Brexit exacerbated labour shortages in the UK, but is not the only cause
The end of free movement has exacerbated recruitment issues faced by UK employers, a major new report from ReWAGE and the Migration Observatory at Oxford University has shown. However, Brexit is by no means the only reason for the shortages, and the pandemic, international sector-specific labour shortages, and an increase in early retirement have been more important factors.
The report highlights that employers have faced recruiting difficulties and high vacancy rates in many different occupations across the economy, including in industries that relied heavily on EU workers such as hospitality and transport and storage.
ReWAGE expert and report co-author, Professor Chris Forde of Leeds University, said: “The reasons for the current UK labour shortages are complex. While there is some evidence that the end of free movement has contributed to shortages in some areas of the UK labour market, it is by no means the only driver. In fact, recruiting difficulties are not unique to the UK and several other countries have experienced high vacancy rates post-pandemic.”
Early evidence suggest that some employers who used to rely on EU workers and are now ineligible to recruit from overseas are starting to adjust—for example, by reducing their need for workers by turning to automation or simply producing less. Some employers have also improved pay packages, but at least so far there is no evidence that the end of free movement has increased wages across the board. Employers in some industries, such as agriculture, have been able to switch from EU to non-EU workers after the end of free movement. But in most low-wage industries, the immigration system does not permit them to do this.
Some shortages are transient and resolve of their own accord over time, although the process of ‘adjustment’ may be disruptive for employers who cannot reduce their labour needs through alternatives, such as automation. This has led to calls for work visas schemes to mitigate the impacts for employers.
Madeleine Sumption, Director of the Migration Observatory at the University of Oxford, said: “While it is clear that ending free movement has made it harder for employers in low-wage industries to recruit staff, changing immigration policy to address shortages brings its own set of challenges. Low-wage work visa schemes are notoriously difficult to police and often open workers up to exploitation and abuse. It’s also surprisingly difficult to measure shortages and work out how to target immigration policy towards them.”
The report examines the options available to policymakers who want to adjust immigration policy to help address labour shortages, including making employers eligible to sponsor workers in more low-wage jobs, reducing the costs and bureaucracy employers face, and expanding the Youth Mobility Scheme.
Sumption added: “Immigration policy is a bit of blunt instrument when it comes to labour shortages and there’s a real trade-off between responding quickly and being evidence based. If the government wants a system that is evidence based, it can’t be expected to respond at short notice to the latest crisis—whether the problem is airports, lorry drivers, the pork industry, or something else.”
Many other policy areas affect supply and demand for workers, including tax and benefits, minimum wages, education and training, and decisions about public services such as health and social care that rely on migrant workers.
The paper was written on behalf of ReWAGE by Madeleine Sumption (Migration Observatory), Professor Chris Forde (Leeds University), Dr Gabriella Alberti (Leeds University Business School) and Dr Peter Walsh (Migration Observatory).
Research for this project was produced with the support of Trust for London, the NHS Confederation and Research England’s PSF allocation to the University of Oxford.