Migration Advisory Committee s call for evidence on EEA workers in the UK labour market: Fragomen s response
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1 Migration Advisory Committee s call for evidence on EEA workers in the UK labour market: Fragomen s response 1 Migration Advisory Committee s call for evidence on EEA workers in the UK labour market: Fragomen s response
2 The Migration Advisory Committee (MAC) has been asked to review the UK labour market and EEA migration, ahead of Brexit. This paper contains the views of Fragomen s clients. 2 Migration Advisory Committee s call for evidence on EEA workers in the UK labour market: Fragomen s response
3 Table of contents Foreword Brexit: A lot will happen in the next 18 months The Respondents Europeans fill important role in sales jobs Engineers are in shortage The end of free movement is a concern for employers Technical, practical and language skills make a huge difference Europeans are disproportionately over-educated for their roles Recruitment practices do not tend to vary between UK and European nationals Atypical workers Brexit is making it harder to recruit and retain European nationals Most companies are developing contingency plans, ready for the end of free movement Two thirds of employers think they would not be as big without free movement Education below degree level could be better What would you need to change in the labour system to reduce your need for European employees? European migration has increased learning opportunities for UK nationals Immigration systems Other useful documents Migration Advisory Committee s call for evidence on EEA workers in the UK labour market: Fragomen s response
4 Foreword We are submitting this paper in response to the Migration Advisory Committee s (MAC) call for evidence: EEA-workers in the UK labour market. The MAC has been asked to consider the contribution of European workers to the UK labour market. The review will inform the UK Government s new immigration policy, to replace the free movement rights of European nationals which are expected to end after Brexit. The call for evidence focuses this extensive brief. Broadly speaking the MAC is interested in The jobs undertaken by European workers and why they are recruited alongside, in place of or in the absence of UK workers The profile of European workers, including how skilled they are, where they are recruited from and the terms of their employment Whether the spectre of Brexit is already affecting the recruitment and retention of European workers The relationship between European workers, the skills system and opportunities for UK workers How employers will respond to an end to free movement This response is submitted on behalf of clients of Fragomen LLP. We are the largest immigration law firm in the world and help businesses of all sizes make sense of immigration procedures in over 170 countries, including over 65% of Fortune 100 companies. Our paper is largely drawn from responses to a survey of Fragomen s clients. We had 75 respondents, of which most people answered every question, from companies in 27 sectors. We have supplemented this data with our reflections from a large number of meetings and round tables, including focus groups in Cardiff, Glasgow, Manchester, Warrington and London. We are grateful to the MAC for meeting Fragomen and listening to the business view during this consultation period. We are also pleased that the MAC was able to meet members of Fragomen s Strategic Migration Forum, a group of 47 of the UK s largest business bodies, think tanks and civil society groups which we have brought together to share views and leanings. The depth and breadth of the Forum is unique in UK immigration policy and means the collective and shared views of business are available to policy makers. Our submission reinforces many of the findings already available in social and economic literature published on immigration. We recognise many of the trends identified in our work with the Chartered Institute of Personnel Development and the Recruitment and Enforcement Confederation. Links to both reports are included on page 23. Key findings include: 1. Language skills are very important. This correlates with anecdotal evidence from our business meetings - if you are working with companies in Germany, you need a native German speaker. 2. European workers fill important sales and account management jobs and, again, language skills are crucial for those posts. 3. European workers are more likely to be over educated for their roles than their UK colleagues. This tallies with findings in a variety of academic papers. 4. Employers are finding it harder to recruit and retain European workers. Two issues tended to be raised when this was discussed in focus groups - Brexit and the value of the pound. 5. European workers have not undermined training opportunities that employers make available to UK nationals and in a lot of instances they have increased them. 6. A welcome proportion of employers will increase their efforts to recruit UK workers when free movement ends, including by targeting harder to reach groups but an alarming proportion think that work will need to be sent overseas. 4 Migration Advisory Committee s call for evidence on EEA workers in the UK labour market: Fragomen s response
