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Will Brexit bring a talent exodus?

9 Apr 2021 By Jo Faragher

Three months in and we’re yet to see the full effect of life outside the bloc. But for industries like care and agriculture that are reliant on overseas staff, it’s a different story

It’s a job that pays around £40,000 a year but few people want to do it, and it can’t be done by a machine. So when ‘chick sexers’ – who determine whether young chickens are male or female so they can be sorted for meat or eggs – were added to the skilled worker list set by the Migration Advisory Committee, poultry farmers breathed a sigh of relief. Butchers, bricklayers and deckhands have also been added to the list of shortage occupations for which there are not enough resident workers, offering a smoother route for migrant workers to come to the UK. 

Recruitment may be last on the priority list for some industries during the pandemic, but for many organisations – almost five years since the referendum – the reality of bringing in staff from other countries has become more complex. Since the points-based immigration system was introduced on 1 December 2020, and freedom of movement for EU citizens in the UK and vice versa ended from 31 December, any employer relying on workers from EU countries faces a set of hurdles and timescales that could put the brakes on their talent plans. Where demand for roles or skills requirements can’t be met by the domestic labour market, this has led to concerns that businesses could face the double whammy of an exodus of migrants leaving the UK because of the pandemic, and fewer entering the country thanks to the limitations of the immigration system. Data from the Office for National Statistics found there were 795,000 fewer foreign-born workers in Britain in the final quarter of 2020 than a year earlier, and almost a million fewer foreign-born residents over the age of 16.

For many employers though, it’s still early days. At Swansea-based translation services company Wolfestone, the fact everyone is still working remotely means the impact of the points-based system has been minimised. “Our translators have always worked remotely across the globe, so our business model was uniquely well-positioned to cope with changes to immigration rules,” says managing director Alex Parr. “However, we do anticipate the long-term impact of the points-based system to be negative for business in the UK in general. Although we’ve shifted to remote working, there are also many team members who look forward to returning to the office at least a few days a week, and we want our offices to be a hub for important collaboration and exchanging of ideas. So we are still wanting to hire for positions that are in person, or at least flexible.” 

Following an employee survey, the firm has decided to offer staff the opportunity to work fully remotely “where this is possible and where tax requirements are met”. But Parr is pessimistic about the impact the new system could have on skills. “Our concern is that, given there is already a huge language skills shortage in the UK, we may not be able to fill our in-house roles with talent with native-level European language skills in the future,” she says. 

To address this, Wolfestone has recently opened an office in Romanian capital Bucharest, where it will have access to multilingual graduates. CEO Anna Bastek worries that many European migrant workers will not meet the required 70 points to work in the UK, and industries will suffer as a result. She says: “If this system had been in place when I arrived in the UK 17 years ago from Poland, it would have been unlikely that I would have met the strict criteria to get a visa. This means our company wouldn’t exist and 60 jobs in the UK wouldn’t have been created, as well as thousands of freelance roles and two successful acquisitions.” 

For businesses used to sponsoring employees from non-EU countries, the new system will be no surprise, according to Adam Hoefel, solicitor at immigration law firm Gherson. “But if you’ve never had to engage with it previously, this can have a huge impact on your recruitment processes, and adds huge costs if you’ve never previously had to rely on migrant workers,” he explains. Employers will need to cover the cost of a sponsor licence, the immigration skills charge and the immigration health surcharge, as well as application fees – likely to top £5,000 before they’ve even taken the employee’s family members into account. Sponsors can ask recruits to pay their own application fees but cannot pass on the immigration skills charge to individuals. In roles where competition for talent is fierce, covering these costs could be the dealmaker. 

The requirements of the new system (see box on page 27) are arguably less onerous than they could have been: the salary and skills thresholds were lowered from original proposals, and accommodations have already been made. There is a new graduate visa route, open from 1 July, that will allow firms to bring in foreign citizens who have finished their studies in the UK for up to two years with no minimum wage threshold or skill level, and in any role. “This is huge, especially for smaller businesses,” says Jonathan Beech, managing director of Migrate UK. “But organisations will need to think ahead, and if they find graduates they want to retain after two years they’ll need to think about sponsoring them under the skilled worker route six months in advance. The graduates themselves will be savvy to this too, asking employers to sponsor them sooner rather than later.” 

The Home Office also removed the resident labour market test, which required firms to advertise jobs to UK applicants first for at least four weeks and in two media outlets. Another change is that staff on intra-company transfers can change their immigration status ‘in country’ so they can stay longer and switch employers without having to go through a long cooling-off period. “This changes things massively for mobility,” adds Beech. “We see this a lot with tech companies that recruit many staff from India. Previously they would finish a project for an employer, go back overseas and have a cooling off period, not able to return for sponsored employment here for 12 months. Now they can come back immediately under the skilled worker route, for the same employer or for another, filling permanent vacancies that can lead to settlement.” 

