UK manufacturing needs skilled migrants

Posted on 16 Nov 2016 by Jonny Williamson

Government must listen to the concerns of UK manufacturers about their ability to continue recruiting and retaining skilled workers in a post-Brexit world. Terry Scuoler discusses the issues.

Terry Scuoler, CEO, EEF
Terry Scuoler, CEO, EEF.

Immigration and hiring non-UK workers came under the spotlight at last month’s Tory party conference, with broadsides against business for hiring foreigners. This is a key issue for manufacturers, who tell us they struggle to recruit and must have access to the widest pool of candidates. Indeed, around a quarter of companies say they specifically recruit EU (excluding UK) nationals to find the right skills.

We know that free movement of people will be a hot topic within the Brexit negotiations, and speculation is rife about its future. For now, there are few facts – but we know manufacturers remain concerned about skilled worker recruitment.

Clearly, the government has many (possibly conflicting) priorities to work through in negotiating a suitable deal on Europe, but it looks likely to include stronger immigration controls. Nevertheless, government could support UK manufacturers by ‘pressing pause or eject’ on the impending changes to non-EU migration. At a time of uncertainty, and concern about our ability to attract skilled people, now is not the time to restrict the talent pool.

There are three immediate measures the government should consider:

First, government should scrap the proposed immigration skills charge – this is something we have called for since its announcement and, even more so, since the announcement of the economy-wide apprenticeship levy.

Second, government should rewind minimum salary thresholds as there is now concern that the new thresholds may not be as affordable as first envisaged. The proposed increases from £20,800 to £30,000 have limited impact on UK manufacturers who generally pay more for skilled engineers. However, our pay benchmarking suggests that several job roles operate near this rate.

We don’t yet know the referendum’s impact on plans to recruit, or its effect on pay. Around 60% of manufacturers plan to review recruitment, and pay settlements have not seen a huge upturn. Minimum salary thresholds could begin to affect a greater number of manufacturers.

Finally, government should freeze planned changes to Intra-Company Transfers (ICTs). One of the arguments for its introduction was that the ICT route was initially established for only senior personnel. However, junior and entry-level staff also spend time working across businesses all over the world, and if ICT changes are implemented then employers will soon be expected to pay more to deploy staff.

Government needs to fast forward to next year and review these burdens on business. The impending changes to non-EU migration are part of a long line of costs that businesses are expected to absorb in the coming years (the levy, national living wage, costs of reporting the gender pay gap, the balance of those who will be auto-enrolling and changes to holiday pay).

This isn’t just about businesses having to carry additional costs, but also their ability to access skilled workers. If the UK is to remain an attractive place to do business post-Brexit, then government must give careful consideration to these risks.