The UK government’s Migration Advisory Committee issued a report this week assessing the impact of immigration from the European Economic Area and suggesting ways for the government to reform immigration policy in preparation for the UK’s exit from the European Union next March. Once Brexit is fully implemented in 2020, freedom of movement is expected to end between the UK and the EU, meaning UK employers will no longer be able to seamlessly recruit workers from other European countries, which employers fear may lead to labor shortages in a range of industries from agriculture and construction to hospitality, health care, and finance.
The MAC report concludes that there is no need for the UK to continue to have separate immigration rules for EU/EEA citizens and migrants from other countries. The committee’s main recommendation for alleviating these potential shortages is to remove the cap on Tier 2 skilled-worker visas, People Management explains:
Along with ending the Tier 2 (General) visa cap, the report also suggested extending Tier 2 eligibility to medium-skilled roles and abolishing the resident market test list but retaining the £30,000 salary threshold. It added the immigration skills charge should also cover EEA citizens. The report noted these changes “would allow employers to hire migrants into medium-skill jobs but would also require employers to pay salaries that place greater upward pressure on earnings in the sectors”.
Tier 2 visas became a concern for employers earlier this year as restricted certificates of sponsorship – which must be obtained by UK employers hiring non-EEA staff – were continuously oversubscribed for in the first half of 2018. Pressure on the system only eased after the government removed NHS doctors and nurses from the cap.
The main upshot of this proposal is that highly skilled talent would be relatively easy to recruit from other countries, but low-skill workers would not. Writing at Personnel Today, Kerry Garcia and Jackie Penlington from the law firm Stevens & Bolton LLP take a closer look at what the MAC’s scheme would mean for employers:
The March 2019 deadline for negotiating terms for the UK’s departure from the European Union is fast approaching, while major points of contention between London and Brussels still remain to be ironed out. While the likelihood of a “no-deal” Brexit, in which the UK would crash out of the EU with no special trade arrangements, is generally considered low, the final outcome remains uncertain with just six months to go, so British companies like London-based financial firms have been taking steps to prepare for that contingency. At the same time, European manufacturers operating in the UK have made clear that they might have to pull out of the country if the deadline passes without a deal, as the removal of the UK from the European customs union would be hugely disruptive to their supply chains.
At the same time, Europeans already living legally in the UK have been assured that they will be allowed to remain under any deal, but it is less clear what will happen to them if there is no deal. Trade unions and other labor groups have also expressed concern that Brexit could mean a reduction in the rights employees enjoy under labor laws grounded in EU policies. The bill drafted last year for removing the UK from the legal, political, and financial institutions of the EU preserves regulations derived from European labor laws, but employee advocates still fear that a weakening of these rights is in the pipeline; the possibility of a no-deal outcome compounds those suspicions.
In the past week, the government has issued several statements meant to reassure employees and employers that a no-deal Brexit remains unlikely and will have no such dire consequences if it does occur. A guidance document issued last week as part of a series of advice papers concerning a potential no-deal Brexit addressed the issue of workers’ rights, saying there would be no change to these protections in any event, Personnel Today reported:
[T]he government said domestic legislation already exceeds the level of employment protection provided under EU law. It intends to make small amendments to the language of workplace legislation to reflect that the UK will no longer be a member of the EU. No policy changes will be made.
The latest labor market bulletin from the UK Office for National Statistics, released on Tuesday, shows that the number of citizens of other EU countries working in the UK has declined in the past year by the largest amount since the government began collecting comparable records two decades ago. Between April and June 2018, approximately 2.28 million EU nationals were employed in the country: 86,000 fewer than in the second quarter of 2017. In the same period, the number of employed UK nationals increased by 332,000 to 28.76 million, while the number of non-EU foreign workers increased by 74,000 to 1.27 million.
Gerwyn Davies, senior labour market analyst at the CIPD, comments on the report to Personnel Today:
“Today’s figures confirm that the UK labour market has suffered from a ‘supply shock’ of fewer EU-born workers coming to live and work in the UK during the past year, compared with previous years. This has contributed to labour supply failing to keep pace with the strong demand for workers; which is consistent with another welcome fall in unemployment.” …
“The tightening labour market is putting modest upward pressure on pay, but this still isn’t leading to more widespread pressure due to ongoing weak productivity,” said Davies.
New employer survey data released on Monday by the CIPD and the recruitment firm Adecco showed that UK employers were experiencing staff shortages due to the low-unemployment environment and a decline in migration from the EU. The survey found that the number of applicants per vacancy had dropped across all roles since last summer, while 66 percent of employers said at least some of their vacancies were proving difficult to fill.
Nonetheless, this tight labor market isn’t translating into higher wages for most UK employees.
