Call for visa reform after EU worker exodus

The number of people in work in the UK has reached a new record despite the total of EU nationals employed in the country falling by 28,000 over the past year – the first decline since 2010.

Union Jack with shadows of people
Figures from the Office for National Statistics (ONS) showed that 2.29 million from other EU countries were now working in the UK. However, the fall was offset by a 20,000 increase in workers – to a total of 1.25 million – from outside the European Economic Area.The data prompted fears that British companies were encountering problems in attracting the overseas skills they needed.

Access to skilled labour

Seamus Nevin, head of policy research at the Institute of Directors, said, “Yet again we’ve seen great employment figures as the number of people in work increased and the number of people without work decreased. All of this suggests, however, that access to staff may be peaking as the labour market tightens.“Employers are finding it increasingly difficult to recruit the people they need. Given access to skills is currently one of the highest concerns for IoD members, today’s figures also highlight the imperative for government to reform the Tier 2 visa cap to allow employers to recruit the overseas workers they need to grow in the short term.”The ONS said that employment rose by 197,000 to 32.3 million in the first quarter, the highest total since records began in 1971 and representing a record employment rate of 75.6 per cent.Simultaneously, the number out of work fell by 46,000 to 1.42 million, giving an unemployment rate of 4.2 per cent, the lowest since 1975.In the year to March, average earnings, including bonuses, increased by 2.6 per cent, down by 0.2 per cent on the previous month but still an increase of 0.2 per cent on a year ago and just above the current inflation rate of 2.5 per cent.Work and Pensions Secretary Esther McVey said, “Since 2010 we have seen 3.2 million more people move into work right across the UK. Youth unemployment has fallen by over 40 per cent and the unemployment rate at its joint lowest since 1975.“Today’s figures once again cement that turn-around, with an employment rate of 75.6 per cent and, on average, over 1,000 people each and every day since 2010 getting a job.“With wages growing faster than inflation and increases in the personal tax allowance, not only are more people bringing home a pay packet but they are keeping more of their hard-earned money for themselves and their families.”

Productivity continues to lag behind

However, John Hawksworth, chief economist at PwC, pointed out that the excellent employment figures were offset by disappointing news on productivity growth.“The great British job-creating machine kicked back into life in the first quarter of 2018, taking the employment rate to a new record high,” he said.
“Unemployment edged down further and regular pay growth continued to edge up as the labour market has tightened. Real pay growth, excluding bonuses, is now firmly back into positive territory.“All of this good news stands in marked contrast to the subdued GDP growth of just 0.1 per cent estimated for the first quarter. This estimate could be revised up later but, taken at face value, it suggests that productivity growth turned significantly negative again after a couple of quarters when it seemed to be perking up.”Geraint Johnes, professor of economics at Lancaster University Management School, also expressed disappointment that growth in total pay appeared to have fallen back recently.Prof Johnes, who is also research director at the Work Foundation, said, “This is a disappointing result, in that it represents a fall from the 2.8 per cent figure achieved in February and it means that we have to wait still longer for real wages to recover.“The single month measure shows a year-on-year growth of just 2.3 per cent. This continued flatness in wages provides justification for the Bank of England’s decision not to raise interest rates – despite the buoyancy of the employment figures, the recovery in the labour market is quite simply not there and rising wages clearly present no threat in terms of inflation.”For related news and features, visit our Brexit section. Relocate’s new Global Mobility Toolkit provides free information, practical advice and support for HR, global mobility managers and global teams operating overseas.Global Mobility Toolkit download factsheets resource centreAccess hundreds of global services and suppliers in our Online DirectoryClick to get to the Relocate Global Online Directory