Brexit widens UK skills gap


Uncertainty over the future status of EU nationals in the UK, and the possibility of the end of free movement of workers between the UK and EU countries post-Brexit is exacerbating more long-standing concerns about skills shortages in certain sectors of the UK economy.


A study by consultancy firm Deloitte, released in June, showed that over a third (36%) of non-British workers, and nearly half (47%) of highly-skilled workers from the EU were considering leaving the UK in the next five years.


The Office for National Statistics has reported a fall in net migration and increased numbers of EU nationals leaving the UK since last year’s referendum on exiting the EU. In the year to December 2016, overall net migration fell to 248,000 (down from 332,000 the previous year) with the number of EU nationals leaving increasing to 117,000. Overall, there are 3.4 million non-British workers in the UK. 


Unions have criticised the government for its negative rhetoric towards migrants and its refusal to give cast-iron commitments to EU nationals living and working in the UK that they can maintain their current status post-Brexit (see box), while not doing enough to ensure that British workers can meet the skills needs of the UK labour market. 


“For too long UK industry and governments have used immigration as an alternative to a domestic skills strategy without any real workforce planning,” Neil Foster, national research and policy officer for the GMB general union told Labour Research. “Now we are facing a lethal cocktail of a government that isn’t investing in people, uncertainty in the economy, the ageing of workers with specific skills, prolonged austerity and now a falling number of EU migrant workers,” he added. 


The Deloitte study assessed the views of over 1,000 non-British workers in the UK, with 48% saying that the country was now less attractive to live and work in. The shift in perception was highest among highly-skilled EU workers, with 65% describing the UK as less attractive since the Brexit vote.


When asked to identify two factors that would make the UK more attractive to them in the future, the most popular choices were reductions in the cost of living and “positive statements from the government that non-British workers remain welcome”.


Growing skills gap

Research findings from the Open University, published last month and based on a survey earlier this year of 400 businesses, highlighted the extent of the growing skills gap. This showed that 90% of employers have struggled to recruit workers with the right skills in the last 12 months.


According to the University’s Business Barometer, which monitors the skills landscape of the UK, those in work are reluctant to move jobs due to continued Brexit uncertainty, while at the same time “the lack of clarity about future immigration rules is putting off some EU nationals from taking up roles in the UK”.


Close to three in five employers surveyed (58%) said that the skills shortage has damaged their organisation. One in five said they were struggling to fill managerial roles, and close to half (47%) said that they were struggling to attract talent with the right IT skills. 


The Deloitte study referred to a number of sectors with high numbers of EU workers which were vulnerable should significant numbers decide to leave the UK. These include the accommodation and food services sector where 14.2% of the workforce are EU nationals, manufacturing (EU nationals represent 10.3% of the workforce) and transport and storage (13.5%). 


The TUC submission earlier this year to the inquiry by the House of Lords Select Committee on Economic Affairs on Brexit and the Labour Market referred to high numbers of migrant workers in professional jobs, particularly IT and health, and those not requiring formal qualifications such as jobs in processing and as machine operatives. 


It said that a reduction in migration to these sectors would “cause significant labour market shortages and an associated drop in economic output”.


At the end of last year, 30 food and drink industry bodies, covering supermarkets and suppliers, wrote to the government warning that EU workers provided “an essential reservoir of skilled, semi-skilled and unskilled labour” and that without them food prices would rise. Around 120,000 workers in the food processing sector — 30% — come from the rest of the EU.



And the National Farmers Union warned that current labour shortages will get even worse if future UK migration policy makes it harder for the sector to draw on EU workers. Around 85,000 EU workers are employed each year for the harvesting and fruit-picking season. 



Skills shortages had been identified in a number of sectors prior to the Brexit decision. A report published in May by the Recruitment and Employment Confederation, the umbrella body for employment and recruitment agencies in the UK, referred to increasing shortages in engineering, IT and computing and for nursing, medical and care staff. 


