25 September 2018

How are firms preparing for a shortage of EU workers post-Brexit? Opinion piece

Firms cannot prepare adequately for a shortage of EU workers because we still do not have a coherent post-Brexit immigration policy from the Home Office.

This is not really the Home Office’s fault: whichever of two options they take, they risk infuriating large chunks of the population because the issue has become so toxic.

However, unless our immigration policy changes, the British workforce growth rate will fall from 9 per cent in the 10 years to 2015 to 2.4 per cent by 2025. This fall is unquestionably due to Brexit: labourers from economically weak parts of Europe can come to the UK visa-free and work without a permit. After Brexit, they won’t be able to.

This drop in the workforce is worrying when more (low-paid) workers are needed to enter the health and social care professions to care for Britain’s ageing population. There are likely to be two million more retirees alive in 2025 than there are now. Old people are more likely to get sick than young people. Hence the need for more NHS staff. And that’s just one of many industry sectors that need foreign labour.

This grim view of a Britain with a depleted workforce assumes, of course, that the Home Office will do absolutely nothing about the workforce shortage. This is unlikely. It is also based on a myth: the myth that the UK’s potential workforce has reduced. It has not.

The reality is that Britain is still seen as an attractive place.  The number of applicants far exceeds the number of approved immigrants. For example, we turn away more doctors than we bring in, not because we don’t need them but because we hit Home Office quotas each month. We don’t need these quotas. At the stroke of a pen, all of the UK’s employment gaps could be filled.

The fall-off in immigration applications is only from the EU. From outside the EU, applications to settle in Britain are as numerous as ever, and the government is still employing its “hostile environment” policies to deter or reject them. There is no reason why such workers need to come from the EU. They could come from anywhere, as long as they are good enough.

Businesses are not responding well. They are, sensibly enough, hunting for UK workers to fill in the place of the EU workers they are losing. They are also fiddling with their diversity policies in the hope of attracting new sections of the population. But in addition to this, they should be lobbying the government to adjust immigration policies to fill the gap. Instead, all their lobbying has been directed at undermining the government’s hard-won compromise on Brexit.

That is pointless. There is no way the government can back down on its promise to dismantle freedom of movement, which favours EU workers, so instead businesses should be pressuring the Home Office to stop rejecting non-EU applicants. They would find they are pushing at an open door.

Deal or no deal – what firms should do

The Government has been busy publishing technical advice notices on many aspects of a no-deal Brexit, while stressing that it continues to work towards a deal for March 2019.

But firms need to plan ahead, whatever the government does, and should tackle the following points:

The movement of goods; e.g. customs, supply chains and export licences

Product compliance; e.g. more detailed technical specifications, how WTO rules might affect you and the importance of keeping standards up to date

Contracts; your form terms and conditions will need clarification when you trade across EU borders – this may also affect tax

Employees; e.g. workplace rights, residency status and workforce planning

Know your partner; the Government hasn’t stressed this but firms need to get to grips with vetting overseas counterparties and developing trust.

All technical notices can be found at https://www.gov.uk/government/collections/how-to-prepare-if-the-uk-leaves-the-eu-with-no-deal and you can also register for updates from HMRC at https://public.govdelivery.com/accounts/UKHMRCED/subscriber/new?preferences=true#tab1

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About the Author
Nicolas Groffman, Partner, Head of International Team
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