Planning for Brexit: Access to skills

16 March 2018

Talent is the lifeblood of business growth, but businesses aren’t getting the answers they need on future access to skills and labour

“If our competitors in Silicon Valley can have their pick of people from around the world, why do we think it’s a good thing for us to deny ourselves that same ability?”

It’s a question asked by Martin Frost, the chief executive of Cambridge Medical Robotics, a potential British success story of the future – and the kind technology-driven leadership the UK has its eye on.

The start-up is aiming to take on industry giants internationally with Versius, its new surgical robot. Based in Cambridge, it has a rich engineering talent pool to draw on – and Frost expects that to remain the case. But as the firm grows it has also started to source expertise from Europe. Its head of clinical affairs is from the Netherlands; its commercial director from Italy.

From the smallest company to the largest, access to skills and labour is the lifeblood of business growth. And continued uncertainty around EU immigration – combined with record employment levels – means that firms are increasingly finding that they can’t get the staff they need.

“For business, this issue is as important as our future trade deals with the EU,” CBI director-general Carolyn Fairbairn said in a speech to CBI members in the East of England. “Put simply, skills shortages threaten to slow down growth. Training British workers isn’t enough on its own. Nor is just hiring from overseas. Business needs both.

“From tech start-ups to care homes firms don’t know which staff they will be able to employ. And this is deterring investment today.”

Leaving the UK

Despite assurances over the rights of 3 million EU workers that live and work in the UK, nothing is yet written in stone – and it is as much about perceptions around being wanted, as it is about job security.

According to the latest immigration statistics, 130,000 EU nationals chose to leave in the year to September – the highest number since 2008 – while 47,000 fewer came to live in the UK than the previous year. And businesses have felt it.

At the end of last year, Sam Davidson, group HR director at Henderson Group (which owns the Spar retail franchise in Northern Ireland) told Business Voice: “We’re getting feedback from our suppliers that a lot of the European workforce that they had went home in the summer and they haven’t come back again.”

We're getting feedback from our suppliers that a lot of the European workforce went home in the summer and haven't come back

That’s particularly concerning when the NI Food and Drink Association (NIFDA) says that nearly half of their members’ full-time employees and more than 9 in every 10 of their seasonal contract agricultural workers are EU nationals.

The National Farmers’ Union puts the number even higher, estimating that 99 per cent of seasonal labour in UK agriculture is provided by EU workers. 

In her speech, Fairbairn pointed to the consequences of falling supply. She referred to G’s Fresh, a fruit and vegetable grower in Ely, which relies on fruit pickers, mainly from Eastern Europe. In the past year, the number of fruit pickers has fallen by 25 per cent. So many people have returned to their home countries that the firm has had to start importing some of its crop from overseas to meet its customers’ needs.

She also spoke of another local construction firm that was about to start work building a new factory for a chicken producer, but the project was cancelled because the client couldn’t get the staff to fillet their chickens.

Across the sector, 20 per cent of firms in Build UK’s State of Trade 2017 report claimed labour shortages resulted in the late completion of work and a third said that it had prevented them bidding for work. Two thirds of firms (67 per cent) also reported labour cost were higher than a year ago.

A border close to home

Back in Northern Ireland, it’s not just EU workers that have travelled across the Channel that businesses need worry about. In an increasingly interlinked “island of Ireland” economy, ready access to workers who live in the Republic of Ireland (ROI) is also under threat.

Airporter, a mini bus service connecting connecting Derry/Londonderry to Belfast’s airports, already faces a long-term shortage of bus drivers across the island. Roughly 25 per cent of its employees live in the ROI. And director Jennifer McKeever worries that the realities of workers having to travel across a border daily – on top of seeing real pay decrease with the weaker sterling – could make working in Northern Ireland far less attractive for those employees.

When the CBI’s latest education and skills survey revealed that Northern Ireland employers are already less confident of filling vacancies than their counterparts in the rest of the UK, many businesses will share McKeever’s fears. And as Northern Ireland is busy making its name in fintech, precision medicine and engineering, access to skills remains firms’ biggest challenge.