And according to the Science, Engineering and Manufacturing Technologies Alliance (SEMTA), the sector skills council for the engineering and advanced manufacturing sectors, 800,000 new engineers will be needed by 2020 on current trends. Engineering UK, which brings together a number of professional engineering bodies, estimates that the UK will need 182,000 new skilled engineers each year in order to close the growing skills gap. 


These figures were cited in the submission by the Unite general union to the government’s industrial strategy Green Paper in April. It also refers to a similar skills shortage in the transport sector, with a national truck driver shortage of 45,000, and with over 35,000 existing drivers due to retire in the next two years. 


The union says that the logistics industry is facing a long-term challenge to attract and recruit sufficient people to professional driving, with the skills shortage in the sector reaching “crisis point”. It says that road haulage is “an example of an industry which is failing to attract and keep workers because of low pay, terms and conditions”. 


Utilities


The GMB’s Neil Foster referred to potential labour shortages in the utilities sectors where the GMB has many members. He said that 37% of water and sewerage workers are aged over 50. 


“If action isn’t taken there won’t be enough skilled workers to keep the taps running, homes heated or the lights on,” he said. He also pointed out that one in 10 workers in these industries are non-UK citizens, and warned that “without certainty for EU-nationals or a plan for recruiting new entrants into the industry, the utilities face an employment crisis after Brexit”. And he referred to construction, manufacturing and public administration, where a third of workers are over 50 “but the investment to replace skills is lacking”. 


Construction

Unite has also called for urgent action to address skills shortages in the construction industry.


In March, the Royal Institute of Chartered Surveyors (RICS) warned that Brexit could make the skills shortage in the construction sector worse, with 8% (176,000) of the UK’s construction workforce coming from the EU. It said that unless the free movement of skilled labour from the EU was secured, “the UK’s predicted £500 billion infrastructure pipeline may be under threat”.


Unite assistant general secretary Gail Cartmail called for strict public procurement policies “forcing companies bidding for all public sector contracts to recruit and train high numbers of apprentices”. 


Last year the Construction Industry Training Board estimated that the industry needed 46,400 new entrants each year. This was almost twice the number of people undergoing construction training.


Apprenticeships and technical education

The government’s apprenticeship levy came into force in April, and looks likely to boost the number of employers offering apprenticeships. The levy of 0.5% on all employers with a payroll bill of over £3 million will generate an estimated £2.8 billion to fund apprenticeships. Iain Murray, senior policy officer at the TUC learning arm Unionlearn, told Labour Research that the TUC was broadly supportive of the government’s policy on the apprenticeship levy. 


“The TUC has long raised the issue of declining employer investment in training and apprenticeships and it is good that the government is addressing this,” Murray said. 


However, he added that there were still concerns about the high number of low-quality apprenticeships on offer, which would take time to address.


Unite said it is aware of many employers who use apprenticeships as a source of cheap labour and do not offer a guaranteed job at the end of the programme. 


The government has also adopted a new post-16 skills plan, based on the recommendations of a review of technical education chaired by Lord Sainsbury last year. At 16, students will be able to opt for either an academic or a technical pathway. The latter will involve 15 technical education pathways to new “T-levels”, replacing the 13,000 or so different technical courses and qualifications currently available. 


Again, the TUC is generally supportive. But more funds are needed to implement this, and it is concerned that improved technical education and apprenticeships will take years to feed through into the system. “A lot more attention needs to be paid to people currently already in the labour market who need to adapt their skills,” Murray said. 


This requires greater investment in the adult further education and skills budget (for those aged 19 and over and not in higher education), which was slashed by 41% between 2010 and 2016. 


The TUC has also pointed to the lack of a coherent institutional framework involving employers and unions working together to identify skills shortages. This sets the UK apart from other European countries, Murray said, where identification of skills gaps and other workforce challenges comes as part of sectoral collective bargaining processes. 


Trade union voice is also lacking in the new arrangements being established. The TUC has criticised the absence of union representation on the board of the Institute for Apprenticeships, launched by the government in April to oversee apprenticeship standards.