The Migration Advisory Committee (MAC), in a report published 27 March 2018, has highlighted the growing concern among employers about the potential negative impact of restricting immigration in the UK, and the increasing difficulty in recruiting workers across a range of sectors.

Background

In June 2017, the Home Secretary commissioned the MAC to consult on the current and future patterns of EEA migration into the UK, and the impact of this on the economy, and more generally on society. The publication of this interim report is the first step in what will be a lengthy process of ensuring that our immigration system is fit for purpose post-Brexit. The final report, due in September 2018, will provide an evidence base for the design of a new immigration system to be implemented after the Brexit transition period in 2021.

The interim report provides an overview of the stakeholder engagement and written submissions that were received by the MAC as well as some data and economic analysis. The report summarises the 417 responses to the call for evidence published in July 2017 – a record number of responses to a MAC consultation, which is a very encouraging level of engagement from business and industry groups.

The most relevant points for employers in the UK are:

  • The evidence received by the MAC supports what we already know about the employment of EEA migrants in the UK labour market – "the vast majority of employers do not deliberately seek to fill vacancies with migrant workers. They employ EEA migrants when they are the best or, sometimes, the only available candidates".
  • Employers have disputed how jobs are labelled as highly-skilled or not. The UK immigration system has long had a narrow interpretation of "highly-skilled" as only those professional jobs which are typically performed by university graduates. Employers argue that if this interpretation of highly-skilled is applied to EEA nationals then many skilled workers needed in the UK would not qualify for a work permit.
  • The MAC disagrees with employers when it comes to the impact higher wages have on the ability to recruit and retain workers. Employers felt that the level of wages was irrelevant in this regard, with the MAC saying that an individual employer should always be able to fill a job if a sufficiently high wage is offered. This was, however, followed by a comment from the MAC that small margins and rising costs in other areas may mean that higher wages are unaffordable for employers.
  • Unsurprisingly, employers were not complimentary of the current Tier 2 system, saying it was "time consuming, costly and overly complex". Employers recruiting employees across the full spectrum of skill levels were concerned about the current system being extended to EEA nationals, with employers of lower-skilled workers being particularly concerned that the jobs they have on offer would not qualify under the current system.
  • In terms of alleviating skills shortages that create a reliance on EEA workers, a long-term option may be training more UK-born workers; however, the MAC acknowledged that this is not a problem that can be solved by individual employers, and that government support was required.
  • Another option being explored by the MAC to alleviate skills shortages is the extent to which investment and innovation could reduce reliance on EEA workers and raise productivity. While we all know that the robots are coming, the degree to which automation, artificial intelligence and robotics are likely to alleviate skill and labour shortages will vary sector by sector, and, again, they are likely to only be a long-term solution.
  • Many responses from employers argued that a more restrictive immigration policy would lead to large numbers of unfilled vacancies. However, the MAC's view is that this is likely to be a short-term issue, and that businesses need to prepare for a changing and tighter labour market in which they may be competing with each other for labour more intensively than in the past.
  • Uncertainty about the future – related to immigration and more widely – is, understandably, preventing employers from making adequate workforce contingency plans. While the current immigration system of free movement for EEA nationals and work permits for non-EEA nationals will continue throughout the Brexit transition period (ending 31 December 2020), businesses are eager to know what the future holds. Especially in the context of falling net migration from the EU and the need to plan contracts and staffing years in advance. There is a danger that if this uncertainty continues businesses will be forced to take drastic measures, such as relocating their operations.

Summary

The concluding comments from the MAC were:

"Why does business employ EEA migrants? The simple answer is because they are the best available candidates. Understandably, employers are unenthusiastic about the prospect of restrictions on the pool of possible workers."

This report is predominantly a consolidation of the written submissions received from employers during the consultation period and, as such, it is very much aligned to what we have been hearing from our clients. Unfortunately for employers we will only start to see glimpses of our future immigration system when the final MAC report is published in September 2018. This final report will form the evidence base for government to make decisions about what changes are needed to our immigration system so that it is fit for purpose post-Brexit.

While the future treatment of EEA nationals is uncertain, following the announcement from the EU and the UK last week (our summary is available here) we now have a degree of certainty as to the treatment of EEA nationals already living and working in the UK, and the length of the transition period. Employers should now start planning their own Brexit transition, with some key considerations from an immigration perspective being:

  • Have you identified your employees who are EEA nationals?
  • To what degree you will support your employees with the residence documentation application process?
  • How you will track and monitor which employees have applied and been granted one of the new residence documents?
  • How will you deal with questions from your employees about what type of residence documentation they should apply for?

To assist our clients and contacts in navigating the complexities of Brexit we have published a comprehensive guide: Immigration and Brexit: Guide for UK-based EU nationals. The guide includes information on how EEA nationals will be affected by Brexit and what can be done now in preparation.