UK employers not prepared for post-Brexit labour supply shock

Date: 30th Sep 2019

The CIPD, the UK’s professional body for HR and people development is urging Government to make future immigration policy more flexible and user-friendly as new research shows many employers are not prepared for EU worker restrictions. New research from the CIPD shows that employers are simply not ready for the introduction of new immigration restrictions planned for January 2021.

In the report, A practical immigration system for post-Brexit Britain, the CIPD highlights that a lack of awareness of the Government proposals among most employers, a lack of planning and ongoing political uncertainty mean that few organisations are equipped to deal with a potential ‘supply shock’ of a reduced inflow of EU workers post-Brexit.

 

In response, the CIPD is urging the UK Government to introduce a two-year visa system for unskilled workers and to lower the proposed £30,000 minimum salary threshold for jobs on the shortage occupation list. It is also calling on government to make the system more user-friendly for employers through changes to the sponsorship system and by introducing a new ‘self-service’ system for low volume users of the system like small employers.

The CIPD’s recommendations are based on findings from a survey of more than 2,182 employers and a series of focus groups held with employers across the UK over the last four months. The survey found that:

• More than half of employers are completely in the dark about the Government’s immigration proposals, with 58% saying they don’t know anything about the Government’s white paper on immigration. Just 7% said they knew “a lot” and 35% said that they ‘know a little’about it.

• 56% of employers said they don’t have enough information to start making decisions about their post-Brexit recruitment strategy. Just one in four (27%) are happy to make decisions based on existing information.

• More than half of employers (51%) felt that the Government’s planned 12-month temporary visa was either ‘not very useful’ or ‘not useful at all’. Just 1 in 4 employers (28%) said it would be useful to them to meet their recruitment needs, falling to 22% among public sector organisations.

• The Government’s immigration white paper proposes introducing a minimum salary threshold of £30,000 for recruiting most non-UK nationals from 2021. However, when asked what minimum salary threshold would enable them to meet their skills and labour needs after Brexit, the most popular employer response was a threshold of £20,000 (16% of employers), followed by £30,000 (14%) and £25,000 (12%). 

The CIPD’s research also shows that since the referendum vote most employers’ efforts have been focused on retaining existing EU staff, rather than planning how to respond to imminent immigration restrictions. This may partly explain why relatively few organisations report they have seen ‘Brexodus’ effect in their organisation yet, as they have been able to continue to access and retain EU workers fairly easily since the EU referendum.

However, the CIPD is warning that the focus on retention, coupled with a lack of knowledge on planned immigration restrictions and limited workforce planning by employers could see many organisations experience a ‘labour supply shock’ when immigration restrictions are introduced in just over a year’s time.   

A full list of the CIPD’s recommendation for the UK’s post-Brexit Migration can be found in its report ‘A practical immigration system for post-Brexit Britain’.

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