Barclays is taking direct ownership of its French, German, and Spanish branches away from its UK company and putting them under control of Barclays Bank Ireland, Reuters reported on Monday. The move by the UK-based international bank to expand its Irish entity, which it announced last year would become its post-Brexit European headquarters, is part of its contingency plans for ensuring the smooth continuation of its European operations after Brexit.
Barclays plans to ultimately move all of its European branches under the aegis of the Irish bank. These include corporate and investment banking businesses in Luxembourg, Switzerland, Portugal, Italy, and the Netherlands, according to Reuters. After absorbing these businesses, Barclays Bank Ireland will have total assets of around £224 billion (250 billion euros, or $286 billion), which the Irish Times reports would make it the largest bank in Ireland.
These entities will ultimately remain under the ownership of Barclays’ holding company in London, but will be directly owned by the Irish bank. This is meant to ensure that even in the event of a “no-deal” Brexit, in which the UK crashes out of the European Union with no special trade arrangements, Barclays will be able to continue serving EU customers without disruption as its businesses will still be based in a member state.
It is not clear what impact these moves will have in terms of jobs, though the Irish Times notes that the bank had already outlined plans to add up to 200 new employees in Ireland; overall, Brexit-related reorganizations at banks are expected to result in tens of thousands of jobs disappearing from the City of London.
The latest migration figures from the UK’s Office of National Statistics, released last week, showed that the number of people emigrating to the UK from EU countries had fallen to its lowest level in four years, the Guardian reported:
Data from the Office for National Statistics released on Monday showed net long-term migration to the UK from the EU was 101,000 in 2017 – the lowest level since the year ending March 2013. Overall, the data showed that about 280,000 more people came to the UK than left in 2017.
While net migration continues to add to the UK population, the figure is down from record highs recorded in 2015 and early 2016. There has been a gradual increase in emigration since 2015 to approximately 350,000. Immigration has stayed stable at about 630,000, the report showed. Net migration from countries outside the EU rose to 227,000, the highest level since September 2010.
Concerned about the impact of immigration on wages and job opportunities in the domestic labor market, the UK government in 2010 set a goal of cutting net migration figures to below 100,000 a year. Curbing immigration from the EU was also one of the key objectives of Brexit. The British business community, however, has warned that reductions in immigration will make it harder for UK employers to fill jobs, slowing down hiring and hurting the economy.
In the context of a very tight labor market, these new figures are bad news for employers, Gerwyn Davies, senior labour market adviser at the CIPD, tells Jo Faragher at Personnel Today:
Two major European manufacturers have said they might have to pull out of the UK if London and Brussels fail to reach a deal on Brexit, or if the UK government is not able to provide some clarity over what to expect in that deal. First Airbus, the France-based airplane manufacturer, published a Brexit risk assessment last Thursday indicating that “the UK exiting the EU next year without a deal … would lead to severe disruption and interruption of UK production” and “force Airbus to reconsider its investments in the UK, and its long-term footprint in the country.”
The manufacturer employs 14,000 people directly in the UK and supports another 110,000 jobs through its 4,000 suppliers in that country. A withdrawal from the EU that removes the UK from the European customs union would disrupt Airbus’s cross-channel supply chain. The current planned Brexit transition, scheduled to last through December 2020, is “too short for Airbus to implement the required changes with its extensive supply chain,” the company said, and will require it to “carefully monitor any new investments in the UK and refrain from extending the UK suppliers/partners base.”
The German automaker BMW has also warned that it will have to think about moving its operations out of the UK if Downing Street does not get clear on its plan for Brexit soon, according to the BBC:
German Chancellor Angela Merkel is arguably the world’s foremost example of women’s empowerment: an accomplished scientist turned national leader and one of the most powerful people (not just women) in the world. Notwithstanding Merkel’s achievements and those of other women leaders in German politics, the country lags behind its European peers in closing the gender pay gap. Germany’s pay gap stands at 21.5 percent, according to EU data: the third largest in Europe and well above the EU average of 16.2 percent.
A new law that went into effect in January is meant to help close that gap by allowing employees to request information about wage disparities from their employers, but as Carolynn Look and Elisabeth Behrmann pointed out in a recent Bloomberg feature, the law puts the onus on employees to ask, whereas other legislative efforts, like the UK’s mandatory pay gap reporting and similar laws being considered in France, compel employers to provide this information up front.
A major component of the challenge for Germany is cultural: The term Frauenberuf (women’s job) is still used to describe occupations like nursing, housekeeping, child care, and social work—jobs that are often low-paying, part-time, and lack clear pathways to career advancement, Look and Behrmann note:
Even in fields dominated by women, such as medical assistants, men can get paid 40 percent more. The lower pay, along with more part-time work for women, mean they earn about 50 percent less over their working lives than male peers, according to a 2017 study by the German Institute for Economic Research in Berlin.