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Brexit as a result of inequality and jobs scarcity
07 July 2016
On 23 June 2016, the United Kingdom held a referendum to vote whether or not the UK
should remain in or leave the European Union. The announcement on the morning of 24
June 2016 revealed that 52% of the votes were cast to leave the European Union. Asief
Mohamed, CIO of Aeon Investment Management believes that several factors hinted to the
direction that the UK citizens would vote.
In 2013, The British Prime Minister David Cameron committed to hold a referendum on
whether or not Britain should remain in the EU as part of his political campaign. The very
first referendum was held in 1975 when about 67% of the votes were in favour of joining
the EU, then known as the European Economic Community. Since then, Britain has
transformed economically, politically and culturally. The population has increased as well
as living standards. The British people felt that another vote needed to be held since their
circumstances had changed and David Cameron pledged to hold the referendum before
2017 (Mason, 2013).
Among the major catalysts for a re-vote and the vote to exit the European Union has been
the increase in inequality, wealth gap, and decreasing job opportunities. Giles (2015)
reported that wealth inequality in Britain had increased for the first time in almost a
decade, in part due the rapid increase in housing prices. Allan Gray CIO, Andrew Lapping
noted that it will take the median earner 12 years of earnings to buy the median house
(from 4 years in 2000).
Immigration to Europe and particularly Britain has been on the increase. According to
Hiltzik (2016) immigration has risen sharply over the last 20 years; particularly from EU
countries. The increase in immigration has caused British citizens much frustration as their
immigration laws are set by the EU. British citizens would favour an exit vote in order to
better control and restrict immigration. The EU immigration laws permit members to
freely move within the 28 EU member countries (Hiltzik, 2016). Many Britons are under the
impression that immigrants strain government programs [e.g. immigrants who are
unemployed and require support from government]; however the reality is that a higher
percentage are employed than are native Britons (Hiltzik, 2016).
Inman (2016) indicated that unemployment slumped to its lowest rate in 11 years dropping
to 5% and once the jobless rate falls below 5%, the bank believes wage pressures start to
build. Carroll, Greenberg and Sharockman (2016) claims that in 2004, when Poland, and
other Eastern and Central European countries joined the EU, the United Kingdom was one
of the few nations that welcomed the newcomers to arrive and work immediately. The
Britons perceive that immigrants make life harder for the average British worker and
drives wages down (Carroll, Greenberg & Sharockman, 2016).

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When factors such as increasing living standards, increasing wealth gap and an increase in
immigrants manifests in a society simultaneously, it creates more competition for job
opportunities. Job scarcity can frighten a society and can lead them to rash and extreme
actions or decisions.
These themes are not unfamiliar to the South African context. We have a history of
xenophobia and recently have seen the large scale impact of the #FeesMustFall
movement. We should heed this example as an illustration of the importance of
transformation. We can no longer afford to ignore or delay the issue of transformation. We
need to have frank discussions, policy changes and regulated implementation in order to
reduce the inequality gap and avoid catastrophic events that could have devastating
consequences for our future generations.
References:
1. Chris Giles. 2015. UK wealth inequality widens for first time in a decade. [ONLINE]
Available at: https://next.ft.com/content/1ad5c43a-a593-11e5-a91e-
162b86790c58. [Accessed 7 July 2016].
2. Ingé Lamprecht. 2016. Why Allan Gray is concerned about London property prices.
[ONLINE] Available at: http://www.moneyweb.co.za/investing/property/allan-
gray-concerned-london-property-prices/. [Accessed 7 July 2016].
3. Lauren Carroll, Jon Greenberg and Aaron Sharockman. 2016. Brexit Voters Had the
Wrong Idea About Immigration and Unemployment. [ONLINE] Available at:
http://www.thedailybeast.com/articles/2016/06/26/brexit-voters-had-the-wrong-
idea-about-immigration-and-unemployment.html. [Accessed 7 July 2016].
4. Michael Hiltzik. 2016. In Britain, anxiety about immigration started long before the
'Brexit' vote. [ONLINE] Available at: http://www.latimes.com/world/europe/la-fg-
britain-immigration-0629-snap-story.html. [Accessed 7 July 2016].
5. Phillip Inman. 2016. Unemployment rate at record low despite stall in private
sector hiring. [ONLINE] Available at:
https://www.theguardian.com/business/2016/jun/15/uk-unemployment-record-
low-private-sector-hiring-stall-self-employment. [Accessed 7 July 2016].
6. Rowena Mason. 2013. David Cameron under new pressure to hold EU referendum
before election. [ONLINE] Available at:
http://www.theguardian.com/politics/2013/oct/06/david-cameron-eu-
referendum-election. [Accessed 7 July 2016]