March 4. 2024. 7:33

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Brexit: UK immigration system found to contribute to labour shortages

Two years in, the post-Brexit points-based immigration system is negatively affecting labour and skills shortages, with low-skilled EU-born workers hit hardest. Wage bargaining in impacted sectors remains at a standstill.

Reforming the UK’s immigration system to limit the flow of EU workers into the country was a central campaign promise of the pro-Brexit camp.

“At a time where an increased number of people across the UK are looking for work, the new points-based system will encourage employers to invest in the domestic UK workforce, rather than simply relying on labour from abroad,” former Home Secretary Priti Patel told the BBC back in 2020.

Yet, preliminary data is showing that this new immigration system, which was first implemented days after an EU-UK deal was found in late December 2020, is directly weighing on heavy labour shortages the country has been experiencing ever since the start of the Covid-19 pandemic, especially in low-skilled sectors.

13.3% of businesses surveyed in November 2022 said they experienced a shortage, according to a Parliamentary report. Proportions go up to 35.5% for Accommodation and food services, and 20.7% for Construction.

Skills through immigration: What is the EU doing?

While the industry is getting a thorough makeover through the green and digital transition, Europe’s population is getting older. Some of the skills needed to sustain the European economy will have to come through immigration from third countries, which the Commission is trying to facilitate with a number of proposals.

Meeting a campaign promise

In a nutshell, the new points-based system intends to make general access to the UK labour market harder for low-pay, low-skill EU nationals, by setting minimum salary and English-language level thresholds.

Having received a job offer from an approved sponsor, or holding a PhD, grants extra points to those seeking to enter the UK labour force. The proposed work being within the scope of a Shortage Occupation List, which includes social care and seasonal workers among other sectors, is extra credit too.

The labour market for low-skilled EU workers is “much tighter” now than before the Brexit deal was signed in December 2020, John Springford, Deputy Director of the Centre for European Reform (CER), told EURACTIV.

Springford co-authored a CER study, published in January, which found that Brexit had led to a loss of 460,000 EU workers compared to 2019, after taking the COVID-19 pandemic into account.

“The large shortfall of non-UK workers is mostly in sectors that disproportionately employ less-skilled workers”, the study reads.

As such, the study found that the actual number of EU nationals employed in the UK today is lower across the board (bar in education jobs) than what would have been the case if the post-Brexit immigration system had not seen light of day.

Non-EU immigration levels have softened the blow, with 130,000 extra workers compared to 2019 levels, especially in education and social work.

At the same time, initial data – which, to this day, remains scarce – does not show improvements in wage bargaining for the low-skilled domestic workforce.

“There was no evidence of widespread wage increases in low-wage industries that previously relied on EU workers,” the University of Oxford’s Migration Observatory found in August, adding that employers are more focused on either automation or cutting back on economic activity across the board.

EU-born ‘key workers’

This new system “effectively delivers on a campaign promise”, Springford said.

“It makes it harder for low-skilled EU workers, and relatively more liberal for the higher-skilled,” he said. Higher-skilled workers are more likely to have salary expectations that go beyond the minimum £25,600/year (€29,000) threshold. They will also have the necessary resources and time to navigate the requisite bureaucracy.

Paradoxically, the majority of the ‘key workers’ so celebrated during the UK’s COVID-19 response – with residents applauding from their houses each Thursday evening – come from the low-skilled EU labour force most affected by the raised thresholds.

The Migration Observatory estimated that two-thirds of UK-based ‘key workers’ born in the EU were in low-skilled occupations, a greater proportion than any other foreign-born, non-EU workers.

The Observatory warned at the time that “many of [EU-born ‘key workers’] would not have been admitted to the UK under the [new] immigration system”.

Labour shortages felt all over Europe

On top of rising costs, Europe’s companies are facing another worry – the lack of skilled workers – which is becoming more prominent than ever before.

Companies all over the continent lament their increasing inability to find workers in a historically …

What Europeans want

The European Commission’s latest Eurobarometer survey on Intra-EU Labour Mobility showed an overwhelming majority of EU workers claim “Brexit had no impact on their choice of the countries they would prefer to work”.

However, the survey found that willingness to move to the UK fell to 12% in 2022, in comparison to its all-time-high 16% mark in 2009. The trend is down in almost all member states.

Of note, 2% of EU workers who initially intended to move to the UK have given up on their plans altogether, choosing to stay in their home countries instead. A further 4% say they still intend to move countries, though the UK is no longer an option.

According to CER’s Springford, while the pattern of moving abroad for work is marginally down across the European continent, the UK is a strong outlier.

“When controlling for intra-EU work moves, we find that numbers are down 3% between Member States, and a stark 19% for EU-to-UK,” he said.

Spin it the other way, and you find that just over 9,000 work visas have been granted to UK citizens wanting to work in the EU, according to 2021 Eurostat data. Demand is highest for Spain (2,616), the Netherlands (1,416) and France (1,338).

Europe’s quest for skills

As Europe grapples with both skills and labour shortages, EU institutions and national governments are trying to find ways to fill the gaps in Europe’s labour market. This EURACTIV Special Report looks at Europe’s challenges in training, attracting and retaining …