One in ten organisations considering relocation: CIPD

As the EU opens negotiations with the UK, new research into business needs calls for a flexible, affordable and straightforward immigration system, with employers acknowledging relocation as a contingency plan if the opportunity is missed.

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The professional body for HR and people development’s investigation into the post-Brexit labour landscape concludes that the end of free movement of people from the EU will damage businesses and public service delivery, unless immigration policies take account of both skilled and unskilled labour from the EU.The CIPD’s joint study with the National Institute of Economic and Social Research (NIESR) finds the main reason employers recruit EU nationals “is because they cannot fill low or semi-skilled jobs with UK-born applicants,” cited by 35% of low-wage industry firms.One in ten (11%) of businesses say the number of EU nationals they have recruited since Brexit has already decreased.Responding to what could be significantly reduced access to EU worker skills and the need to retain EU market access, one in ten organisations say they are considering relocating all or part of their UK operations outside the UK (11%), or will focus future growth outside the UK (9%).

Broadening recruitment after Brexit

Facing the Future: Tackling labour and skills shortages post-Brexit, analyses employers’ perspectives on migration restrictions following the end of free movement. It is based on a survey of more than 1,000 organisations, employer focus groups held around the UK and in-depth interviews with HR leaders.The CIPD/NIESR study advises businesses to extend recruitment and people development strategies to ensure they are doing all they can to attract and develop UK born workers.The qualitative research from the focus groups and case study interviews reveals many employers have difficulty attracting sufficient UK nationals to work in low paid and low-skilled jobs, particularly where hours are anti-social or the work environment challenging, and especially in regions such as the East Midlands and South West of England. This is despite offering higher pay and investing in the skills of the workforce in some cases.Some employers participating in the CIPD/NIESR research have already taken action to widen their recruitment channels to boost employment from different groups in the labour market and raise pay in response to migration restrictions, especially in sectors such as retail where the proportion of EU nationals in low-skilled roles is relatively high.

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Employers doubt UK skills supply

However, there is "considerable scepticism" among some employers over whether efforts to attract a wider range of UK candidates will be enough, according to the study. This is particularly among organisations in sectors such as food manufacturing, hospitality and care, which have historically relied significantly on migrant workers.Heather Rolfe, associate research director at NIESR, commented: “Our research adds further weight to evidence that employers don’t recruit EU migrants in preference to British workers, but because they attract too few British applicants. Ideally, many employers would like to recruit more young people, but working in a meat factory or a care home is not top of the list for school leavers now, and never has been.”It would be very unwise indeed for the government to end free movement without putting in place new policies which enable employers to meet their needs for lower-skilled labour. Our key sectors and services will suffer damage if policies to replace free movement are introduced in haste and are costly, complex and bureaucratic.”Peter Cheese, chief executive of the CIPD, commented: “Our research also suggests that while Brexit will encourage some employers to work harder to recruit local candidates and people from under-represented groups in the UK, many employers are already working to build links with schools, provide apprenticeships and invest in training and yet are unable to find the skills and people they need.”

Government action on skills needed?

The CIPD also believes the research highlights the need for significant changes to government skills policy if Brexit negotiations limit immigration into the UK. The government needs to provide a straightforward, flexible and affordable immigration system for EU nationals post Brexit, or risk significant numbers of employers facing skill shortages that may limit growth and performance.“With the Brexit negotiations starting this week, there is still little clarity on the immigration system that the UK will adopt after Brexit,” says Peter Cheese. “An overly blinkered approach focused on simply cutting immigration to tens of thousands and focusing only on high-skilled employees could leave employers high and dry, especially those who rely more on EU migrants to fill low-skilled jobs.“The government must therefore consult far more widely about their plans and invite employers to play a key role in shaping the future of UK immigration policy to ensure it works for businesses and the economy.”Gerwyn Davies, labour market adviser at the CIPD added: “The report concludes there is a strong need for employers to be able to continue to recruit unskilled labour from the EU where they are unable to recruit locally and have shown they have made all reasonable efforts to recruit from within the UK. Any efforts to hinder this will hinder business growth.”

Future immigration policy recommendations

The report recommends any future immigration policy to replace free movement must be:Straightforward:
  • New policies for EU nationals should be aligned as closely as possible with the existing points-based system for non-EU nationals.
  • Government should avoid introducing a complex array of sector or regional-based immigration policies, which could lead to disparities and unfairness.
  • Any changes to immigration policy for EU citizens should be introduced at the end of a three-year transitional period once negotiations are completed.
  • Government should review and expand the labour shortage occupation list for EU nationals to include jobs at lower levels of skills and salary where there is evidence that labour shortages are difficult address and damaging to employers.
  • Government should review the Resident Labour Market Test and make it more appropriate for employers facing damaging labour shortages by reducing the requirement to advertise jobs through Job Centre Plus from 28 to 14 days.
  • The Youth Mobility Scheme should be extended to all 18-30 year old EU migrants and EU students with a bachelor’s degree or above should be allowed to remain in the UK, without requiring a job, for two years.
  • In applying the existing points-based system for non EU workers to EU workers, government should halve the sponsorship licence fee for public sector employers and review the other costs that employers are subject to, for example the health surcharge, the skills levy and the fee to for every non-EU national they employ.

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