How difficult will it be to hire EU workers after the Brexit transition period?
By Annabel Mace, partner and head of immigration at Squire Patton Boggs.
Last month we partnered with the EEF on a new report ‘Navigating Brexit: the Migration Minefield’. Following this, the EEF’s Director of Employment and Skills Policy, Tim Thomas, commented how very little will change in terms of immigration rules for EU citizens and their families already in the UK before the end of December 2020 (assuming that the UK and the EU can finalise the Withdrawal Agreement).
Thomas also highlighted the need for clarity, simplicity and urgency in the Government’s messaging to stem the flow of EU citizens from the UK, taking their much needed skills with them.
The next big question is – what hurdles will manufacturers face when seeking to hire new EU arrivals after the Brexit transition period?
As yet, of course, there is no guidance on this. The Migration Advisory Committee is not due to publish its recommendations on future immigration policy until September 2018 and the Government has indicated that it will ‘set out initial plans later this year’.
Realistically, it may then take a further year or more for the Government to finalise any new immigration policy, let alone have something up and running for the end of the transition period.
Manufacturers in need of new EU workers after December 2020 therefore face the challenge of trying to make meaningful contingency plans with very little to go on.
Perhaps all they can do is hope for the best, plan for the worst and expect to end up somewhere in between? With this in mind, here are some best guesses for potential outcomes:
- Faced with an ongoing skills gap (at all levels), common sense would suggest a user-friendly registration scheme with qualifying criteria limited to, for example, EU citizens having a genuine work offer in the UK and the means to support themselves financially until they receive their first month’s wages combined with restrictions on out-of-work benefits and no UK employer ‘sponsorship’ obligations other than a strict duty not to undercut resident worker wages. We know that there are more EU citizens leaving the UK than arriving; is it too much to hope that such a system would reverse that trend to the point of filling the skills gap whilst allaying concerns of ‘uncontrolled’ migration?
- At this stage, we cannot rule out the worst case scenario – the possibility that the Home Office’s current Tier 2 of the Points Based System (PBS) for non-EEA nationals will be adapted for new EU arrivals from January 2021 (not least because the systems are already in place). Unfortunately, the PBS is widely regarded to be cumbersome, expensive and time-consuming. If this is what we end up with, UK manufacturers should prepare themselves for complex skill and salary thresholds, delays in bringing skills to the UK, together with significant cost and administrative burdens.
- The ‘half-way house’ could be an entirely new system for both EU and non-EU workers that caters for all skill levels with an effective and dynamic system of identifying and prioritising genuine skills shortages. Sounds great in theory but, based on our experience of the current PBS, there is a well-founded concern that such a system wouldn’t be sufficiently user-friendly or cost-effective to enable manufacturers to hire the workers they need in realistic timeframes. The proposed new settled status process for EU citizens due to be launched towards the end of 2018 will provide an insight into the Home Office’s ability to come up with something materially different that actually works.
In the meantime, what should manufacturers be doing to prepare for any of the above, acknowledging that EU migration is likely to be restricted in one way or another?
In summary, they should:
- assess the scale, skill and salary level of their current EU workforce in the UK to understand the impact of future more restrictive rules from 2021 if that workforce leaves and cannot be replaced with UK nationals;
- adapt their recruitment strategies to tap into alternative workforces with a focus on students, working families, pensioners and encouraging the return to work of the long-term unemployed;
- make better use of the Apprenticeship Levy to develop the skills needed for the future, consider longer-term recruitment drives and skills development for apprenticeships and school leavers; and
- anticipate increased costs both in terms of wages (as a result of greater competition for workers) and recruitment (particularly if the future immigration system is employer-led in the same way as Tier 2 of the PBS).
Finally, for those manufacturers who are most concerned about future EU immigration policy, the importance of voicing those concerns (whether via EEF or other means) cannot be underestimated. It is hoped that the Home Office will launch a public consultation on a new Immigration Bill once the Migration Advisory Committee has published its recommendations later this year – this will be a key opportunity for affected businesses to speak up.