Interim Update: Migration Advisory Committee Report

On 27 March 2018, the Migration Advisory Committee (MAC) published an interim report into the economic impact of EEA migration on the UK labour market.

It will be the autumn at the earliest when the MAC publishes its full research piece and resulting recommendations as to how the UK’s immigration system should be designed following the end of the implementation period in 2021.

While the extent to which these interim findings are indicative of the full and final version remains to be seen,  this instalment carries a number of interesting points of note in respect of EU workers from the perspective of UK employers:

EU migration has brought valued and valuable benefits to the UK

What is clear from the report is that EU workers are highly valued by UK employers – across all skills levels.

Responses from UK employers showed a general consensus that EU migration has had a positive impact for the UK economy, being credited for contributions by way of job creation, enabling economic growth and contributing to public services funding.

The report also, interestingly, raised a clear message from UK employers that EU workers are employed where they are the strongest candidate, as opposed to being ‘sought out’. A number of generalisations are highlighted which suggest why EEA nationals often make the better candidates in employers’ eyes:

  • Shortage of resident applicants with requisite skills
  • Migrant workers can be more reliable, motivated and productive
  • Migrants are more willing than UK workers to take on roles in difficult conditions
  • Lower levels of unemployment affecting the supply of UK-born workers

Employers are worried about future restricted access to EEA workers 

Across all UK sectors, employers have raised clear concerns about the introduction of any future restrictions on EEA migration and the impact this will have in limiting access to skills and labour.  

UK employers have significantly increased employment of EEA workers since 2004 when new Member States joined the EU. EU workers play a vital role in plugging skills gaps and labour shortages in the resident labour market. This applies across all skill levels.

However -the majority of inward migration to the UK has since comprised low-skilled labour. Prior to 2004, the majority was highly-skilled labour.

The report notes that employers in sectors such as agriculture, leisure, construction, retail have expressed concern there is little alternative to migrant labour for lower skilled roles. This is further exacerbated by employment levels sitting at the highest level in years, resulting in a reduced supply of resident labour.

Businesses also cited a number of general issues with resident workers as to why they have become heavily reliant on EU workers, including the unwillingness of domestic workers to work unsociable hours or refusal to take on low-skilled jobs, and a general difference in work ethic.

A post-Brexit immigration regime 

It appears the underlying concern is that while employers recognise freedom of movement will end – in its current form at least – restricted access to EU workers will, in employers’ opinions, hamper businesses’ ability to meet their recruitment needs and growth ambitions.

Since the referendum vote, UK business has experienced difficulties recruiting and retaining migrant workers, arguably attributable to the fall in the pound making Britain a less attractive destination.

As the report notes, firms are concerned that applying non-EU immigration rules, largely skills-based as per the Points Based System (PBS), to EU citizens would be disastrous for the economy.

Extending the PBS to EEA nationals would see lower-skilled workers unable to secure permission to work in the UK. Smaller employers would be hit hardest.

At the other end of the spectrum, where skilled EU workers would theoretically meet the PBS requirements, concerns are that the PBS is in its current form unfit for purpose and in need of reform, and that such workers may choose other destinations than the UK as more attractive destinations.

The call from UK business is that new immigration rules would need to align to staffing needs across industries. The assertion is clear that there are roles which cannot be filled by the resident UK workforce.

As such, some form of low-skilled route for EU migrant workers in the UK will be critical to the economy in the medium to long term.

This could mean reform of the current PBS to better meet the actual needs of UK employers.

Beyond the PBS, other schemes may also be resurrected or adapted for this new era. The current Youth Mobility Scheme for example may well work if extended to include EU nationals, and the now-defunct Seasonal Agricultural Workers Scheme could ease the pressure on the agricultural sector.

In general – there is a consensus that the continued and successful future functioning of the UK economy will depend on access to migrants under any new regime.

Indication for the Final MAC Report?

The MAC is unconvinced of any detrimental economic impact of a more restrictive immigration policy for EU workers, at least in the long term.

The MAC make clear they believe that employers should be doing more to prepare for change:

“If it was harder to employ EEA migrants, employers might use a variety of strategies to deal with this. Many submissions indicated that, in their view, there were no alternatives to EEA migrant labour in which case businesses might grow more slowly, contract or even disappear. Many employers do not seem well-prepared for a changing labour market in which they will be competing more intensively with each other for labour.”

A labour shortage occupation list has been mooted, requiring employers to evidence they are taking steps to  improve the supply of resident labour while demonstrating that the occupation has a genuine labour or skill shortage.

Placing greater onus and accountability on employers is likely to be a direction the MAC will explore further as part of its commission. Employers gain the benefit of continued access where genuine skills shortages exist, but this comes at a price of ensuring controlled recruitment of migrant workers.

The final report, expected to be published this autumn, will go beyond the perspective of employers and look at the broader impact of EEA migration on the UK.

View the full report here: report