Immigration: the future of British business shouldn’t be a cliff-hanger

Employers concerned that they will no longer be able to hire the skills and labour they need post-Brexit will have heaved a sigh of relief at today’s news that they will finally have a chance to have their say on future immigration policy. The Home Secretary announced the long-awaited consultation by the Migration Advisory Committee (MAC) and set out the Government’s priorities. Among much recent talk of cliff edges, it is not surprising to find that cliffs get a mention here too.

Employers have felt in the dark ever since the Leave result became apparent in the early hours of June 24th last year. But what will employers be asking for? Our recent research with the CIPD, involving a survey of 1000 employers and a series of interviews and focus groups sheds some light. Here are their priorities.

First priority: clarity over existing EU workers

Some employers have already experienced in fall in applicants and an increase in departures which they say is encouraged in part by the fall in the value of sterling. But uncertainty over future rights is also a factor and the Home Secretary’s letter does appear to set out a process, which includes a period of ‘grace’ for EU citizens to obtain documentation. Cliff edges aside, this process needs to be simple and straightforward in order not to deter existing or future EU citizens from working in the UK.

Second priority: policies that work for low skills and no skills

The Government has fairly consistently supported high skilled migration but only more recently appeared to recognise that migration is also needed in low skilled industries and jobs. The Industrial Strategy Green paper states ‘Our failure to address skills shortages has increased our reliance on flows of migrant labour’. Yet, while migrants are found in highly skilled jobs, the low skilled sectors, for example those associated with the food and hospitality industries, are among those most heavily reliant on migrants:  35% in food processing and 28% in hospitality. Whether employers have, as the Green Paper argues, used migrants as a substitute for training is questionable but future immigration policy cannot ignore the need for low skilled labour.

The Home Secretary’s letter suggests that while free movement will end with Britain leaving the EU, there is now an opportunity to discuss what restrictions might be put in place that do not damage UK businesses and services. There’s a wide range of options which employers would find workable, including ‘trusted sponsor status’ and even shortage occupation lists and Resident Labour Market Tests. Employers in our research thought they could live with these arrangements, if they were sufficiently flexible and responsive to their needs. This is particularly important in sectors which have long struggled to attract British workers.

Third priority: no complexity, confusion and cost

A new immigration system, even if it ends up being quite flexible, will not be policed at the UK border but in the workplace. Processes must therefore be as simple as possible to avoid inflicting heavy costs in applications, checks and mistakes. Complex rules and procedures won’t deter employers from recruiting EU migrants where they have little choice. They will simply add costs to businesses, services and ultimately the public in what is clearly a challenging economic environment as Britain leaves the EU.

Will a transition period avoid the cliff edge?

A transitional period, as proposed in the Home Secretary’s letter will certainly be welcomed by employers. However, it is unlikely that employers in sectors which rely on EU migrants will replace them with British workers however long they are given. A brief look at the history of sectors such as agriculture, hospitality and food and drink shows this. Our young people aspire to work as TV presenters, IT consultants and, thankfully, teachers, but not as fish gutters and fruit pickers. Unemployment hasn’t been so low since those far off days when Harold Wilson and Edward Heath were in Theresa May’s shoes.

The long-held – and broken – policy of reducing net migration to the tens of thousands doesn’t get a mention in the Home Secretary’s letter. But Immigration Minister Brandon Lewis today reiterated his party’s commitment to this as a ‘long term aim’. The problem is that this target can really only be achieved through substantial reductions in migration from the EU.  This represents the real cliff edge and one which risks throwing businesses and services which depend on migrants on to the rocks

NIESR – with its wealth of research on all aspects of Brexit ad migration – also welcomes the opportunity to submit its own evidence during the consultation. The issue of immigration is too often discussed through the prism of personal perspective but with so much at stake we cannot afford to ignore the evidence.