CIPD calls for short-term immigration changes to address labour shortages

Return to pre-pandemic norms will not be enough to close the skills gap, report warns

The CIPD is calling for short-term changes to the UK’s immigration policy to address the current labour crisis, warning that the immediate skills shortages could undermine the government’s plans to create a high-wage, high-skill economy.

The professional body has urged the government to create a temporary job mobility scheme for young EU nationals, saying there was a “strong case for an immediate immigration safety valve” to address the acute labour shortages some sectors were facing.

It added that data showed the UK’s labour shortages pre-dated the coronavirus, meaning that a return to pre-pandemic norms was unlikely on its own to resolve the talent shortages.

The CIPD also called for the apprenticeship levy to be reformed into a more flexible training levy, as well as a £60m-a-year investment to improve business support for SMEs on issues including people management and skills development.

The calls come alongside the release of data from the CIPD showing that sectors including hospitality, health and social care and manufacturing are all facing challenges with hard-to-fill vacancies and require “urgent intervention”.

A poll of 2,000 employers, conducted as part of the Addressing skills and labour shortages post-Brexit report, found that while the current labour shortages pre-date the pandemic – with the number of firms reporting hard-to-fill vacancies increasing only slightly from 36 per cent in 2019 to 39 per cent this year – there has been a notable spike in these key sectors.

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The number of firms reporting hard-to-fill vacancies in the hospitality, arts and recreation sector increased to 51 per cent this year, compared to just 12 per cent in 2020. Similarly, 49 per cent of firms in the health and social care sector, and 47 per cent of manufacturing firms, also reported hard-to-fill vacancies.

The report also said there had been a “supply shock” of labour in key sectors, including in transport where the median number of applicants for low-skilled vacancies has fallen from 50 in 2018 and 2019 to just 15 in 2021.

In part, it said this was because of the “unattractiveness” of many low-paid jobs in these key sectors, with salaries and working conditions not meeting the expectations of UK workers.

Gerwyn Davies, senior labour market adviser at the CIPD, said the research suggested that businesses in low-paying sectors too often saw their workforce as a “cost to manage rather than a key value driver”.

While there was promising evidence that some employers were getting better at sourcing labour and improving job quality, Davies warned: “Changes in business behaviour, people management capability and investment priorities will take time: time firms that are struggling with acute skill and labour shortages now simply don’t have.

“In response, there is a strong case for an immediate immigration safety valve to address the rising labour supply challenges some employers are facing,” he said.

Karendeep Kaur, manager of Migrate UK, said the CIPD’s recommendations were a necessary short-term fix, but that long-term reform was needed if the UK was to see a change in dynamic.

“Brexit resulted in a huge portion of the EU population leaving the UK, which meant industries such as hospitality and transport suffering immensely,” she said. “With the added pressure of the pandemic, the talent pool has shortened significantly and the knock-on effect has been felt by many other industries.”

Kaur added that individuals potentially looking to migrate to the UK also had the potential to relocate elsewhere. “Therefore, the desirability of joining a UK-based organisation will be through salary and working conditions.

“The opportunity for settlement in the UK is also a factor for many; however this is achieved via sponsorship under the correct routes,” she added, noting that the UK’s current youth mobility scheme only offered a two-year visa and required anyone wanting to stay longer to apply via the skilled workers route.