Number of EU workers in UK falls at fastest ever rate

Migrant numbers down 4.5 per cent in a year, with firms cautioned to start planning urgently for post-Brexit shortages

The number of EU migrant workers in the UK has shown its sharpest annual decline since records began in 1997, according to new labour market data from the Office for National Statistics (ONS). 

The figures, published yesterday, found the number of EU-born workers fell by 4.5 per cent (107,000 people) during July to September 2018 compared to the same period in 2017.

The decline will be attributed by economists to negative Brexit-related sentiment, as well as to businesses putting plans in place to strengthen their recruitment of UK-based staff and their retention strategies. The figures arrive at a critical juncture, with the cabinet today given access to the details of an initial transitional deal agreed between the UK and EU, which will in turn be put before the UK and European parliaments. 

Stephen Clarke, senior economic analyst at the Resolution Foundation, said the fall in EU migrant workers showed Britain’s labour market was changing ahead of the country’s exit from the EU, and long before a post-Brexit migration plan is in place.

“Firms who employ a large share of migrant workers need to think now about adjusting to a lower migration environment, in terms of the workers they employ, what they produce and how they operate,” Clarke cautioned. 

Tom Hadley, director of policy for the Recruitment & Employment Confederation (REC), said his organisation had seen “record numbers of vacancies” and signs that “skills shortages will further intensify” as EU workers no longer find the UK an attractive place to work. 

“UK businesses will need to work with recruitment partners to innovate and review current hiring strategies – particularly with regards to reaching out to under-represented groups,” Hadley said. “At the same time, the case for a pragmatic, evidence-based immigration strategy that reflects staffing needs across all sectors has never been clearer.”

He added it was critical to ensure a “comprehensive mobility deal with the EU post-Brexit, so firms have the capacity to invest and grow” in the UK.

The CIPD revealed earlier this week that employers are finding vacancies harder to fill due to the decline in migrants coming to the UK since the referendum. 

More than two in five (44 per cent) employers reported it had become “more difficult” to fill vacancies in their companies over the past 12 months. And seven in 10 said some of their vacancies were proving hard to fill.

Gerwyn Davies, the CIPD’s senior labour market advisor, said rising skills and labour shortages would lead to increased workloads, which meant line managers need to “be challenged and encouraged to adopt more sophisticated HR and management practices such as high-performance working”.  

The ONS data also showed an increase in the overall number of people in work in the UK. There were 32.4m people working from July to September, 23,000 more than in April to June. This was up 350,000 on the same period in 2017. 

While employment rates increased, the number of self-employed workers fell by 17,000 between July and September, to 4.75m. 

Andy Chamberlain, deputy director of policy at IPSE, said it was unsurprising the total number of self-employed workers was falling. 

“The self-employed are suffering from a decline in confidence and earnings,” Chamberlain said. “We are hearing a very clear message from our members – this is due to government policy. Confidence in the economy overall remains very low, which is due in no small measure to the lack of a clear plan for the UK’s exit from the EU.”

The ONS also reported on Tuesday that regular wage growth picked up in September by the fastest rate in almost a decade. Compared with a year earlier, wages rose 3.2 per cent – the largest increase since the end of 2008.

However, the Resolution Foundation cautioned real average pay in Britain may return to pre-crisis levels by the end of 2024

The think tank reported that wages in many parts of the UK remain below their 2008 peak. London had the biggest gap (-6.8 per cent) with the East Midlands (-5.6 per cent) and Northern Ireland (-4.7 per cent) close behind.