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UK – Employers not ready for post-Brexit labour ‘supply shock’, CIPD finds

20 September 2019

Most employers in the UK are not equipped to deal with a potential ‘supply shock’ of a reduced inflow of EU workers post-Brexit, according to new research from the Chartered Institute of Personnel and Development.

The new report, ‘A practical immigration system for post-Brexit Britain’, highlights that employers are simply not ready for the introduction of new immigration restrictions planned for January 2021. The CIPD also points to a lack of awareness of the government proposals among most employers, a lack of planning and ongoing political uncertainty.

In response, the CIPD is urging the UK Government to introduce a two-year visa system for unskilled workers and to lower the proposed £30,000 minimum salary threshold for jobs on the shortage occupation list. It is also calling on government to make the system more user-friendly for employers through changes to the sponsorship system and by introducing a new ‘self-service’ system for low volume users of the system like small employers.

The CIPD’s recommendations are based on findings from a survey of more than 2,182 employers and a series of focus groups held with employers across the UK over the last four months.

The survey found that 58% of employers they don’t know anything about the government’s white paper on immigration. Meanwhile, 7% said they knew “a lot” and 35% said that they ‘know a little about it.’

CIPD also found that 56% of employers said they don’t have enough information to start making decisions about their post-Brexit recruitment strategy while 7% are happy to make decisions based on existing information. 

The CIPD’s research also shows that since the referendum vote most employers’ efforts have been focused on retaining existing EU staff, rather than planning how to respond to imminent immigration restrictions.

“This may partly explain why relatively few organisations report they have seen ‘Brexodus’ effect in their organisation yet, as they have been able to continue to access and retain EU workers fairly easily since the EU referendum,” CIPD states. 

However, the CIPD is warning that the focus on retention, coupled with a lack of knowledge on planned immigration restrictions and limited workforce planning by employers could see many organisations experience a ‘labour supply shock’ when immigration restrictions are introduced in just over a year’s time. 

The CIPD calls on the government to merge the planned 12-month temporary visa route with the Youth Mobility Scheme to create a two-year temporary visa route for all workers, to be reviewed in 2025. They are also calling for the government to allow for lower salary thresholds to be set for skilled workers based on jobs covered by the shortage occupation list and for the government to make the system more user-friendly through reform of the sponsorship system.

Gerwyn Davies, senior labour market adviser for the CIPD, commented, “We need a set of workable policies that apply across all sectors that are simple, low-cost, fair and user friendly for both employers and non-UK citizens.”

Tom Hadley, Director of Policy and Campaigns at the Recruitment & Employment Confederation, commented, “A healthy UK economy will need people coming from abroad to contribute at all skill levels, across a wide range of sectors. Our immigration system needs to be managed, but it must also be open - helping businesses to grow and create jobs for prosperous future.”

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