Tech talent

According to the European Start-up Monitor in 2015, a third of UK start-ups were founded by non-UK nationals and 51 per cent of UK start-up employees come from outside the UK. The tech sector is a case in point.

According to Tech City UK’s Tech Nation 2017, over 50 per cent of those surveyed highlighted a shortage of skills – and 25 per cent described sourcing talent as a major challenge. When the growth rate of digital jobs was more than double that of non-digital jobs between 2011 and 2015, the difficulties are only likely to increase. These companies can little afford to lose access to the 6 per cent of tech workers currently come from the EU (rising to 11 per cent in London).

If freedom of movement isn't as easy, you're automatically introducing restrictions on the ability of UK plc to be all it can be

“There just aren’t enough people in tech,” says Cormac Whelan, Nokia’s UK and Ireland chief executive, where more than 10 per cent of employees are currently EU nationals. “And when you go beyond that into specialisms like ours, there’s definitely not. Being able to move people is crucial.”

But Whelan is also concerned about the knock-on effect for the UK’s reputation and ability to attract employees from elsewhere if fewer restrictions on talent makes another country the “go-to place” for cutting edge innovation.

He uses the latest developments in mobile technology as an example as the government has declared its ambition to make the UK the 5G test bed centre for the world. “You can’t do that with just UK people. If freedom of movement isn’t as easy, you’re automatically introducing restrictions on the ability of UK plc to be all it can be.”

International reputation

That’s a familiar concern for the UK’s universities too, which are rightly proud of their international reputation for research. Nearly 34,000 academic staff currently come from other EU countries. And anecdotally, many universities talk of staff moving back to Europe – or of not taking jobs with them – because their offers can’t compete with the stability of alternative roles on the continent, particularly when access to future funding for research is also clouded by uncertainty.

A report from University College London’s Centre for Global Higher Education, published in February, saw European universities candid about Brexit presenting an opportunity to poach the best researchers from the UK. An anonymous university respondent in Ireland said applications from UK staff were already up, leading to “several recruitments”, while a Danish university said it was planning a recruitment tour of the UK.

The NHS crisis

But the impact Brexit is already having on recruitment, in roles where skills shortages are already acute, is perhaps made clearest by the situation in the NHS.

More than 60,000 EU citizens work in England’s NHS, which already has at least 40,000 too few nurses, according to Royal College of Nursing (RCN) estimates. Yet 10,000 EU nationals quit the NHS in the 12 months after the Brexit vote, according to official workforce figures.

If there is a Brexit cliff-edge in migration, it will be the NHS going over it

And, worryingly, a report by NHS Providers in November said there were “no domestic quick fixes” to the problem – something made even clearer by the fact that UCAS applications to study nursing were down 18 per cent in 2017.

In February, RCN Chief Executive Janet Davies said: “In some hospitals, one in five NHS workers have EU passports. If there is a Brexit cliff-edge in migration, it will be the NHS going over it."

There’s a knock-on effect here too, with many private healthcare businesses and care homes sourcing their nurses from the public sector. And many more firms could face a similar impact if the government simply replicates the current Tier 2 visa system for EU workers after Brexit – and NHS, care workers and teachers are included in the same monthly quotas as private sector applicants.

A two-way benefit

But it is important to remember that the free flow of movement also offers UK talent – and business leaders of the future – the chance to develop their careers within the EU.

Michael Lewis, CEO of E.ON UK, for example, moved from the UK to Germany to head up E.ON’s renewables business before coming back as UK CEO. “This was a great opportunity for me to develop personally, and to build new networks and new business relationships across the EU,” he says. “I want young people entering the workforce today to be able to benefit from the same opportunities.”

It’s clear that the UK must get better at developing its school-age homegrown talent too, but when businesses are already feeling the affects of Brexit on their recruitment efforts, they are now looking for urgent answers.

“The uncertainty about access to European workers and the delays to the immigration white paper have left business frustrated,” said CBI Director-General, Carolyn Fairbairn. “In conversations with firms in every region and nation, we’re hearing the same thing. We need clarity and certainty over migration. Now and in the future.”

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