New policy solutions geared to prevent labour supply shock post Brexit
Immigration and continued access to skilled overseas workers are two of the most crucial Brexit-related issues facing UK employers and policy-makers. From January 2021, a new immigration system will begin in the UK that will inevitably and significantly alter both the supply of labour from abroad as well as the way in which businesses can access it.
The exact details of this system are yet to be finalised. The UK Government is consulting via its white paper on ways to control the flow of EU workers. A portion of the proposals that have already emerged have been welcomed by employers, but others have raised significant concern.
The CIPD has surveyed and conducted discussions with UK employers from a wide range of sectors on the potential impact and feasibility of the white paper proposals to produce a new report, A Practical Immigration System for Post-Brexit Britain. The report proposes a number of key alternative policy options to solve the challenges reported by employers and members.
The report highlights the following challenges faced by employers:
- Only a small portion of employers are aware of the government proposals and fewer still have begun to prepare for these impending restrictions. This leaves employers vulnerable to a potential labour supply ‘shock’ from 2021. Employers say this is primarily due to resource constraints and ongoing Brexit-related uncertainty.
- Upon learning about current white paper proposals, the majority of employers were daunted or alarmed by the prospect of using this new immigration system. In particular, concerns were focused on the new minimum salary threshold of £30,000 to recruit EU workers, as well as the full range of costs that employers would incur.
- The administrative burden of the new system also worried employers. If implemented, it would require additional HR resources to learn and administer the new system.
- Employers were apprehensive about their future ability to attract workers from the EU – especially those who rely on this supply pool for low-skilled occupations.
To address these challenges, the CIPD’s report sets out policy recommendations for government, which are designed to buy more time for employers in the short-term, while ensuring the UK economy can continue to attract needed skills from overseas in the medium-term. This would soften any potential Brexit-related labour supply shock.
Two-year mobility scheme for all EU citizens
To ensure employers continue to have a practical way of employing low-skilled EU workers, the CIPD recommends that the two proposed mechanisms from government (Youth Mobility Scheme for 18-30-year-old EU citizens, and a temporary 12-month visa) be merged to create a two-year visa. This visa would allow EU citizens to live and work in the UK for a maximum of two years to study or work without a job offer – irrespective of age. This would simplify the system, make it fairer, and reduce administrative costs.
Minimum salary threshold
If the two-year unskilled route were introduced, the CIPD would support keeping the current proposal of a minimum salary threshold of £30,000 for EU workers. However, it does recommend imposing a lower salary threshold for occupations that are currently experiencing a shortage in labour supply (e.g. healthcare and social workers). It says this should become the default minimum salary for that occupation, ensuring affected employers can access the labour they need.
Abolishing the minimum skill threshold
To ensure simplicity and accessibility, the CIPD suggests the removal of the current proposals around a skill threshold, stating that the need for both a salary and skill threshold in deciding whether employers can recruit EU nationals is unnecessary. For example, very few occupations that require below intermediate level skills would provide a salary of £30,000 or above.
The CIPD found that the potential costs of recruiting workers via the skilled route, which would involve a sponsorship licence, skills surcharge and a visa, worried many employers. It therefore supports initiatives to consider a ‘tiered’ sponsorship system. Amongst other streamlined schemes, this would include an umbrella sponsorship system that would allow membership and sectoral bodies to be responsible for compliance duties.
The full report, findings and recommendations are available to view here.