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Global HR Lawyers

The road to nowhere: Brexit and labour shortages

26 February 2018

In an opinion piece in the Guardian by British Chambers of Commerce (BCC) Director General Adam Marshall warns of an imminent recruitment crisis.

The critique highlights that the Government has refused to take labour market realities into account when shaping immigration policy. The benefits to the UK economy of freedom of movement are belittled by Theresa May who famously stated “If you believe that you are a citizen of the world, you are a citizen of nowhere.”

The House of Commons Environment, Food and Rural Affairs Committee noted the Government’s reluctance to engage with the reality of labour shortages almost a year ago in its report ‘Feeding the nation: labour constraints’, pointing to the Government’s use of spurious data in assessing the agricultural sector’s labour needs. Since then, shortages have spread through the UK economy. Beginning in December 2017, the recruitment efforts of UK sponsors of highly skilled migrants have been frustrated by the cap on new entries into this category. Marshall cites the results of a BCC survey that found three-quarters of firms are having difficulties recruiting.

It follows that many UK industries will struggle to survive if EU nationals are subjected to the current immigration system that applies to non-EU nationals. Marshall correctly describes the current policies as ‘expensive and bureaucratic’. Application fees are high and additional fees have increased in number, scope and amount in recent years, such that sponsoring a skilled worker in the UK for five years now costs £8,849 at a minimum, including the application fee for the requisite sponsor licence. The trend will continue this year as the Government has announced a doubling of the Immigration Health Surcharge to £400 per year. In terms of bureaucracy, interdependent Immigration Rules, applicant guidance, sponsor guidance and internal Home Office guidance add up to thousands of pages of material. Recent case law reflects that the Home Office itself often provides incorrect information on migrants’ status as a result.

Marshall suggests either a preferential approach for EU nationals or one that reduces costs and administrative burdens across the board. The former might keep struggling sectors afloat but the latter would be more widely beneficial. Several aspects of the current system could easily be simplified, including English language requirements, the spectrum of fees and overseas application submission processes.

The Home Office has already taken some steps towards addressing the complexity of the immigration system. It has tasked the Law Commission with simplifying the Immigration Rules. However, the Law Commission’s scope is limited to identifying principles for redrafting the rules to make them simpler and more accessible. The Law Commission does not propose to simplify the actual requirements. Marshall commends Amber Rudd’s Home Office for engaging with businesses. The immigration team at Lewis Silkin has also noted a welcome change in the receptivity of certain teams within the Home Office to understanding the concerns of businesses and migrants.

British Chambers of Commerce joins the Home Affairs Committee in criticising the Government’s delay in publishing a white paper setting out a clear immigration policy covering EU nationals coming to the UK during the post-Brexit transitional period and beyond. Businesses need to know the Government’s plans. If the information is not forthcoming, their productivity will be reduced and they may move operations elsewhere.

As long ago as 2014, the Migration Advisory Committee advised that migration’s effects on the employment and wages of UK-born workers are modest. The Government’s objective of reducing immigration is out of sync with the economy. Marshall is right to warn that the Government must act quickly and bravely to reverse the trend of labour shortages. If the Government does not heed his warning, we might all end up as citizens of nowhere. 

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Following the UK’s departure from the EU, the Trade and Cooperation Agreement sets out the shape of the ongoing future relationship between the UK and the EU and provides some degree of certainty for UK businesses.

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