Once the UK leaves the European Union, some employers want a UK-wide immigration system based on national labour or skill shortage occupations in the likely event of migration restrictions

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The latest quarterly Labour Market Outlook from the CIPD and The Adecco Group has revealed that 41% of UK employers would prefer an immigration system that helps them tackle skills and labour shortages once migration restrictions are put in place. Just over 1 in 10 (13%) employers would prefer a sector-based policy and 5% would support a regional policy.

The report notes the main reason organisations choose to employ EU migrants is part of a wider effort to invest in skills and talent as well as finding the labour they require, unlike unsubstantiated reports of employers looking to cut costs or failing to invest in UK born workers. 18% of employers also cited a difficulty in finding local applicants to fill lower skilled roles as a reason for employing immigrants.

Gerwyn Davies, Senior Labour Market Adviser for the CIPD, the professional body for HR and people development, says “The Government’s continued rhetoric of an immigration system that only works to attract “’the brightest and the best’ simply doesn’t tally with what employers want or the economy needs. Employers have expressed concern over preferential arrangements being made for certain sectors and regions as well as the additional cost and complexity such a system would cause. A post-Brexit immigration system based on a national skills or labour shortage occupation list is the most straightforward scheme to implement and would avoid penalising employers who have no alternative to recruiting EU nationals for what are thought of as low-skilled roles.”

Organisations that already employ EU nationals are more likely to invest in training their worker (84%), as opposed to those who don’t (45%). The main driving force for this is to invest in skills and talent to reduce the skills shortage.

Regardless of what future migration restrictions may be imposed on EU workers, more than a quarter (27%) of employers stated they would continue to recruit EU nationals where possible, including almost a third (30%) of public sector organisations.

Davies continues “The data shows that it’s highly questionable whether future migration restrictions on EU nationals will act as a catalyst for improving skills investment in the UK. To kick-start greater investment in skills across the economy as the UK prepares to leave the EU, the Government should urgently review the Apprenticeship Levy and make it much more flexible to employers’ skills requirements.”

The survey data also indicates that the strong demand for labour has led to a tightening labour market and an increase in recruitment difficulties over the last year. Among employers who have vacancies, the share that report hard-to-fill vacancies has increased from 56% in Spring 2017 to almost two thirds (64%) in this latest report (Winter 2017). The challenge is being felt most acutely in healthcare where three-quarters (76%) of employers are reporting hard-to-fill vacancies.

Despite the tightening of the labour market, the survey suggests there is still only very limited pressure on employers to increase pay in the next year. The median basic pay increase expected over the twelve months to November 2018 is 2%.

Alex Fleming, President of General Staffing, The Adecco Group UK&I, adds “It is now clearer than ever that investment in staff is critical to business success, especially in this uncertain political climate with unknown and potential restrictions which may impose on the flow of EU talent that our economy depends on. Employers need to be on the front foot when it comes to solving the skills shortages in their businesses and not wait for the Government to produce and implement a system that may allow EU nationals of varying skill levels to work in the UK. Development strategies need to be created with the current workforce in mind.”

“Putting aside the uncertain political climate, it is always good practice for organisations to prioritise investment in talent development. Not only is talent development proven to aid retention, it also ensures that organisations have ready-made replacements of suitable cultural fit if it is unable or unwilling to match the market rate for a new candidate.”

The Labour Market Outlook also explores employers’ hiring and pay intentions. It suggests that employers demand for labour is likely to remain relatively strong in the near-term. This quarter’s net employment balance – which measures the difference between the proportion of employers who expect to increase staff levels and those who expect to decrease staff levels – has fallen to +16 from +18 in Autumn 2017, but this is still above the survey’s historical average.

The private sector’s employment confidence is much higher (+22) than the voluntary sector (+20) and the public sector (-7). The region with the highest employment confidence is in the North-West of England (+29) with the lowest being in Wales (+3). The manufacturing and services industries remain strongest in employment intentions at +20 which is broadly consistent with the most recent GDP figures.

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