But while the lower skills and salary thresholds (and the addition of around 140 roles to the shortage occupations list) have widened eligibility for visa sponsorship, sectors hiring at relatively lower skills levels and pay rates could face real challenges in filling roles. One welcome announcement has been a trebling in the number of available seasonal worker visas this year to 30,000 to help farming companies harvest produce. According to British Summer Fruits, the industry body for the UK berry industry, this will be extremely helpful as the sector brings in 29,000 seasonal workers per year. “Until 2019, 99 per cent of seasonal jobs were filled by workers travelling here from the EU and working from spring to early autumn; in 2020 the mix was around 70 per cent EU nationals returning, around 20 per cent non-EU nationals (mostly from Ukraine, Russia and Georgia) on the pilot seasonal workers scheme, and 10 per cent UK residents,” explains chairman Nick Marston. 

Farms have worked hard to boost local recruitment – for example, offering more flexible shift patterns and helping existing EU workers to gain settled or pre-settled status – but challenges persist. “There is an ever-diminishing number of workers from the EU available for seasonal work as, for instance, the Romanian economy builds and unemployment falls, and this will be a continuing trend,” Marston adds. “Recruitment from UK residents has very limited potential with low levels of unemployment, especially in rural areas, and the built-in fact that a seasonal job is less attractive than a permanent one to anyone who has commitments in the UK such as family, housing or rent.” 

Covid has complicated matters further, with social distancing measures reducing the number of workers that can be transported on minibuses, for example, and requiring higher levels of supervision to ensure rules are followed. Restrictions on foreign travel this summer will only exacerbate the situation. 

In less ‘hands on’ roles, organisations are using the switch to home working to reassess their approach to workforce planning and the role of location within that. Tata Consulting Services (TCS), an IT services firm, has “no major plans to recruit from the EU” despite holding a sponsor licence. “TCS’s talent strategy in the UK has involved a diverse mix of workforce development, which includes graduate trainees, hiring experienced technology professionals and deputation of employees on international assignments,” says Ramkumar Chandrasekaran, head of HR for UK & Ireland. “While the visa changes make it easier to bring in some niche skills, this will only augment our continuing investment in hiring in the UK.” 

TCS plans to recruit more than 1,500 UK-based graduate trainees this year, but technology will allow it to access talent from anywhere in the world, he adds. The company has built what it calls the ‘secure borderless workspace’, based on cloud infrastructure, collaboration tools and virtual project management practices. It has also created a virtual ‘talent cloud’, a pool of consultants available for any project in any location as per client demand and project requirement. Flexibility on location and the ability to manage remote workers will be crucial for tech companies like TCS moving forward: research by the Learning and Work Institute has predicted a “catastrophic” digital skills shortage in years to come, while demand for artificial intelligence, cloud and robotics expertise far outstrips supply. 

Although it might be slow going for recruitment plans and employee mobility while pandemic travel and working restrictions are in place, that doesn’t mean businesses shouldn’t get their houses in order. “It will be possible to look at each hire on a case-by-case basis, particularly while movement is drastically reduced,” says Natasha Chell, partner and head of risk and compliance at Laura Devine Immigration. “But gone are the days when workers could go freely between offices in the EU. Now rules will vary depending on state and HR will have to check that, meaning there will be more delays and less flexibility in terms of workforce.” 

Hoefel advises firms to anticipate the skills they will require and where they might come from: “If you already have EU staff, ensure their right-to-work checks are up to date and they have applied for settled status before the end of June and, if you foresee the need to recruit from overseas, start the process of acquiring a sponsor licence as this can take weeks to get in place.” Workers who frequently travel to other countries on projects may need a frontier visa worker for each country, he adds, or have to apply for a temporary work permit in each of those countries. 

Marja Verbon, chief operating officer of recruitment platform Jump.Work, says most companies are focusing on recruits who already have a right to work in the UK rather than jumping through this new set of hoops. “When businesses do decide to go through with sponsorship it tends to be for higher-paid and more senior roles. Getting the sponsorship licence is still a cost and time investment, as well as a responsibility, meaning that many have not yet taken the jump,” she says. “Once the labour market becomes tighter and the economy reopens post Covid, I’d expect many more businesses to realise the urgency of going down this route as there are not enough candidates to choose from.” 

For many, one of the key strategies will have to be building a domestic pipeline of workers, however slow. Hospitality charity Springboard, for example, plans to train up 10,000 young people ready for work and able to support the sector’s recovery by 2022. CEO Chris Gamm says this needs to be a nationwide effort. “There is so much talent out there and I truly believe the hospitality sector will come back stronger, but this will only happen if there’s great people behind it, trained with the right skills,” he says. “By inspiring and tapping into a pipeline of local talent we’re securing the future of the hospitality industry, and also equipping the next generation. This comes hand in hand with providing the right training, so we can ensure they are able to build long and fulfilling careers.” 

