Skill Shortages: How Much Blame Is Still on Brexit Three Years On?

The end of freedom of movement has been a huge concern for businesses since its initial proposal. Prior to 2020, numerous sectors comprised largely of EU workers, many in fact being dependent on them. As we enter an increasingly tight labour market, Brexit has definitely left an impact. However, nearly three years on, how much blame can we still place on the reform?

After COVID-19, the Great Resignation and increasing rates of early retirement, several factors are at play. Whilst lack of access to EU workers has undoubtedly left many sectors short, this may not be the case across the board.

Varying Opinions

The current state of skill shortages is nuanced, as are opinions on Brexit’s continuing influence. According to Huw Pill (Chief Economist for the Bank of England), it’s a definite contributor to skill shortages and a driving force behind the UK’s weak economic performance. No doubt, low-skill sectors would agree, having significantly lost large portions of their workforce to the new immigration points system.

According to Migration Observatory, however, the outlook isn’t quite so simple. Post-pandemic impacts and those opting for earlier retirement have contributed significantly, according to their report. They also point out that the UK isn’t the only country suffering from a tight labour market—other countries that have not undergone such drastic immigration reforms face similar struggles.

Industries Worst Hit

Industries like construction, hospitality, transportation, and warehousing, however, may have more of a reason to blame Brexit specifically. Whilst low volumes of UK school leavers/graduates are taking up careers in these fields, EU workers were previously an effective method of filling the gaps. However, with the new points system requiring a £20,480 per annum minimum salary threshold, these sectors are struggling.

According to research from CER, transportation and warehousing were worst hit by skill shortages last year, with an 8% drop in employment. This was followed by hospitality at 4% and construction at 2%.

In previous times of skill shortages, wages have seen significant increases. However, this is currently not the case, with many businesses still in financial recovery from COVID-19. Many are simply reducing output and, where possible, turning to automation.

Ending Low-Wage Immigration Routes   

Aside from the recent Seasonal Worker Visa, there are now very few ways to obtain low-wage workers from outside the UK. The government has explicitly stated that it “will not introduce a general low-skilled or temporary work route” and that “Employers will need to adjust”.

Sectors which have historically relied on low-wage visas are continuing to lose out on both workers and profit, and there have been calls for some flexibility to this. Madeleine Sumption, (director of the Migration Observatory at the University of Oxford), however, explains why this may be unlikely to change:

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.

This leaves many sectors and businesses with an uncertain future.

In Conclusion…

The extent of Brexit’s impact, nearly three years on, very much varies from industry to industry. However, when looking at the collective state of UK skill shortages, it’s more of a synergy of forces. Whilst some businesses are adapting, others will have lost out on a key source of their workforce, and future outlooks are yet to be seen.

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