With attitudes to migration continuing to shift, long-term migration might well be the answer to a skills shortage fuelled by an ageing population, low fertility rates and the increased adoption of technology in the workplace.
The potential consequences of reduced work migration, particularly of lower-skilled workers, post-Brexit became very apparent over the past 12 months as the skills shortages that emerged during the pandemic became more pronounced and contributed to: inflationary pressures; a shift in employer/employee bargaining power; and delays and shortages throughout the economy – from airports to hospitality and farming.
The government’s response has been to create specific work visa categories for certain jobs, either through the skilled worker visa or temporary worker visa scheme. Nonetheless, the absence of EU nationals willing to enter and work in the UK, the limited numbers permitted entry to date, the costs involved in the visa process, and the eligibility criteria have combined to restrict employers’ ability to meet skills shortages through work visas. Liz Truss supported extending the Seasonal Worker visa scheme to help address shortages in the food and farming sectors. Rishi Sunak has repeated his commitment to reducing immigration numbers but, consistent with the growing recognition of the role of immigration in addressing the country’s skills shortage and fuelling economic growth, has approved 3,000 visas for young professionals from India. The Office for Budget Responsibility in its November 2022 Economic and Fiscal Outlook projected much higher net migration next year than it predicted in March (205,000 up from 136,000). Latest ONS data estimates that net migration to the UK in the year to June 2022 will have amounted to 504,000. The statisticians point out that this period was unique “with simultaneous factors coinciding to affect long-term immigration” including support for Ukrainian nationals (89,000 in year to June 2022) and the post-Covid relaxation of travel (net migration numbers include 45,000 British nationals returning to the UK).
Misleading reports featured in the British media suggested that work migration from abroad had increased since Brexit (e.g. “figures show there are now more migrants coming to the UK than before the vote”). However, this is not the case and these figures looked only at those needing work visas, ignoring the numbers who previously benefited from free movement rights.
In the UK, numbers of refugees crossing the Channel in small boats from France has proved politically challenging. Twenty times as many people have arrived in the UK by small boat so far this year as crossed the Channel in this way in 2019. As the numbers of refugees seeking asylum grow, the UK can no longer rely on the Dublin III Regulation to return refugees to their country of entry into the EU (since the Brexit transition period ended at the end of 2020). Those allowed to stay in the UK following a successful application for asylum will contribute to an expanding and increasingly diverse pool of labour and potentially increase the labour force in the shorter term should the rules be changed and asylum seekers be allowed to work pending the outcome of their applications.
Exploitation of migrant workers
With EU migrant workers no longer entering the UK to work as seasonal agricultural workers and Ukrainians (67% of post-Brexit seasonal workers in 2021) now unable to come as they did, there are worrying reports of vulnerable and desperate nationals from further afield replacing them.
Attitudes to migration
Over the last decade there have been dramatic changes in attitudes to migration. The latest annual British Attitudes Survey shows a considerable majority that consider migration as beneficial to the country. The UK appears to diverge from other countries elsewhere in Europe which are experiencing a rise in support for anti-immigrant parties, such as in France, Sweden and Italy at recent elections. A report from The Migration Observatory at the University of Oxford highlighted a 2018 study which showed the UK had relatively positive attitudes to migration compared to many other European countries and reinforced the view that immigration had declined in importance among the electorate since the Brexit referendum.
Changes in attitudes can also be attributed to a recognition of the need to increase the number of migrant workers to tackle labour market shortages. Lord Wolfson, the Brexit-supporting Chief Executive of Next plc, for example, has implored the government to relax controls on immigration. CBI boss, Tony Danker, has also now called for increased work migration to the UK to address labour shortages.
Negativity towards immigration may harden as unemployment increases and access to public services becomes more difficult. History suggests that around the world opposition to immigration increases during economic slumps but also that immigration represents something of a labour-market valve; declining with a slowing economy and rising in buoyant economic times.
The significance of the attitudes and values of the younger generations on future changes to society and the world of work are apparent throughout this Report. This is clearly reflected in attitudes to immigration, which become increasingly positive the younger the generation.
Interpreting the impact of the end of free movement of EU/EEA nationals on 31 December 2020 is not straightforward. There are several reasons for this. Firstly, pandemic restrictions have made comparing data over the last couple of years very difficult. Secondly, numbers of EU nationals entering the UK to work in the years of free movement were not tracked and the data available relies on estimates. Oxford University’s Migration Observatory estimates that net migration from the EU to the UK fell from a peak of just over 280,000 in the 2015/16 to just under 120,000 in 2019/20. Thirdly, the numbers entering the UK between the referendum and the end of free movement declined significantly. Fourthly, data from the Office for National Statistics (ONS) is published about work visas granted, but not the net numbers currently working in the UK with work visas, after taking into account those who have left the UK. Finally, the ONS is now using a new method to calculate net migration, making comparisons with periods before the year to June 2020 somewhat unreliable. Nonetheless, it is apparent that the total numbers (EU and non-EU combined) entering the UK each year to work are down by approximately 200,000 from the pre-referendum days.
Post-Brexit, the number of work visas issued by the UK has increased significantly by nearly 100,000 from the pre-pandemic year, but this has not compensated for the reduction in EU workers. By far the highest number of skilled work visas are issued to Indian nationals (44%) and 42% of skilled work visas are health and social care sector visas.
Of this increase in work visas, about one third (12% of all work-related visas) is accounted for by EU/EEA/Swiss nationals now needing work visas. ONS data shows that net migration of EU nationals to the UK is estimated to be minus 51,000, with more leaving than entering the UK in the year to June 2022.
With other drivers combining to contribute to the skills shortage and demand for workers, it is likely to be the case that the numbers of EU migrants entering the UK to work now would be higher than historically if free movement rights had been maintained.
Though Brexit is blamed by many for job shortages, others blame the political choices made by the government post-Brexit. They argue that Brexit does not require a restrictive approach to migration and the UK could open up its job market much more to migrant workers, including EU migrant workers, if it so chose. Tensions exist in the Conservative government between those advocating a more relaxed approach to fuel growth and those advocating a more restrictive approach to immigration post-Brexit. The additional visas for Indian nationals announced by Rishi Sunak signals this government’s support for a more relaxed approach, a change in priorities in the wake of Brexit and a realisation of the need for flexibility to advance trade deal negotiations. These developments herald a shift in migration from Europe to Asia-Pacific and other regions. Work visa data shows this is already happening.
The last year has seen an explosion of cross-border working, particularly in knowledge jobs. In light of the skills shortage, many organisations have little alternative but to respond positively to requests from staff to work temporarily or permanently abroad.
The immigration and tax issues involved in employing people in other countries remain a major obstacle in many cases. This has resulted in the growth of Employers of Record - employment businesses with legal entities set up in the country from which the employee wishes to work and that employ the employee for the employer. The Employer of Record market is projected by one study to grow globally over the next six years from US$4,300 million to over US$6,600 million as employers look to hire more globally.
Migration does not just concern those moving across national boundaries. The pandemic resulted in many reassessing their lives, including where in the country they wanted to live.
There is no doubt that the permanency of hybrid and remote working will result in new-found opportunities for many workers to combine work with a move to outside of cities and large towns. For some, however, the rural idyll has not lived up to expectations and city returnees form one group of so-called “boomerangers” who, dissatisfied, returned to their home location or employer. For employers, targeting these “boomerangers” can form an important part of a strategy to address skills shortages. Increasingly employers are working harder than ever to cultivate positive ongoing relationships with their alumni in case an opportunity to re-hire presents itself.