In a year that has seen West End musicians retrain as delivery drivers and millions supported by the government’s furlough scheme, the pandemic will clearly influence the supply of UK labour. The truth is, the impact of the immigration system is so inextricably linked to the fallout from Covid that we’re unlikely to see the full picture for some months yet.  

For guidance on post-Brexit planning and employing foreign nationals, visit the CIPD’s Brexit hub

How does the points system work? 

The UK opened the points-based immigration system for visa applications on 1 December 2020. The system treats workers from the EU and non-EU countries equally, and requires employers to acquire a sponsor licence to hire eligible employees from outside the UK. ‘Eligible’ employees are those who can reach a total of 70 points by matching certain criteria set by the government. These include (some are tradeable):

  • A job offer from an approved sponsor (20 points)
  • Meeting the appropriate skill level (RQF 3 or above, equivalent to A-level) (20 points)
  • Speaking English to a certain standard (10 points)
  • A salary of £25,600 or above (can be lower in certain cases) (10 points)
  • A job in a shortage occupation as set by the Migration Advisory Committee (MAC) (20 points)
  • A PhD relevant to the job (more points if it’s a STEM subject) (10 or 20 points)

Many employers welcomed the drop in skills level from a degree requirement to A-level, as well as a drop in salary for certain roles. The resident labour market test, which used to require firms to place a carefully worded job advert for 28 days, has now been removed, shortening hiring times and reducing red tape. The cap on applications was also scrapped. 

What’s new? 

In early March, the Home Office announced a new graduate visa route that would be open to applications from 1 July 2021. Any international student who has completed an eligible course at a UK university can apply, and stay for a maximum of two years (or three for doctoral students). Employers can use that time to plan ahead for acquiring longer-term sponsorship via the skilled worker route. 

In 2020, shortly before the pandemic hit, the MAC published a review of how the shortage occupations list works ahead of the introduction of the points-based scheme. One of the recommendations was that the list of roles is reviewed more frequently to respond to the uncertainty created by Covid. Recent additions to the list include senior social care workers, pharmacists and physiotherapists. 

What about existing EU staff? 

Employees who were living in the UK before the end of 2020 can apply for the EU settlement scheme until 30 June 2021. People with five years’ continuous residence should be granted settled status, while those with shorter residence periods can acquire pre-settled status, and switch to settled after they’ve reached five years. 

What might be on the horizon? 

In this spring’s budget, the chancellor announced a new ‘elite’ visa, which is understood to be launching in spring 2022. There is little detail on who will qualify for the route yet, but it is thought it will enable highly skilled migrants in ‘scale up’ industries such as fintech to gain fast-track access to a visa with no sponsorship or third-party endorsement. The government will also review the innovator visa, which is open to entrepreneurs but has so far had limited uptake.  

Spring 2022 could also see the launch of a new visa category known as global business mobility, which covers intra-company transfers and eases the way for overseas businesses to establish a presence in the UK and transfer staff. The MAC is investigating this and is due to deliver its recommendations in October. 

Social care: “We need a pipeline of senior carers” 

The recent addition of senior social care workers to the Migration Advisory Committee’s shortage occupations list was a welcome one. According to Skills for Care, 17 per cent of the adult social care workforce in 2019 was non-British nationals. The sector has faced a perfect storm this year, with Covid absences meaning teams are spread thinner than ever, and exhaustion threatening an exodus of staff. Approximately 430,000 care workers leave the profession each year, and around 7 per cent of roles are vacant at any one time. “It’s better late than never, but if the decision had been made earlier we could be in a better place,” says Nadra Ahmed, chairman of the National Care Association. 

It’s still early days, but Ahmed is hopeful the change will drive an improvement in recruitment prospects: “We’re unable to fill that level of vacancies in the UK, so we have no option but to go outside, and we need to build up a pipeline of senior carers. But those in the more junior roles will always be needed.” 

At care provider Sunrise Senior Living and Gracewell Healthcare, around a fifth of the staff come from the EU, although this is as high as 40 per cent in some homes. Sharon Benson, senior director of HR, has kept a close eye on the new immigration system since it was introduced. “We are taking this into consideration for our recruitment strategies and also modelling how this could affect our attrition rates, particularly at those care homes that employ more team members from the EU,” she says. “However, we do concentrate many of our efforts on retention to keep talented staff within our homes.”

The organisation offers “sector leading” rates of pay and benefits, and has reduced attrition by 23 per cent year on year. The vast majority of roles it has open are not on the shortage occupations list, but Sunrise and Gracewell will campaign to drive changes. “We’re particularly interested in lobbying for the new visa arrangements to include carers, as the absence of these roles on the shortage list will likely create challenges for the sector,” Benson says. 

One potential area of focus is career changers from industries badly hit by the pandemic, such as hospitality. “We have housekeepers who have been instrumental in infection control this past year; we need chefs, nutritionists, entertainment managers and dementia specialists. People don’t always realise the range of jobs available in a care home,” she says.

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