On 23 June, the nation will vote on whether the UK should exit the European Union. There has been a lengthy and emotional debate and there is certain to be more to come.
One thing that everyone agrees on is that an exit will bring about significant change to businesses large and small; particularly those who engage with members of the EU.
According to the latest ONS statistical bulletin, UK Labour Market 2016, the number of non-UK nationals from the EU working in the UK as of December 2015 was 2.04 million; 6.5% of the total working population. In addition, it’s estimated that there are 1.2million people employed on a temporary basis in the UK on any given day (REC Recruitment Industry Trends 2014/15), and non-UK nationals from UK are certain to make up a significant portion of these. Perhaps most interesting is data from the ONS Migration Statistics Quarterly Report published in February 2016, which states that, ‘Nearly half of the growth in employment over the last year was accounted for by foreign nationals.’
There are several reasons for this trend. According to the UK Labour Market 2016 report:
“The most commonly mentioned reason for employers was that migrants are available, with almost a fifth of employers (19%) identifying difficulty with ‘attracting UK-born applicants to fill unskilled or semi- skilled roles…Additionally, other popular reasons for employing EU migrants include better work ethic or motivation (18%), better job-specific, practical or technical knowledge (13%) and language skills (12%).’
Whilst the reasons for choosing non-UK workers are compelling to UK employers, preventing it is certainly a strong motivator for ‘Brexit’ supporters, keeping British jobs for British workers. According to an FT special report, UK’s EU Referendum, ‘Record levels of EU immigration to the UK are…a huge issue in the vote.’
However, there are almost certainly skill advantages and cost efficiencies those businesses gain by using workers from countries across the EU including Poland, Germany, Spain and France.
Skill shortages across broad industry types are widely reported. In response to the latest statistics from Migration Statistics Quarterly Report from the ONS reported by the CIPD, Gerwyn Davies, Labour Market Adviser for the CIPD has suggest that immigration is having a notable impact on the skills crisis. In particular, the value can be seen in the highly skilled workforce available to UK businesses that come to the UK with a definite job, both in terms of flexibility and up-skilling of the whole employee base.
Mr Davies comments:
“This shows that the majority of employers looking to address recruitment difficulties by recruiting migrant workers are also investing in up-skilling their existing workforce and providing more job opportunities for young people. This has helped reduce skill shortages and also contain wage inflation – two factors which have contributed positively to delaying any decision on raising UK interest rates.”
The UK Labour Market 2016 Report makes it clear there is a reliance on this labour source, particularly in the Public Sector:
“Currently, around two-fifths of employers post-2004 employ EU14 migrants (40%) and EU migrants from EU2 (Romania and Bulgaria) and EU8 countries (Poland, Lithuania, and so on) (45%). As in previous reports, almost a fifth (16%) of employers intend to recruit migrant workers in Q4 2015. Plans to hire migrant workers are higher in the public sector (22%) than in the private sector (15%) and voluntary sectors (6%).”
So what impact will a less fluid transfer of these skills have and how will British employers who rely on a supply of skilled and non-skilled workers who come, in part, from the EU manage such a significant potential change?
Based on Gerald Davies’s comments, it’s certain to compound the skills shortage crisis, but not only that, the tens of thousands of non-skilled jobs that these people fill will magnify the pressure on the UK workforce economy even further.
One key solution will be to invest in and boost local skills communities. Infinity CEO, David Thornhill believes that this should be a major focus if labour shortages are to be addressed immediately:
“We believe strongly that the estimated 10,000 plus SME Recruitment Businesses hold the key to a more diverse, high quality labour supply. By supporting these smaller, local consultancies to grow and flourish, Infinity is harnessing their market knowledge and insight into a local talent pool that is difficult for private businesses and local authorities to manage.”
Historically these SME businesses have been reluctant to supply through a managed service solution, however the Infinity Neutral Vendor approach has removed many of those barriers.
A fair and respectful approach, which has no affiliation with specific recruitment businesses and offers an attractive payment model, has meant that small, specialist recruitment businesses can reengage and reap the rewards of an alternative supply channel. Meanwhile employers can benefit from their ‘on the ground’ knowledge and candidate relationship management skills.
David Thornhill comments:
“It takes time and a specialist skill set to develop this depth of market knowledge and nurture a range of candidate relationships. In an economy which is seeing in-house recruiters and HR functions’ resources stretched more than ever, gleaning and maintaining this level of knowledge, in an environment which is constantly shifting, is extremely difficult.”
Contact Infinity to find out more about our fresh approach to skills sourcing and how it could benefit your temporary and contract worker recruitment needs.