5 Foreword (cont.) Respondents also expressed concern about plans for a new immigration system, leaked earlier this year. Ultimately it remains to be seen how that policy will pan out, but the view of business has been clear in our survey and meetings. Removing free movement will inevitably make it harder for employers to source skills and labour. Any new policy needs to be flexible and meet the needs of business, otherwise jobs may need to be filled elsewhere in the world. Our response also includes two practical resources. A lot needs to happen over the next few years, so we have included a timeline on page six. We have been very busy since Brexit, producing a range of guides and contributing to or drafting policy papers on immigration, messaging and the labour market. Page 23 includes links. We hope that the response is useful and would be very happy to discuss our findings. We would also be happy to discuss whether any excerpt of our report could usefully be quoted in your final report to government. Caron Pope Managing Partner London cpope@fragomen.com 5 Migration Advisory Committee s call for evidence on EEA workers in the UK labour market: Fragomen s response
6 Brexit: A lot will happen in the next 18 months Referendum on membership of the EU takes place in the UK JUN MAR 2017 Article 50 of Lisbon Treaty triggered, starting the 2 year negotiating period PHASE 1 UK publishes immigration proposal on safeguarding the position of European citizens living in the UK and UK nationals living in the EEA MAC Call for Evidence *Interim reports could be published by the MAC* JUN AUG JUL 2017 Home Secretary commissions the Migration Advisory Committee (MAC) to report on the impact on the UK s labour market of the exit from the European Union (EU) and how the UK s immigration system should be aligned with a modern industrial strategy OCT Closing date to respond to the MAC I. Home Office begins to accept settled status applications II. MAC expected to publish final report SEP 2018 PHASE 2 I. A temporary immigration system for new European entrants is expected. II. A 2 year grace period for European citizens already in the UK to apply for settled status or a residence document 29 MAR 2019 MAR MAR UK is expected to exit the EU A new permanent immigration system expected covering migration of European citizens, designed according to economic and social needs and reflecting the future partnership with the EEA PHASE 3 6 Migration Advisory Committee s call for evidence on EEA workers in the UK labour market: Fragomen s response
7 The Respondents Fragomen works with a broad spectrum of employers ranging from the smallest start ups to the largest global corporations. We had 75 respondents from 27 sectors, in response to our survey about the MAC s call for evidence. Sectors MANUFACTURING Information Technology, Financial Services and Manufacturing were amongst the most responsive industries. This mirrors the trend from our Brexit Benchmarking report published in September 2016, indicating that these sectors are particularly alive to the impact of Brexit on their operations in the UK and the EU. 40% One quarter of respondents could be classed as small companies, based on number of employees in the UK. 24% 22.67% 8% 5.33% Key of number of employees in the UK Less than ,000 1,001-10K 10,001-50K 7 Migration Advisory Committee s call for evidence on EEA workers in the UK labour market: Fragomen s response
8 Europeans fill important role in sales jobs We asked employers which three roles performed by Europeans are most important to their organisation: Engineers, researchers and software professionals were unsurprisingly prevalent. Interestingly, those companies that indicated that important sales roles were occupied by Europeans also indicated that they mainly recruited Europeans for their language skills. 8 Migration Advisory Committee s call for evidence on EEA workers in the UK labour market: Fragomen s response
9 Engineers are in shortage We asked employers which three roles in their organisation would they find most difficult to fill without Europeans: Again, the prominence of engineers comes as no surprise. As recently as July 2017, Engineering UK reported that the UK s engineering sector already faces a serious skills shortage that Brexit could exacerbate. Skill shortages in engineering are well understood and reflected in the UK s shortage occupation list. 9 Migration Advisory Committee s call for evidence on EEA workers in the UK labour market: Fragomen s response
10 The end of free movement is a concern for employers We asked employers how significant a consideration immigration and access to talent is for their Human Resource function when preparing for Brexit as a whole: 70.67% 25.33% 4% A major consideration A consideration, but of less concern than the other implications of Brexit It is not a concern for my Human Resources function Over 70% of employees perceive immigration and access to talent as a major consideration in the preparation for Brexit. The UK Government will need to work to reassure them that sensible processes will be put in place to maintain the required talent pipeline in the absence of free movement. 10 Migration Advisory Committee s call for evidence on EEA workers in the UK labour market: Fragomen s response
