What will Brexit mean for employers and migrant workers?

By Gerwyn Davies, CIPD Labour Market Adviser 

Following the UK’s referendum vote to leave the European Union, one of the most significant questions facing the HR profession is what will happen to immigration policy.

No change in the short-term

In the short-term, it must be emphasised, the status quo is maintained with EU nationals able to continue to come to the UK to live and work and vice versa. Also, it is likely that the status of EU workers that already live in the UK would be maintained, although some form of registration scheme could be anticipated once the negotiations are completed.

However, as Theresa May, the current Home Secretary and the bookmakers’ strong favourite — not that this is a failsafe guarantee — to become the next Prime Minister, has warned recently, there are no absolute guarantees. In a recent speech, she commented: “What's important is there will be a negotiation here as to how we deal with that issue of people who are already here and who have established life here and Brits who have established a life in other countries within the European Union. The position at the moment is as it has been, there's no change at the moment, but of course we have to factor that into negotiations.”

What next?
The first clear signal of where immigration policy may be heading in the medium-term will be known when the new Prime Minister and her new cabinet is formed. If, as seems likely, Theresa May becomes the next PM there may be less likelihood that an Australian-style, points-based system put forward by the Leave campaign ahead of the referendum is adopted.

This is because the Home Secretary is currently responsible for the points-based system for non-EU immigrants, which could offer an alternative model to the Leave campaign proposal if free movement of labour is to be curbed.

So, what are the options for a future system?

Expansion of the current points-based system to EU citizens
One of the attractions of adapting and expanding the current points-based system to include EU citizens is that it offers continuity, especially for employers that already use the system to recruit non-EU workers. It also provides an option for employers to recruit unskilled workers through what is known as the Tier 3 system. Tier 3 was set up in the original points-based system to allow employers to recruit unskilled non-EU migrants, but it has never been used due to the strong labour supply from EU countries.

However, the significant downside to the system is that employers would have to register as sponsors and pay various costs that will include a new immigration skills surcharge from April 2017. In addition, employers would have to demonstrate that they have tried various recruitment channels before they recruit EU migrants from overseas for many roles, making it much harder for employers — particularly SMEs — to recruit migrant workers and address recruitment difficulties and skills shortages.

CIPD research published in September 2014 highlighted the role EU migrants play in enabling organisations to find the skills they need to grow. It found that organisations which employ EU migrant workers are more likely to report that their business had been growing over the previous two years (51%) than organisations that didn’t employ migrant workers (39%). Employers in low-skilled sectors were particularly positive about the contribution EU migrants made to their organisations’ performance. It also showed that employers who employ migrant workers are also more likely to invest in training for the wider workforce and provide apprenticeships than employers that don’t recruit migrant workers. This strongly suggests that most employers who employ migrant workers are not doing this to cut costs on training and development, but as part of a broad approach to addressing recruitment difficulties and skills shortages.

An Australian-style points system
The main advantage of an Australian-style points system is that migrants do not require an employer offer to live and work in the country which would cut the amount of bureaucracy for employers. Under this system, prospective migrant workers have to lodge an Expression of Interest (EOI) through the Department of Immigration and Border Protect’s (DIBP) 'SkillSelect' system. Applicants must be aged under 50, have at least a competent level of English and plan to work in an occupation from the relevant skilled occupation list. They must also have obtained a sufficiently positive skills assessment for their nominated occupation.

However, the downside of the Australian system is that is it would not necessarily prevent skilled migrant workers that enter the country legitimately from taking up low or medium skilled jobs. This is because migrants do not require an employer offer to live and work. Quite how the Government could prevent UK employers from recruiting migrants with high educational attainment levels into low skilled jobs, as happens frequently at the moment, is not clear. The same CIPD study cited above found around three-fifths of EU migrant workers employed in low to medium skilled jobs were graduates.

Of course, there is no guarantee that during the course of negotiations over access to the Single Market the Government will not be prepared to give ground on its ambition to restrict freedom of movement for EU citizens, but at present, this seems unlikely.

What can employers do in the meantime?
Consequently, it makes sense for employers to redouble their efforts in building relationships with schools and colleges to help improve the employability skills and supply of local applicants and raise the aspirations of young people. The introduction of the National Living Wage and the Apprenticeship Levy from April 2017 are also reasons for organisations to review how they invest in their people to develop and utilise their skills more effectively. There is a strong body of evidence showing that investment in High Performance Working practices, for example in leadership and management development, apprenticeships and other training programmes, smart job design and flexible working, can help boost workplace efficiency and outcomes.

Some employers, especially those in low-skilled sectors, may argue that the opportunity for such productivity improvements are limited. However, all organisations can seek to embrace a learning culture, even if it is limited to simple tactics such as rotating job roles that can often generate new ideas and improve output.

Looking ahead, as more information becomes available on the likely direction of travel over immigration policy, the CIPD will be consulting with its members to ensure their views and insights are taken into account when discussions about the design of any new immigration system begin.

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