CIPD Voice: Issue 11

Alongside access to the single market, EU immigration policy is arguably the most important issue facing employers and policymakers resulting from the UK’s decision to leave the European Union. And the policy implications of the first phase of the Government’s consultation for managing migration from countries inside the European Union will give rise to a range of practical concerns for many UK employers that stand to be a cause of consternation for some; especially low-skilled employers in sectors such as hospitality and retail, who look set to bear the brunt of migration restrictions.

However, there is cause for optimism too. As recent CIPD/NIESR evidence suggests, the introduction of migration restrictions for EU nationals can be achieved successfully, provided that the new immigration system operates flexibly and be fine-tuned to meet changing economic and labour market conditions. As the report points out, one way of achieving that is to drop the Government’s net migration target, which does not respond to fluctuations in labour demand. In addition, the report calls for a safety net for low-skilled work to offset the Government’s focus on attracting the ‘brightest and the best’.

Some of the ideas put forward in the report that could help achieve this include a more generous post-study worker route that is currently enjoyed by EU students, a youth mobility scheme that would allow all EU workers aged between 18 and 30 the right to work in the UK for two years. However, one of the more ambitious ideas is to create a labour shortage occupation list that would complement the existing shortage occupation list for EU workers. This would help ensure that low-skilled employers are not penalised for recruiting EU nationals despite making every effort to train their staff and recruit from the domestic workforce; as we found with many of the employers we interviewed for the report. On which point, it is very encouraging that the Government has asked the Migration Advisory Committee to look at making the shortage occupation list more flexible to include low-skilled roles; a shift that would be music to the ears of sectors such as social care.

Another cause for optimism is that the stock of EU nationals in employment in the UK has not fallen since the Brexit as many commentators predicted. Yes, there is some evidence that some groups, including Eastern European countries, have left the UK since the referendum. However, the fact remains that the number of EU nationals in employment increased by 126,000 in the 12 months to June 2017, driven by a sharp increase in the number of Romanians and Bulgarians. Overall therefore, the official data indicates that the Brexit vote has not overall deterred EU nationals from entering the UK to fill job vacancies. But, on the other hand, it further highlights the dependence of many UK employers on the free movement of EU labour and thus the possible negative consequences of a ‘hard’ Brexit deal.

Many employers will, therefore, be breathing a tentative sigh of relief that Brexit has not led to an exodus, yet. It remains a strong possibility that many EU nationals will wait to see the outcome of the negotiations between the UK and the EU before making a decision to come or leave the UK. It is worth noting, however, that EU nationals already living in the UK may be encouraged that they only have to apply for a settled status document, similar to an ID card, for a nominal fee. This will entitle them to indefinite leave and access to public services, which is a much cheaper than the citizenship process that non-EU citizens are required to go through.

Another outcome that will have a bearing on the stock of EU nationals is the UK’s EU immigration policy. The broad thrust of government policy will be contained in a consultation paper, published by the Home Office, in autumn 2017. The CIPD is already engaging with Home Office officials to ensure that our research findings, based on the view of members, are reflected in the consultation; and it seems that we are making good progress. While some of the policy calls we make in the report are highly ambitious, such as dropping the net migration target are highly ambitious, there are many others which would reduce the cost, complexity and bureaucracy of the system. These include the period employers have to advertise posts under the Resident Labour Market Test, which currently only applies to non-EU workers, from 28 days to 14 days, which we feel are more achievable.

We know that CIPD members are understandably concerned about the practical, financial and business implications of a future EU immigration policy. However, we remain hopeful that a system can be found that supports a labour market that continues to generate a high number of jobs that is ably supported by a strong supply of EU migrant labour and a flexible labour market.

Note: The Home Office has asked the Migration Advisory Committee to provide evidence on key questions that will help shape this autumn’s consultation paper. The CIPD shall be responding to the consultation exercise, but for those that want to respond directly, the MAC’s call for evidence can be found here.

[The deadline for comments is 27 October 2017]

Gerwyn Davies

Gerwyn Davies, Labour Market Adviser

Gerwyn is the CIPD’s Public Policy Adviser for a wide range of labour market issues. With lead responsibility for welfare reform, migration and zero-hour contracts at the CIPD, Gerwyn has led and shaped the policy debate and achieved substantial national media coverage through various publications. These include Zero-hours contracts: myth and reality (2013) and The growth of EU labour: assessing the impact on the UK labour market (2014). In addition Gerwyn authors the institute’s high profile and influential quarterly Labour market outlook report. Gerwyn is an experienced labour market commentator, making regular appearances in the national media and on other public platforms, including several appearances before the House of Commons Work and Pensions select committee.