11 Technical, practical and language skills make a huge difference We asked employers why they recruit Europeans: Better job specific, technical or practical knowledge 55.56% Language skills 51.11% Difficulty attracting UK nationals to fill skilled roles 48.89% Commitment to values / behaviours 17.78% Better qualifications 15.56% IT skills 13.33% Difficulty attracting UK nationals to fill unskilled roles 8.89% Better work ethic/ motivation 6.67% More work experience 4.44% Lower labour turnover 2.22% Better basic skills (literacy and numeracy) 2.22% Better generic or soft skills 2.22% Unsuprisingly, skills motivated employers to recruit Europeans and language abilities are very important. The UK Government will have to work with businesses and representative groups to strategise on how to fill these significant gaps with local and overseas workers. Letting jobs go unfilled won t help anyone. Ultimately, if a role requires a native German speaker, it will almost always need a German national to take it. 11 Migration Advisory Committee s call for evidence on EEA workers in the UK labour market: Fragomen s response
12 Europeans are disproportionately over-educated for their roles The MAC is interested in the skill level of European workers. We asked employers if their workers are typically: UK Workers European Workers Non-European workers Over-educated to the level of the role 18.18% Yes, No 40.63% Yes, 59.38% No 28.13% Yes, 71.88% No Under-educated to the level of the role and will be given training (e.g. apprentices) 18.75% Yes, No 16.13% Yes, 83.87% No 6.45% Yes, 93.55% No It is not unusual for workers to be overeducated for their roles, though that trend is more than twice as common amongst Europeans. UK nationals are marginally more likely to be undereducated for their role and require training on the job than European nationals. It is far less likely that a non-european national would be under-educated. Arguably, this is to be expected given that the work immigration system is calibrated to graduate level roles. Tier 2 policy assures that sponsored workers will be able to hit the ground running, not least because of the high salaries required for their roles (though exceptions apply for graduate salaries). 12 Migration Advisory Committee s call for evidence on EEA workers in the UK labour market: Fragomen s response
13 Recruitment practices do not tend to vary between UK and European nationals Do you employ a different method when recruiting European nationals? Yes 7.14% No 92.86% The MAC is interested in UK businesses recruitment practices, specifically in reference to European nationals. We found that businesses use a range of methods to recruit for skilled roles, specifically internal websites, employee referrals and recruitment agencies. These methods do not vary a great deal for unskilled roles, though external recruiters are not used as much and local media becomes more useful. Job Centre Plus is rarely used for skilled and unskilled roles. When we discuss this with employers, we are often told that they tend to only use Job Centre Plus when obliged to as part of a Resident Labour Market Test. There are better ways to find the workers they need, irrespective of nationality. We asked employers how they tend to recruit when filling skilled vacancies: Own website 76.74% Recruitment agencies 79.07% Online jobs boards 53.49% Employee referrals 72.09% Internal recruitment team 65.12% Professional social media searches 58.14% Word of mouth 39.53% Job Centre Plus 13.95% Industry journals 9.3% Local media 4.65% Other 9.3% We also asked how they tend to recruit when filling unskilled vacancies: Employee referrals 50% Job Centre Plus 15.79% Own website 31.58% Recruitment agencies 39.47% Online jobs boards 34.21% Word of mouth 26.32% Local media 10.53% Internal recruitment team 34.21% Professional social media searches 15.79% Other 28.95% Industry journals 2.63% National media 2.63% 13 Migration Advisory Committee s call for evidence on EEA workers in the UK labour market: Fragomen s response
14 Atypical workers The MAC are interested in whether Europeans are likely to be employed in atypical scenarios such as agency workers or seasonal workers, for example. We asked employers if they are more or less likely to employ UK, European and non-european people to these employment types: UK Workers European Workers Non-European Workers Full-time Likely 93.37%, Not likely 2.63% Likely 93.37%, Not likely 2.63% Likely 89.19%, Not likely 10.81% Part-time Likely 75%, Not likely 25% Likely 74.19%, Not likely 25.81% Likely 48.39%, Not likely 51.61% Seasonal Likely 33.33%, Not likely 66.67% Likely 33.33%, Not likely 66.67% Likely 11.11%, Not likely 88.89% Agency workers Likely 76.67%, Not likely 23.33% Likely 67.74%, Not likely 32.26% Likely 44.83%, Not likely 55.17% Self-employed Likely 53.85%, Not likely 46.15% Likely 50%, Not likely 50% Likely 42.31%, Not likely 57.69% Zero hour contracts Likely 0%, Not likely 100% Likely 3.85%, Not likely 96.15% Likely 3.85%, Not likely 96.15% Likely Less likely Non-European workers are much less likely to be employed in the capacity of agency or seasonal workers. This is most likely because the immigration rules do not lend themselves to such categories of worker. Ultimately, there is very little difference in the employment offered to UK, European or non-european workers. This all chimes with conversations that we have had with employers, as they do not discriminate on the basis of nationality. They look beyond the passport to consider the contribution that the person could make to their business, immigration rules permitting. 14 Migration Advisory Committee s call for evidence on EEA workers in the UK labour market: Fragomen s response
