UK faces skills crisis as inflow of EU workers plummets

Official figures reveal a ‘staggering’ 99 per cent drop in Europeans applying for National Insurance numbers in the last year

There has been a sharp drop in the number of migrants registering to work in the UK, with numbers at an all-time low, according to new figures, leading to warnings from experts that a skills shortage could harm the country’s recovery from the coronavirus pandemic.

The latest quarterly official migration statistics, published yesterday by the Department for Work and Pensions, showed that the number of National Insurance number registrations to EU nationals decreased by 99 per cent between July and September 2020 compared with the same period in 2019. Registrations to non-EU nationals also decreased by 65 per cent during the same period.

While Covid-19 is cited as a factor, the report notes that numbers had been falling prior to the pandemic.

The fall in migrant workers threatens to trigger a skills shortage and hamper the UK’s attempts to get the economy back on track, according to Gerwyn Davies, senior labour market adviser at the CIPD: “This is a staggering fall in registrations, reflecting not just the current restrictions of the pandemic but the fact that the stock of overseas workers in the UK may be falling sharply.

“The worry is that the combined impact of the apparent exodus of EU workers and the continued, subdued inflow of EU jobseekers in particular will feed into recruitment difficulties in the medium term,” Davies said.

The CIPD called on the government to increase investment in training and to make the apprenticeship levy more flexible to ensure British workers have the skills to compensate for the sharp fall in availability of migrant workers from the EU, with Davies warning that the shortfall in migrant labour would “force employers to make full use of available UK workers, especially those recently made redundant with relevant skills and up-to-date experience”.

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The government could also help by adding more critical roles to the shortage occupation list, said Chetal Patel, partner at Bates Wells, but this would still mean businesses faced paying immigration visa fees, which can reach up to £20,000 for a five-year skilled worker visa for a family of four. “This is simply a luxury that not many businesses can afford right now,” she said, adding: “The last thing that the UK needs is even bigger skills shortages.”

The official data showed that the manufacturing, transport and communication and hospitality sectors were particularly reliant on EU nationals – shortages that were likely to deepen once labour demand revcovers, said Davies. 

Alongside shortages in occupations such as doctors and engineers, there are also growing shortfalls in roles such as bricklayers, electricians and social care workers, and while many of the jobs in these sectors required lower training and qualifications compared to the wider economy, Davies warned employers faced challenges in making these jobs attractive to the domestic workforce – particularly in sectors such as social care that are less able to compete on wages.

The renewed warnings over a skills shortage come just weeks before free movement of EU nationals to the UK will end. And the drop in migrant workers is likely to be part of a continuing trend, according to Madeleine Sumption, director of the Migration Observatory at the University of Oxford.

“With a combination of the new immigration system and the pandemic, one would expect to see lower international migration to the UK in the coming years,” she said.

Jonathan Beech, managing director of Migrate UK, added that a lot of EU workers that have already left might not wish to return, and could miss out on applying for settled or pre-settled status – the deadline for which is 30 June 2021. This would be the case “especially if there is an economic downturn,” he said.  

A government spokesperson said: “To state that a reduction in the number of [National Insurance Number registrations] allocated is a direct result of a drop in the number of migrants coming to work in the UK is incorrect.”

“Due to Covid-19 it was necessary to suspend the face-to-face element of the National Insurance number application process. Individuals can start work without a National Insurance number if they have the right to work in the UK and we are working to reopen the service in due course.”

However, the latest statistics are part of a series of figures highlighting a long-term decline in migrant workers.

The number of Tier 2 work visas issued in the year ending September 2019 fell by 30,570, according to immigration data released by the Home Office yesterday. “While much of this decline is as a result of Covid-19, it follows a fall over the last few quarters before the pandemic,” according to the report.

And the office for National Statistics revealed earlier this month that the number of EU nationals working in the UK has fallen by 364,000 over the past year.