But the impact of friction in migration is going to be felt much wider than that. “We work with a number of companies that say they’re already struggling on labour and talent availability,” says Phil Shaw, Investec’s chief economist. “And that suggests, among other things, that there is a genuine danger in production drifting overseas."
‘For a while, there was a lot of apprehension, even fear about Brexit deadlines. Now, it’s mostly boredom – and people just want to know when something’s actually happening.’Government assurances about the rights of existing EU workers and a relatively straightforward registration scheme have gone some way towards shoring up the existing EU skills base. And the numbers of overseas workers in the UK right now is holding up.
With the deadline for a deal or hard Brexit extended to the end of October – after nearly three years of speculation about workers’ rights – the sentiment is now less about facts or paperwork. “It seems that there is a lethargy; people are bored of Brexit,” says Melanie Punch, Head of UK Careers at Investec. “My impression is that for a while, there was a lot of apprehension, even fear about deadlines. Now, it’s mostly boredom – and people just want to know when something’s actually happening.
What will change as Brexit day approaches?
“We also move people within Investec on an Intra-company Transfer Visa – a five-year arrangement,” she adds. “But most people don’t want to do that, they want a more committed option.”
“We are speaking to people about their own circumstances,” says Punch. “But the shifting situation doesn’t help. We set up a meeting with our external advisers recently for an update, but they recommended we wait because they wanted more clarity on how things were developing.”
(The adviser's own factsheet on the situation post-Brexit is telling – featuring some alarming “unknowns” that even the government cannot resolve as we write.)
When you’re talking to people running companies, you start to see the real complexities they’re facing ... it’s a reminder that business should be lobbying very hard on their own issues to ensure they’re reflected in any outcomes being considered.
Phil Shaw, Investec chief economist
What are the known-knowns?
There will also be new transitional option until at least 2025 where workers from ‘low-risk’ nationalities can work in the UK at all skill levels for one year. (According to Emma Carmel of the Department for Social and Policy Sciences at the University of Bath, “‘Risk’ can be defined in many ways and give governments wide powers to select which countries the skilled migrants may come from.” Right now, the whole EU is ‘low risk’. But this might change.)
For many businesses, there is one other ‘known known’: ensuring the organisation itself offers a welcoming culture for EU and other overseas nationals. But the future relationship with the EU – which might also see special arrangements to help businesses hire more flexibly – is all-important, and that does remain a ‘known unknown’.
“When you’re talking to people running companies, you start to see the real complexities they’re facing,” says Shaw. “And it’s a reminder that business should be lobbying very hard on their own issues to ensure they’re reflected in any outcomes being considered.”
The number of Eastern European-born workers actually rose from around 1.2 million at the start of 2016, peaking at 1.4 million in the middle of 2017 before settling.
What has Brexit already done to the labour market?
Data from ONS shows that while the origin of Europeans working in the UK has shifted a little post-referendum, a significant element of the change – fewer Polish workers – is probably as much to do with the robustness of Poland’s economy and the poor performance of sterling against the zloty, as it is Brexit.
“The relative ease with which you can get into a country is just one factor that encourages migration,” says Shaw. “Another is income levels. And if your base currency is zloty or crown, the level of the sterling exchange rate matters a lot.
EU and non-EU nationals working in the UK
And while the UK’s attractiveness is declining for the lowest-skilled roles, it continues to be a desirable destination for EU nationals looking for higher-skilled jobs. The big questions are what mechanisms come into play to facilitate that desire after the UK leaves; how many higher-skilled roles are available if businesses rebalance operations; and whether the economy and currency keep the UK a sought-after destination for work.
Where is the labour pain being felt?
Sounds good. But he has a caveat. “I was speaking with a logistics company recently that ships good for a large domestic retailer. They said they just couldn’t get the drivers from the UK. And absent fully autonomous vehicles – which are years away – the idea of becoming more capital intensive to offset that problem just doesn’t come into play.”
Top seven industries reliant on EEA workers
What are the alternatives to scarce talent?
“One option for companies finding talent more expensive or hard to find is to become more capital intensive – through investments in automation, for example,” says Shaw. “This would have a positive influence on productivity growth over the medium term.” UK productivity growth has been poor compared to most economies over the past decade, and as a slew of new automation technologies find applications, capital investment could deliver a double bonus: a stronger economy and less reliance on hard-to-find talent.
The other option is to up-skill existing human resources. According to the CIPD’s survey almost a year ago, 52% of private sector organisations said they were “only just planning to up-skill their existing workforce to address the potential skills shortage”. With many organisations hesitant to spend money while the potential fall-out from Brexit in other areas remains unclear, that low number is perhaps understandable.
But Investec is not alone in exploring other avenues. “If there is less talent out there to attract, we have to think about different ways to build it,” says Melanie Punch. “We need to think about apprenticeships and continuing to focus on growing our internal talent, for example."
“But our approach to recruitment is already centred on getting to know a person in the round, not just ticking boxes to drop them into a ready-made role. Our job descriptions are designed to allow people to build their own roles. And that means we have a more flexible approach to the talent pool than maybe other organisations that are more rigid in their requirements.”
In other words, it’s less about specific competencies, and more about cultural fit, the right attitude, ‘learnability’ and the basics of the skills for the role. “My team are also keen to attract people who aren’t looking,” Punch adds, “to find talent that’s passive in the market. We feel we have a great story to sell Investec.”