15 Brexit is making it harder to recruit and retain European nationals Over four fifths of employers are finding it harder to recruit European nationals since the election and none are finding it easier. 2% of employers are finding it easier to retain European nationals but over one third are finding it harder. This doesn t come as a huge shock. In client meetings and employer focus groups we are regularly told that employers are losing European nationals as a consequence of Brexit and the fall in the value of the pound. That said, we hear these stories much more often in relation to workers filling lower skilled roles. Since the referendum, employers have found: Has not changed 57.78% The recruitment of European nationals Harder 42.22% Has not changed 62.22% The retention of European nationals Harder 35.56% Easier 2.22% Key No We already have Yes 15 Migration Advisory Committee s call for evidence on EEA workers in the UK labour market: Fragomen s response
16 Most companies are developing contingency plans, ready for the end of free movement The MAC would like to know how companies plan to adapt to the end of free movement. We asked employers whether, as a consequence of Brexit and in readiness for an end to free movement, are they now thinking about: Increasing salaries 2.38% Otherwise changing terms and conditions 2.44% Moving work off shore Automating your business beyond existing plans 7.14% 14.63% 9.76% 7.69% 20.51% 90.48% 82.93% 36.59% 53.66% 71.79% Doing more to recruit UK workers 4.76% Targeting harder to reach workers, e.g. women returners or ex-offenders 2.5% 7.5% Increasing apprenticeships and similar schemes 7.5% 28.57% 66.67% 90% 25% 67.5% Key No We already have Yes Our data showed that all but 13% of companies were developing contingency plans. 80% of those who do not have contingency plans employ under 100 people. There are some pleasing trends here, for instance an increase in apprenticeships and greater efforts to recruit UK workers. That 37% of companies expected to move work off shore is nevertheless a concern, although could be mitigated by immigration policy that ensures employers can still access European workers in a reasonably frictionless way, after free movement ends. Employers understand that there will be immigration controls for Europeans. They simply worry that they will be unduly inflexible. 16 Migration Advisory Committee s call for evidence on EEA workers in the UK labour market: Fragomen s response
17 Two thirds of employers think they would not be as big without free movement Employers were asked if the UK had not allowed free movement since 2004, do you believe that your organisation would be: 50% 40% 35% 40% 30% 20% 25% 10% Substantially larger Larger Much the same Smaller Substantially smaller No respondents felt that free movement had adversely impacted their growth. In fact, two thirds think they would be smaller or substantially smaller without it. How those companies continue to grow after free movement remains to be seen. The more flexible the immigration system, the more likely it is that these companies will continue to grow. 17 Migration Advisory Committee s call for evidence on EEA workers in the UK labour market: Fragomen s response
18 Education below degree level could be better The MAC will consider if the UK s skills system does an adequate job of giving UK workers the skills they need. We asked employers how they rate the quality of learning provided in the UK at each of these levels: 5.26% 2.63% 2.56% 2.56% 10.53% 7.69% 2.7% 2.7% 16.22% 31.58% 41.03% 43.24% 50% 46.15% 35.14% Schools Colleges Vocation training 29.73% 5.41% 2.7% 21.62% 20.51% 2.56% 20.51% 2.7% 28.95% 13.16% 35.14% 13.51% Apprenticeships 40.54% 56.41% Bachelors 57.89% Masters PhD 48.65% Key Very poor Poor Fair Good Very good Employers broadly rate the level of training received by UK workers as good or fair but there were some concerns about the quality of education below degree level. Interestingly these concerns were felt across a variety of sectors. In client meetings and employer focus groups we are often told that improving the quality of education and training below degree level would reduce the need to source labour and skills from overseas. That said, employers have not suggested it would entirely remove the need to look overseas. 18 Migration Advisory Committee s call for evidence on EEA workers in the UK labour market: Fragomen s response
