration after Brexit will not mean higher wages". In fact, though, we could see the exact reverse of the prediction. Taking our grape harvesting example, the higher skills required for mechanical harvesting and the greater productivity allow for fewer workers to be better paid, in much more demanding jobs.

That is the way developed economies operate. Importation of cheap labour is a throw-back, holding back capital investment, improved productivity and the higher wages that follow.

In the continuing battle for Brexit, therefore, we should not be letting negativity set the pace. Immigration has its place, but there are upsides to labour shortages. Lazy and unimaginative employers might benefit from cheap labour, but that is not how we progress as a nation.