Strategic workforce planning

Although there is still a lot that is unknown about what the post-Brexit world will look like, Theresa May’s speech at the 2016 Conservative Party…

Although there is still a lot that is unknown about what the post-Brexit world will look like, Theresa May’s speech at the 2016 Conservative Party Convention made one thing abundantly clear: the Government’s intention is to reduce net migration significantly in the wake of Brexit and freedom of movement in its current form must go. While this may be welcome news to some, it has led to concerns from many employers and particularly those who rely heavily on migrant workers from the EU.  Whilst the Government has ruled out a points based system to replace the current rules on EU workers, there is little clarity about what sort of work permit rules may replace the current rules and this in itself makes workforce planning well into the future difficult. In the absence of freedom of movement, any replacement work permit scheme will inevitably be more restrictive and is likely to involve more administration and planning than is currently the case.

So what is the scale of the challenge for employers in terms of planning?  One of the biggest issues is trying to anticipate the level of any skills shortages which could impact businesses as soon as 2019 without knowing broadly what the immigration rules will be going forward.   However the scale of the challenge differs for businesses depending on location and sector.

In May 2016, it was estimated that there were 2.15million EU citizens working in the United Kingdom.   Those migrant workers have been able to move freely around the EU for decades which has allowed UK employers to benefit from a very large labour market without any administration, restrictions in terms of who can work or visa costs to deal with.  Employers who have faced recruitment shortages in the past have been able to target recruitment efforts in specific EU countries.  For example, certain hospitality jobs have been advertised in Poland with staff being flown to the UK to fill roles in times where there have been specific shortages. Many agricultural employers will target recruitment campaigns overseas when they have difficulty recruiting within the UK.

The numbers of EU workers are significant across the UK as a whole. However, for employers in certain geographic locations such as London the impact is even greater - EU workers make up 15% of the workforce – 770,000 in total which has led for calls for there to be a London-only visa put in place.

Employers in specific sectors will be impacted more than others by any changes to the immigration rules for EU workers.  For example in the NHS, it is estimated that around 10% of doctors are EU migrants. Nurses are already in short supply even with access to the EU labour market so without that additional pool of labour, there is likely to be an issue in filling the jobs that are needed. Whilst the Government has pledged to have a ‘self-sufficient’ NHS by 2025, the practicalities of this may not be straight forward. It is estimated that 13,500 doctors will retire in the next 5 years, with considerable numbers expected to leave the UK for opportunities for abroad. This, added with the anticipated £100million expense of training places, may make ‘self-sufficiency’ extremely difficult to achieve.   This case in point highlights issues that other employers will face.  It can take many years to train staff to carry out jobs and yet the speed of change that employers are having to deal with as a result of Brexit may not allow time to train enough staff from within the UK to deal with any skills gaps or shortages.

It is likely that those employers who rely on EU workers for lower skilled jobs will be most concerned about what the future may hold and will face the biggest issues in terms of workforce planning.  Businesses within the hospitality, farming, construction  and care sectors rely heavily on EU migrant workers and yet as a result of these jobs being lower skilled, it appears less likely that their needs will be catered for by any new immigration rules.  The uncertainty that they are dealing with is even more stark.

The Government has indicated that there may be some kind of work permits for highly skilled highly paid EU workers , with Theresa May stating she does not want to exclude the “brightest and the best” from the UK. The Government’s position in terms of low skilled workers appears to be different. Amber Rudd, the Home Secretary, has put forward a proposal that these kinds of low skilled, accessible jobs should be kept for British people only, going as far as to suggest that employers should pay into “controlling migration fund”. This is concerning for businesses where EU migrants often undertake jobs regarded as ‘low skilled’. Some reports have indicated that if the current skills restrictions for visas were applied to EU workers in manufacturing, construction, energy and transport, around three quarters would not qualify to work in the UK.

It may also be less easy for businesses in these areas to respond to shortages and to attract the staff that they need by simply increasing pay rates.  So workforce planning around these potential shortages and strategies to address any gaps may be difficult.  

Whilst the Government has provided some reassurance that EU workers already in the UK are likely to be given some form of protection to remain living and working in the UK (provided that the EU reciprocates), this has not been guaranteed.  It will be easier for employers to carry out workforce planning once an agreement on this has been reached which is definitive.

In light of the general climate of uncertainty which is in part due to unknown immigration rule changes but also the uncertain economic climate, employers will struggle to plan for every eventuality which they may face in terms of staff shortages and recruitment.  The first step for employers will be to carry out some analysis of how many EU workers they currently employ, in what geographic areas and in what roles.  This should allow them to identify any areas where the changes to the rights of EU workers to work in the UK may make the most difference.  This analysis will then have to cover different scenarios depending on what ‘sort’ of Brexit may occur.

Businesses which identify potential future recruitment gaps from the UK labour force may want to consider strategies such as focusing investment in training or apprenticeship programmes in those areas. This may enable them to more easily fill roles through the recruitment of British workers. For those lower skilled roles where training is not an issue, employers may have to consider what financial or other incentives may need to be provided to prospective British employees in order to ensure their workforce runs at full capacity. If so, it is important for companies to budget for this, and analyse the impact this may have on profits and internal expenditure.

Potential future gaps will also allow business to consider areas of policy whereby they might want to lobby the UK Government to try to influence policy.  Businesses in London are already lobbying the Government for special treatment in the City in relation to immigration policy.

The impact of Brexit, is, and will remain, one of the biggest challenges facing UK business over the coming years. Although the UK’s withdrawal from the EU may bring with it many challenges, there are bound to be opportunities too.  Those employers which are well informed, prepared for all eventualities and quick to respond will surely benefit most in the long term. 

This article was first published by the HR Director in January 2017.

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