19 What would you need to change in the labour system to reduce your need for European employees? UK workers with better language skills and more engineers It s not possible to answer this... The need is not around the labour system but rather a wide pool of appropriate skills who have the right to work. More skilled workers in the areas where we have skills gaps. We will always be needing as local culture and language is key to our business in order to support our customers as not all in Europe speak English or good enough English to do training on our tools and so on. Nothing - we seek experience of working in multiple countries in order to have skills to take on regional roles More schools education in electronics engineering Higher level of Technical IT knowledge Demand of skills is based on the nature of the industry which is based on the political need in the UK Need more STEM & crafts/ trades in schools and universities More UK employees looking for our roles. There is a shortage Making languages a requirement in the curriculum Better languages, more availability of fund-raisers Its about a global integrated organisational model matrixes managed with opportunities for all to develop and build our global footprint - all essential to hire and retain the best people Less strict requirements and labour laws for Non- EU employees Cost of living in the UK, better primary and secondary education More language skills Better skills and training for soft skills and technical skills/ knowledge Broader global knowledge base for UK citizens For us, it s really all about availability of necessary skills... Schools and businesses working together encourage more young people to pursue degrees in Construction and Engineering Improved level of STEM students Working ethos, languages, broader work experience We would need UK nationals to speak european languages 19 Migration Advisory Committee s call for evidence on EEA workers in the UK labour market: Fragomen s response
20 European migration has increased learning opportunities for UK nationals We asked employers, in your organisation, has the employment of European workers: 38.1% 2.4% 59.52% Increased learning opportunities for UK nationals Decreased learning opportunities for UK nationals Had no effect These findings tally with what we are told in client meetings and employer focus groups. Employers treat their employees equally, including in terms of learning. Moreover, overseas workers bring new and different perspectives, ideas and skills that help UK workers learn and develop, just as UK workers can help them. 20 Migration Advisory Committee s call for evidence on EEA workers in the UK labour market: Fragomen s response
21 Immigration systems If free movement were to continue, employers would expect their business to: If the policy detailed in the UK Government s leaked policy paper were to apply, employers would expect their business to: 2.22% 4.44% 2.22% 4.76% 11.11% 19.05% 11.9% 42.22% 37.78% 26.19% 33.33% 4.76% Key Significantly contract Contract Remain the same Expand Significantly expand Expand outside the UK Don t know Almost half of companies believe they would grow if free movement continues, very few think they would contract. Worryingly, a quarter of employers might expand outside of the UK if the contents of the UK Government s leaked white paper are implemented. 21 Migration Advisory Committee s call for evidence on EEA workers in the UK labour market: Fragomen s response
22 If the existing Points Based System (PBS) for non-european migrants were applied, including a bar on unskilled workers, employers would expect their business to: If EU migration were to stop altogether, employers would expect their business to: 4.76% 7.14% 9.52% 19.05% 11.9% 38.1% 35.71% 21.43% 38.1% 4.76% 9.52% Key Significantly contract Contract Remain the same Expand Significantly expand Expand outside the UK Don t know Almost half of employers felt their business would contract or significantly contract if EU migration stopped altogether. We know that isn t on the table, but it is still worth stating. It is interesting that employers were less concerned about the PBS being applied than the lighter touch policies in the leaked White Paper. That is likely because the White Paper doesn t offer certainty. The sooner the Government confirms the position the better. 22 Migration Advisory Committee s call for evidence on EEA workers in the UK labour market: Fragomen s response
23 Other useful documents 23 Migration Advisory Committee s call for evidence on EEA workers in the UK labour market: Fragomen s response
24 For further information contact MORE ABOUT FRAGOMEN To learn more about how we can help you with your immigration needs and challenges, please visit: Atlanta Auckland Beijing Bengaluru Boston Brisbane Brussels Chicago Coral Gables Dallas Doha Dubai Dublin Frankfurt Hong Kong Houston Irvine Johannesburg Kochi Kuala Lumpur London Los Angeles Matawan Melbourne Mexico City Nairobi New York Perth Phoenix Rio de Janeiro San Diego San Francisco San Jose, Costa Rica Santa Clara Sao Paulo Shanghai Sheffield Singapore Sydney Toronto Troy Washington, DC Zurich This document is for informational purposes only. If you have any questions, please contact the global immigration professional with whom you work at Fragomen or to 2017 Fragomen, Del Rey, Bernsen & Loewy, LLP, Fragomen Global LLP and affiliates. All rights reserved. 24 Migration Advisory Committee s call for evidence on EEA workers in the UK labour market: Fragomen s response
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