By Gerwyn Davies, Senior Labour Market Analyst, CIPD
The Migration Advisory Committee (MAC) has produced a largely well-reasoned, evidence-based set of recommendations to government on how a post-Brexit immigration system could work. Many of those are in line with the CIPD’s own policy recommendations, but foremost is the proposal that there should be a less restrictive regime for higher-skilled workers. However, the lack of a viable low-skilled route for EU migrants has raised concern among employers about how these needs would continue to be met, particularly against the backdrop of a tightening labour market.
The MAC report suggests there should be no distinction between EU and non-EU workers in the UK’s post-Brexit work immigration system. It makes a strong case for prioritising highly-skilled workers — justifiably perhaps, given the positive contribution they make to public finances and productivity. Its recommendation to expand the current regime means employers would be able to recruit overseas workers for medium-skilled roles where currently they can only recruit for graduate-level roles.
Significantly, the MAC also gives the government a long overdue nudge to improve the existing system by reducing the bureaucratic burden. CIPD members who recruit non-EU workers have consistently cited this as a key concern, especially in terms of the substantial documentation required for visas and the high costs associated with them. At present, employers are subject to a wide range of costs for recruiting non-EU workers including a sponsorship licence, health surcharge, skills levy and a fee for every non-EEA national they employ. These costs are considerable and markedly higher than in most countries. If the government wishes to ensure parity between its EU and non-EU immigration policy, it should apply the streamlined, digital and cheap process it has put in place for EU settlement to the new system.
Other welcome changes proposed include the abolition of the 20,000 cap for Tier 2 skilled workers from outside the EU, removal of the Resident Labour Market Test and making it easier for migrants to change employers once they have secured their visas.
Concerns over access to low-skilled labour
The MAC report makes no concessions towards a low-skilled route for EU migration. It argues that measures such as the youth mobility scheme, which would allow all 18-30 year old EU citizens to live and work in the UK for a period of up to 2 years, would be sufficient to cover the labour supply needs of the UK economy. This however, assumes that EU citizens would continue to be attracted to low-skilled roles. But given the competition with other well-performing labour markets, such as Germany, along with a much less favourable exchange rate, the clear challenge is whether EU workers would continue to come to the UK to live and work only for a limited period and for low pay.
The government is reportedly looking at allowing certain industries, such as construction and hospitality, to hire low-skilled workers from overseas, subject to a cap. But a sector-based route also raises questions, particularly around how you enforce matching the labour shortage occupations with the new recruits. In other words, what would stop employers from recruiting an EU citizen into a listed sector, but to a role where there is no skill or labour shortage? A fairer and more effective way of matching labour supply and demand would be to develop a labour shortage occupation list. The limited number of workers that arrive via this route would later be able to apply for visas, provided that they have progressed into a higher-skilled role. This would have the additional advantage of providing incentives to employers to train and provide progression routes.
Overall, the MAC report is a commendable set of recommendations which the government should accept to a large extent. The proposals should enable most organisations to meet their labour and skills needs and support the broader policy drive to develop their workforce. However, as we have advised, further considerations to resolve the question of low-skilled labour supply will be needed. It is also important that the government provides advice and support to employers to guide them through the new system, especially in the case of SMEs who may be unfamiliar with the current immigration system. Further, more help for small firms will be needed to boost their management capabilities and strategic thinking about how they recruit, manage and develop their people. Employers for their part, who until now have been slow to respond to the workforce implications of Brexit, need to undertake a thorough workforce planning review to help offset the growing prospect of chronic labour and skills shortages.
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