Where will we get the workers? The battle over skills and immigration

Sunday 29 October, 10:0011:30, ConservatoryState of the Nation

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Today, Britain’s employers are uncertain about where they will find their future workers, while European nationals working in Britain are uncertain if they can or should stay. There also appears to be a consensus that any undermining of the free movement of labour will trigger a crisis for our economy. Britain currently has about 3.5million EU migrants defined by nationality, or just under 11 per cent of the workforce. Fitch, a ratings agency, has already downgraded the UK’s credit rating from AA+ to AA with a negative outlook, citing reduced immigration as one of the reasons for the UK ‘s weak economic status. The National Institute for Economic and Social Research forecasts that reducing immigration by two-thirds would see the UK economy shrink nine per cent by 2065.

Employers, especially those operating in hospitality, construction, health and social care, agriculture and manufacturing are making the same point again and again: British workers do not want to work in these industries, making employers reliant on EU labour. For example, just one in 50 applicants for jobs at Pret-A-Manger is British. Twenty-five per cent of employers say it is difficult to fill semi-skilled or unskilled jobs with British workers. British people appear not to be attracted to these jobs even when wages are increased. It is said they do not like the unsocial hours, the physical demands on them handling machinery, or the fast pace that is needed in the food industry.

In contrast, employers applaud the work ethic of their EU employees. The CIPD/Adecco Group Labour Market Outlook, Spring 2017 said that EU workers are willing to work additional hours, are more flexible and willing to increase or decrease their hours of work in line with what the employer needs. As one human resources consultant representing agricultural employers in East Anglia put it: ‘EU nationals are what’s called, and you have all heard it, “overtime jockeys”. They will work all hours God sends and totally ignore the Working Time Regulations if they are allowed to. It is also the demand for money to send home.’

Fear of losing, or being unable to recruit EU nationals is not just pertinent to industries that need semi-skilled and unskilled workers. The country’s £170 billion technology industry is also worried. Already recruiters and executives say they have seen a sharp drop in job applications from Europe. Technology needs people with education in the STEM subjects – science, technology, engineering and mathematics. Not enough UK students study these subjects: hence the employers’ fear from no longer having free movement of labour.

Many claim the uncertain status for EU workers is already impacting their businesses. Rob Tincknell CEO of the Battersea Power Station Development Company cited how one house-builder had 15,000 workers on site before Christmas 2016. He now has 11,000. The fall in the value of sterling has not helped, either, as it has reduced the value of earnings people send home.

Against this backdrop, in July this year, the home secretary, Amber Rudd, announced a review into the costs and benefits of EU migrant workers. Many criticise this as a little late in the day, not least as the review is not due to report until autumn 2018, long after an expected White Paper on immigration this autumn and only six months before Britain leaves the EU.

How do we link the admission of migrant workers to the genuine skills need of employers? Are we here because our employers are reluctant to invest in training? Is it likely that the economy will suffer a collapse if, after Brexit, there are restrictions on the freedom of movement for European workers into Britain? How else could employers make up the labour shortage if Europeans workers pack up their bags and leave? What does ‘taking back control’ mean for the free movement of labour? Is the free movement of labour a legitimate policy for British politicians to adopt? Perhaps, as suggested by the Resolution Foundation, the sectors that are heavily reliant on low-paid immigrant workers should instead invest in machinery and automation, which would also help raise Britain’s abysmal level of productivity?