More than a quarter (27 per cent) of employers have seen evidence that suggests EU nationals in their organisations are considering leaving the company, or the UK, in 2017, according to a new report.
The latest Labour Market Outlook (LMO) from the CIPD and the Adecco Group also found that employers are struggling to fill the nearly 750,000 vacancies in the UK labour market because of a lack of suitable labour and skills.
ONS data from January shows low-skilled sectors that normally employ a large number of non-UK EU nationals – such as retail, manufacturing, health and hospitality – account for almost half (45 per cent) of all vacancies.
The public sector is likely to be hit hard; 43 per cent of education employers and 49 per cent of healthcare employers said they believe EU staff were considering leaving their organisation and/or the UK in 2017.
The LMO, which surveyed more than 1,000 employers, found the most common response to labour shortages was to leave vacancies empty.
ONS non-seasonally adjusted data showed that the number of non-UK EU nationals decreased by almost half from an average of more than 60,000 per quarter in the nine months to June 2016, to 30,000 in the three months to September 2016.
“There has been a significant slowdown in the number of non-UK nationals from the European Union in work in the UK,” said Gerwyn Davies, labour market adviser at the CIPD. “This is creating significant recruitment challenges in sectors that have historically relied on non-UK labour to fill roles and which are particularly vulnerable to the prospect of future changes to EU immigration policy.”
But more than a quarter (27 per cent) of organisations surveyed that employ EU nationals said they were unsure how many EU nationals they actually employed.
“Employers need to start collecting data about their workforce and review their approach to workforce development and training to avoid a squeeze on skills and the workforce,” said Davies. Employers in sectors like retail, hospitality and care will need to work much harder to attract candidates and combat labour shortages by improving the attractiveness of their jobs through better line management and job design, developing closer links with local educational institutions and improving pay and employment conditions where possible.”
A quarter (26 per cent) of organisations that employ EU nationals said they would respond to migration restrictions by absorbing the extra cost of recruiting staff from the EU. Other coping strategies cited by employers included retaining older workers (19 per cent), investing more in training (17 per cent), hiring more apprentices (17 per cent) and recruiting UK-born graduates (16 per cent).
“It is encouraging that some employers are beginning to look to new solutions for their future workforce with investment in retraining and apprenticeships, but many more need to begin this planning and investment in their workforce,” said John Marshall, CEO of the Adecco Group UK & Ireland. “Investing in young people is a solid long-term strategy, but employers also need to face the facts and prepare for a situation where they might lose access to significant numbers of skilled EU workers in the near future.”
The LMO report also found that median pay expectations for the year ahead had risen from 1.1 per cent to 1.5 per cent during the last quarter. Nearly one-third (28 per cent) of employers said they were planning to award a basic pay increase of 2 per cent or more this quarter (compared to 17 per cent in the previous quarter) – decisions that were largely driven by a recent rise in inflation. Employers also cited productivity improvement and the national living wage (34 per cent and 21 per cent respectively) as factors influencing pay rises.