CIPD Voice: Issue 14

It has been two years since the UK decided to leave the European Union, a decision that has caused justifiable consternation among people managers up and down the UK. Will EU nationals stay? Will we have enough time to adjust to any future restrictions? And what does recruiting the ‘brightest and best’ actually mean? Two years on, and some of these questions finally have answers, which should give us grounds to be more reassured about Brexit.

First, it seems that the early fears of ‘Brexodus’ may have been overstated according to official statistics. The number of EU nationals employed in the UK has actually increased by around a quarter of a million since the referendum, although the data has been softening of late, especially among eastern Europeans. This additional labour supply has provided a useful safety net for employers against the backdrop of a tightening labour market that continues to be driven by strong employer growth. Looking ahead, news that free movement of labour will continue until the end of 2020, which marks the end of the transitional period, will have reassured some employers about the rising threat of labour and skill shortages in the organisation.

There is also good news on the status of EU citizens. The government has committed to giving all EU citizens ‘settled status’; including those who arrive during the transitional period. This means that EU citizens can stay in the UK indefinitely and enjoy all the rights and conditions they currently enjoy. The caveat is that they must demonstrate they have lived here for a continuous period of 5 years. Somebody arriving in 2019 therefore must wait until 2024 before they can applied for ‘settled status’. Family members who are living with, or join, EU citizens in the UK by 31 December 2020 will also be able to apply for settled status, usually after 5 years in the UK. The government has also clarified that close family members (spouses, civil and unmarried partners, dependent children and grandchildren, and dependent parents and grandparents) will be able to join EU citizens after exit, where the relationship existed on 31 December 2020. Further details about the government’s settlement scheme for family members and dependents will be announced in late June.

For employers who are still wrestling with whether to provide assistance, including financial assistance, to EU citizens to get permanent residence; this may persuade many that this may not be the best course of action. This is because it is a requirement to get a settled status document even if you have permanent residence. In addition, the settled status document is equivalent to the cost of a UK passport and is a relatively straightforward process. Overall therefore, this package may reassure more EU citizens to stay and encourage others to move to the UK to live and work before the 2021 deadline.

And lastly, it was encouraging to note that the Migration Advisory Committee (MAC), which is advising on EU immigration policy, acknowledge in its interim report that UK employers do not deliberately seek to fill vacancies with migrant workers. They do so because they are the best or sometimes the only candidates for various reasons, such as the tightness of the labour market or the unattractiveness of the roles. This may indicate that the UK government may be encouraged to adopt a more nuanced approach to EU immigration policy, including some form of low-skilled migration route; albeit one that is subject to some form of control. The CIPD will continue to make this case and exert its influence as one of the members of the government’s main employer forum on EU immigration policy and through the MAC. As the MAC interim report shows, the CIPD was the most quoted organisation out of the 400+ organisations that submitted evidence.

So while there is still lots to play for, the good news is that key progress has been made on many fronts, which could offset the rising threat of labour and skills shortages. However, this should not make employers complacent because the bad news is that the migration restrictions deadline, which will hit low-wage employers most, is fast-approaching. The need to undertake a thorough workforce planning exercise should therefore be switching from amber to red for more employers. Unfortunately, there is slim evidence that employers are preparing for the future removal of the safety net that free movement of labour has given them until now.

A summary of the latest political developments and guidance on Brexit can be found on the CIPD’s Brexit hub

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.