Report: UK employers vulnerable to labour 'supply shock' in 2021

A report by the Chartered Institute of Personnel and Development (CIPD) found that more than half of employers are either unaware or know nothing about the proposed changes to the UK's immigration system, where the same rules will apply to individuals whether they are from the EU or the rest of the world.

The CIPD said the government should consider refining its plans to make it easier and cheaper for employers to recruit overseas labour after Brexit.

In a white paper published in December last year, the government outlined proposals to remove the cap on skilled workers and end the requirement for employers to carry out a resident labour market test before recruiting a worker from overseas. The existing route for skilled workers requiring employer sponsorship will apply to EU workers.

A majority of employers surveyed by the CIPD for its latest report (25 page / 450KB PDF) said they were either unable to identify how they might respond to the planned migration restrictions or would not take any action.

Businesses expressed concern over the minimum salary threshold which will cover the recruitment of EU workers, as it applies currently to non-EEA workers. The salary threshold has yet to be set. Businesses said they were worried about the new system's administrative burden, as well as their future ability to attract workers from the EU - especially low-skilled workers.

The CIPD set out four suggested policy recommendations for government which it said were "simple, low-cost, fair and user-friendly", and were aimed at making sure the UK could continue to attract labour from overseas.

It recommended that the government merge its current two proposals for enabling businesses to employ low-skilled EU workers - its youth mobility scheme for 18-30 year-old EU citizens, and a 12-month temporary visa. The CIPD said these should be merged to create a two-year visa that would allow EU citizens to live and work in the UK for a maximum of two years to study or work without a job offer, whatever their age.

While the CIPD said it supported keeping the government's current proposal of a minimum salary threshold of £30,000 for EU workers, it suggested introducing a lower threshold for occupations where there was a shortage of supply, such as healthcare.

It recommended removing proposals requiring a skill threshold, saying it was unnecessary to have both a salary and skill threshold to recruit EU nationals.

Immigration law expert Joanne Hennessy of Pinsent Masons, the law firm behind Out-Law.com, said: "Many employers are confused about when the white paper proposals, which were published under Theresa May, were intended to kick in - essentially in the noise of Brexit and deal versus no deal many businesses I'm speaking to have been confused as to what applies the day after Brexit, to whom and for how long. The White Paper outlined the proposed new one system for all, to be rolled out in 2021. It would apply to EEA and non-EEA nationals alike entering the UK from then on."

"The government’s immigration policy has made it hard for businesses to plan and prepare," she said. "Although the Home Office is consulting on the white paper, many comments coming from the government suggest it might revisit many of the proposals. Indeed, it has commissioned the Migration Advisory Committee (MAC) to look at the 'Australian points based system', which could suggest wider changes are intended."

As many businesses expressed concern about the cost of recruiting skilled workers, the CIPD recommended the introduction of a tiered sponsorship system, which would include a self-service system for low-volume recruiters as well as an umbrella sponsorship system that would allow membership and sectoral bodies to be responsible for compliance duties.

Hennessy said there were longer-term issues with the proposals. "The current white paper proposals provide a short-term solution for recruiting low skilled staff from the EU but imposes a revolving door as it only provides for 12 months in the UK, followed by a 12-month ban," she said.

"The whole route is likely to be in place for a short period. That will be hard for businesses which wish to retain skills and experience and could impact more seasonal industries such as retail and farming," said Hennessy.