The government must guarantee pathways into British businesses for migrant workers to mitigate intense workforce pressures from Brexit, Carolyn Fairbairn, director general of the Confederation of British Industry, said in a speech today (23 February).
Addressing crashing UK productivity with government, industry experts and delegates, Fairbairn described access to EU and other skilled workers as “absolutely vital” to productivity and employment growth.
Outlining a series of measures designed to bring certainty for migration pathways into British business, Fairbairn proposed a transition period for any new rules on migration to give businesses the necessary time to prepare.
She warned that without certainty and clear measures from government to guarantee the EU migration system, British businesses and employers would no longer be able to compete.
“With record employment rates – and without access to EU workers – firms are unable to get the staff they need to grow,” she said.
The latest Office for National Statistics (ONS) migration figures, published on 22 February, revealed that the number of EU citizens leaving the UK was at its highest level in a decade, with 130,000 emigrating between January and September 2017.
Net EU migration has fallen to 90,000 – its lowest levels in five years – with fewer EU nationals arriving in the UK for ‘work related’ reasons.
“For business, this issue is as important as our future trade deal with the EU,” Fairbairn said. Put simply, skills shortages threaten to slow down growth, and “training British workers isn’t enough on its own, nor is just hiring from overseas – business needs both.
“We know from the Federation of Small Businesses that one in five small businesses rely on skills and labour from the EU. This isn’t just about the best and brightest – it’s about giving companies of all sizes access to the skills and labour they need to succeed.”
She said that uncertainty about access to EU workers, and delays to the immigration white paper, have left businesses frustrated. “In conversations with firms in every region and nation, we’re hearing the same thing: we need clarity and certainty over migration – now and in the future,” the business head said.
Skills shortages have also affected employers recruiting from outside the EU, as last week it was revealed that Britain had hit its cap on Tier 2 visas for non-EU migrants for the third consecutive month in a row.
Phoebe Griffith, associate director for migration at the Institute for Public Policy Research, warned that the trend highlighted an “irrepressibly high demand” for migrant labour.
“Given the barriers currently facing employers that want to recruit from outside the EU – including salary thresholds, labour market tests and the £1,000 immigration skills charge – the fact that the cap is still repeatedly being hit shows the irrepressibly high demand for migrants among employers,” she said.
“The government needs to act now by lifting the arbitrary monthly limit,” Griffith continued, referring to the UK’s annual quota of 20,700 Tier 2 visas, allocated monthly to employers and front-loaded each financial year to allow for high demand in summer months.
She said employers should plan now for a world “without freedom of movement”, and develop new skills and productivity strategies for key sectors reliant on EU labour.
Today, however, Fairbairn called on the government to “end the game of human poker” by guaranteeing that EU citizens will be able to remain in the UK even in a no-deal scenario. She issued a stark warning against proposals to extend Tier 2 visas to EU citizens, saying it would be “costly, complex and unaffordable for smaller businesses”.
“Copying and pasting the Tier 2 system would be a disaster for the UK, damaging competitiveness and stopping businesses getting the people and skills they need to compete globally,” she said.
“Instead we need a system that gives firms the confidence to keep investing in every part of the UK, which ensures firms of every size and sector get the talent they need for years to come.”
UK unemployment levels were at the highest for five years, the ONS revealed this week. While some types of employment levels remained high, and with the national minimum wage set to increase on 1 April, real wages for workers were falling. Inflation and costs have risen substantially, with an increase in interest rates by the Bank of England expected this year.
This has resulted in an ongoing squeeze on British living standards, and growing numbers of people in unsustainable or insecure forms of work.
With reports that employer confidence has fallen to its lowest levels since the EU referendum in 2016, Ian Brinkley, chief economist at the CIPD, said sustained investment in skills would be crucial for boosting the labour market in the face of ongoing uncertainty and falling migration.
“Organisations need to give serious thought to how they will invest in their skills and training to plug the gaps created by restrictions on migrant labour. However, the CIPD and Adecco Group’s Labour Market Outlook earlier this week showed that future migration restrictions were unlikely to act as a catalyst for improving skills investment in the UK,” he said.
“The government needs to encourage greater investment in skills and training; for example, by making the apprenticeship levy into a much more flexible training levy that will help organisations develop the skills they need.”
The director general and the deputy governor of the Bank of England spoke together on how to address Britain’s current productivity challenge and rebalance the economy in light of EU negotiations.