The impact that Britain's vote to leave the European Union will have on the UK economy will more than offset any increase in wages for British workers, a study released on Tuesday (16 August) has found.
According to a report from the Resolution Foundation think-tank, a drastic cut in the number of overseas workers entering the UK would result in a marginal pay increase for Britons working in sectors such as security and cleaning.
Those gains, however, are likely to be more than offset by slower economic growth and by the decline in real income deriving from a high inflation environment on the back of the pound's ongoing weakness.
The report found even if the government were to hit its target of cutting net migration from 300,000 to below 100,000 a year, wages for British workers in the sectors most affected by migration would grow by a mere 0.2% to 0.6% over the next two-and-a-half years.
By contrast, the Bank of England has cut its forecast for wage growth over the same period by 2%.
However, while a sharp reduction in the number of immigrant workers would not have a material impact on wage growth, it could spell problems for firms in the sectors that rely heavily on migrant labour.
Over 30% of employees, in industries such as food and clothing manufacturing, are foreign and a sharp cut to migration would mean recruitment is "likely to be a challenge for these sectors," the report said.
Furthermore, given the fact that migrants in these sectors earn a lot less than average native wages, it is unlikely that these sectors will be able to substitute migrant for native labour without rethinking their business models.
Low-skilled workers from EU countries such as Poland and Latvia had helped drive down wages, with their average earnings at £8.33 per hour, £2.76 below that of British workers.
"The government must use its new industrial strategy to support these firms, such as food and clothing manufacturers, who have hitherto relied heavily on migrant workers," said Stephen Clarke of the Resolution Foundation. "These firms will need to invest in skills and new technology if they're to stay afloat in a changed labour market."
According to the most recent figures, 257,000 of the total 617,000 immigrants to the UK during the past year came from within the EU.
When the Conservative-led coalition came to power in 2010, the government outlined plans to reduce net migration by two-thirds to under 100,000. Immigration was a major topic of discussion during the Brexit campaign and, should the government be allowed to place a cap on EU migrants, it would be easier for it to achieve its target
However, EU authorities have made repeatedly clear that Britain can not remain a member of the single market without guaranteeing freedom of movement to EU nationals.
"To reduce net migration to the tens of thousands would mean cutting the numbers coming from within the EU by much more than half while simultaneously significantly reducing migration from the rest of the world," said the think-tank's director Torsten Bell.
"To achieve that you'd need a very aggressive points-based system and to accept a lot less temporary labour. That would mean losing single market membership, but also accepting the same restrictions on British people working elsewhere."