Out-Law News 2 min. read

Employers struggle to fill vacancies as migrant labour supply falls

UK employers are struggling to recruit and retain staff, largely because of a fall in the number of workers born outside the country coming to the UK for work.

Data gathered by the Chartered Institute of Personnel and Development (CIPD) for its quarterly labour market outlook (24 page / 867KB PDF) showed that 70% of employers currently have vacancies and are reporting recruitment difficulties. This is up from 66% in the second quarter of the year and 61% in the first quarter.

Meanwhile 34% of employers surveyed by the CIPD said employee retention had become more difficult over the last 12 months, compared to 27% in the previous report.

The CIPD said the "labour supply shock" was largely driven by non-EU-born citizens, with the number of people from outside the EU working in the UK falling by 40,000 in the year to June 2018.

Employment law expert Neil Black of Pinsent Masons, the law firm behind Out-Law.com, said the survey results would not be a surprise to UK employers across a range of sectors.

"The problem of the skills gap continues to grow by the day and no employer, however large, will be able to solve this alone. Though larger companies can insulate themselves to a degree in terms of their own talent requirements, the skills shortage will still indirectly impact them via the inefficiencies it creates within their UK supply chain," Black said.  

More than 70% of employers have at least one member of staff from outside the UK, including around 40% who employ non-EU citizens.

Around a third of employers said Brexit had caused EU workers to leave the UK, and almost half said they thought Brexit had led to an increase in EU citizens expressing concerns about their job stability.

Immigration law expert Euan Smith of Pinsent Masons said: "This indicates employers are concerned about retaining their existing EU employees and will need to consider whether to implement strategies to help address these concerns."

Over half of the employers responding to the survey said they knew little or nothing about the UK’s EU settlement scheme, which will allow EU citizens to continue living and working in the UK if they obtain 'settled status'.

"This is currently being trialled and due to be in place fully for March 2019," said Smith of the settlement scheme. "As this scheme will effectively provide the way to recruit and retain EU employees during the proposed transition period from March 2019 to December 2020 and provide a way for such employees to settle in the UK, this is a concern."

"The current uncertainty regarding whether or not there will be a Brexit deal does not make this easy for employers but it is important that employers are aware of how the scheme can help them," Smith said.

The survey found that the government's Youth Mobility Scheme, which is aimed at solving the recruitment need for lower-skilled workers, will not be sufficient for many employers due to a negative impact of its restrictions on the supply of EU migrants.

Only one in 10 employers said the scheme would meet their recruitment needs and nearly 40% said it would not meet demand.

The CIPD said employers generally agreed with recommendations published recently by the Migration Advisory Committee that the same immigration system should apply to both EU and non-EU citizens.

Black said the government’s industrial strategy, first announced in January 2017, had begun the conversation about filling the skills gap but more needed to be done.

"A strategic UK wide response, together with a sector by sector approach, is needed with better co-ordination and collaboration within sectors and across local and central government. Better integration between industry and the education sector is also vital," Black said.

"The industrial strategy presents a great platform from which to build this strategy but alas the distractions of Brexit mean that this key strategy has not benefited from the attention and investment it deserves," Black said. "Sectors with historic under-representation of certain groups will also need to carefully consider their approach to diversity and inclusion. Targeting under-represented groups could be a key strategy in tackling the skills gap."

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