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Brexit — why employers may be struggling in the labour market

Almost 70% of the attendees who took part in a poll at a recent CIPD webinar, where we presented, said that they felt Brexit was having a negative impact on businesses.

This was largely due to recruitment challenges given the previous reliance on EU nationals, not least because of the former freedom of movement for workers.

Our audience represented a wide range of businesses, so the result was particularly striking. Although staff shortages affect many different sectors it is not surprising that traditionally lower wage businesses and/or work involving “unsociable hours” are in particular facing a considerable employment gap. The hospitality sector is a well-known example.

The background

Why is that?

There are significant administrative and financial considerations when businesses employ workers from outwith the UK.Those looking to work here from outside the UK generally need a skilled worker visa, which requires sponsorship. For a business to do this, it needs to obtain a sponsor licence, the cost of which can run into hundreds of pounds.Workers must also meet the skill and salary levels set by the Home Office, in-line with the new points-based system.

The general minimum salary threshold is £25,600 per year (or £10.10 per hour, or the “going rate”) and the minimum qualification level is RQF3: equivalent to Scottish Highers.

Those who do not quite meet the salary requirements (and who do not work in healthcare or education where the going rate is based on national pay scales) may still meet the salary threshhold under certain circumstances, for example, if the job is on the “shortage occupation list”.

However, this is a considerable barrier for the likes of the hospitality sector, due to the significant number of what are designated as “low-skilled” roles.

Plus, applicants must also be offered a full-time position within the UK, which for businesses relying on a more fluid workforce, including zero-hours contracts, complicates things further.

The solution?

Of course, there’s a wider discussion here around longer-term changes, such as increased wages and career pathways.

Meanwhile, there are some short-term solutions for organisations, including the Youth Mobility Scheme.

This is available to those from certain countries between 18 and 30-years-old. It allows people to live and work in the UK for up to two years.

EU nationals aren’t currently included, but this may be subject to change.

There's also the Graduate Visa Scheme. This was launched in July 2021 and is aimed at international graduates who have successfully completed a course in the UK.

It’s also important those facing difficulties recruiting workers highlight this to the Migration Advisory Committee (MAC) and their industry bodies. MAC can then make recommendations to the government, with roles facing shortages potentially added to the shortage occupation list.

Jobs placed on this list will not have to meet salary requirements to be approved for a visa.

It’s an evolving situation too.

Recently, there’s been much in the media around supermarket and fuel shortages. In response, the government announced its plans to provide more support. So far this includes introducing a new temporary “emergency visa” for thousands of HGV drivers and poultry workers.

As it is increasingly an employees’ market when it comes to recruitment, we all must consider how to make our businesses attractive for potential recruits. The recent widespread embracing of hybrid and flexible working is an example.

It is going to be challenging time for employers for the foreseeable future. However, it will be fascinating to see how both short and long-term solutions can potentially help business not only survive but thrive.

Alanah Mills

Solicitor Alanah Mills provides employment law, human resources and data protection advice to a wide range of our commercial clients.

Posted, 29 September 2021 by Alanah Mills
Categories: Corporate | Employment | Insights