Migration Advisory Committee’s call for evidence on EEA ... · 1 Migration Advisory Committee’s...

1 Migration Advisory Committee’s call for evidence on EEA workers in the UK labour market: Fragomen’s response© 2017 Fragomen, Del Rey, Bernsen & Loewy, LLP, Fragomen Global LLP and affiliates. All rights reserved.

Migration Advisory Committee’s call for evidence on EEA workers in the UK labour market:

Fragomen’s response


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.


Table of contentsForeword

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

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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

•TheprofileofEuropeanworkers,includinghowskilled they are, where they are recruited from and the terms of their employment

•WhetherthespectreofBrexitisalreadyaffectingthe 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 FragomenLLP.Wearethelargestimmigrationlawfirminthe 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.

Wehavesupplementedthisdatawithourreflectionsfroma large number of meetings and round tables, including focusgroupsinCardiff,Glasgow,Manchester,Warringtonand 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.

Oursubmissionreinforcesmanyofthefindingsalreadyavailable in social and economic literature published on immigration.Werecognisemanyofthetrendsidentifiedin our work with the Chartered Institute of Personnel Development and the Recruitment and Enforcement Confederation. Links to both reports are included on page 23.

Keyfindingsinclude:

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.Europeanworkersfillimportantsalesandaccount 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 withfindingsinavarietyofacademicpapers.

4.Employersarefindingithardertorecruitandretain 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 effortstorecruitUKworkerswhenfreemovement ends, including by targeting harder to reach groups...

7. ...but an alarming proportion think that work will need to be sent overseas.


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. Anynewpolicyneedstobeflexibleandmeettheneedsofbusiness,otherwisejobsmayneedtobefilledelsewhere 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 happytodiscussourfindings.Wewouldalsobehappytodiscuss whether any excerpt of our report could usefully bequotedinyourfinalreporttogovernment.

Foreword (cont.)

Caron PopeManaging [email protected]

mailto: [email protected]


232016

JUNReferendum on membership of the EU takes place in the UK

29MAR

2017

Article 50 of Lisbon Treaty triggered, starting the 2 year

negotiating period

262017

JUNUK publishes immigration

proposal on safeguarding the position of European citizens

living in the UK and UK nationals living in the EEA

PHASE

1

292021

MAR

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

29MAR

2019

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

PHASE

2

27JUL

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

28MAR

2019UK is expected to exit the EU

MAC Call for Evidence

*Interim reports could be published by the MAC*

042017

AUG

SEP2018

I. Home Office begins to accept settled status applications

II. MAC expected to publish final report

Closing date to respond to the MAC27

OCT

2017

Brexit: A lot will happen in the next 18 months


Sectors

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.

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.

24%

40%

8%

22.67%

5.33%

One quarter of respondents could be classed as small companies, based on number of employees in the UK.

Key of number of employees in the UK

Less than 50 51 - 500 501 - 1,000 1,001 - 10K 10,001 - 50K

MANUFACTURING

https://www.fragomen.com/sites/default/files/brexit_immigrationbenchmark_september2016.pdf


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.


WeaskedemployerswhichthreerolesintheirorganisationwouldtheyfindmostdifficulttofillwithoutEuropeans:

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 engineeringarewellunderstoodandreflectedintheUK’sshortageoccupationlist.

Engineers are in shortage


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:

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

70.67% 25.33% 4%

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.


Technical, practical and language skills make a huge difference

We asked employers why they recruit Europeans:

DifficultyattractingUKnationalstofillskilledroles48.89%

DifficultyattractingUKnationalstofillunskilledroles 8.89%

Better work ethic/ motivation 6.67%

Commitment to values / behaviours 17.78%

Betterjobspecific,technicalorpracticalknowledge55.56%

Language skills 51.11%

Betterqualifications 15.56%

More work experience 4.44%

IT skills 13.33%

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.


The MAC is interested in the skill level of European workers. We asked employers if their workers are typically:

Europeans are disproportionately over-educated for their roles

UK Workers European Workers Non-European workers

Over-educated to the level of the role

18.18% Yes, 81.82 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, 81.25 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).


Recruitment practices do not tend to vary between UK and European nationals

We asked employers how they tend to recruit when filling skilled vacancies:

Job Centre

Plus 13.95%

Own website 76.74%

Recruitment agencies79.07%

Industryjournals

9.3%

Online jobs boards 53.49%

Word of mouth 39.53%

Local media 4.65%

Employee referrals 72.09%

Internal recruitment

team 65.12%

Professional social media

searches 58.14%

Other 9.3%

Job Centre

Plus 15.79%

Own website 31.58%

Recruitment agencies 39.47%

Industryjournals 2.63%

Online jobs boards 34.21%

Word of mouth 26.32%

Local media 10.53%

Employee referrals

50%

Internal recruitment team 34.21%

Professional social media

searches 15.79%

Other 28.95%

National media 2.63%

We also asked how they tend to recruit when filling unskilled vacancies:

Do you employ a different method when recruiting European nationals?

No 92.86%

Yes 7.14%

TheMACisinterestedinUKbusinesses’recruitmentpractices,specificallyinreferenceto European nationals.

We found that businesses use a range of methods to recruit for skilled roles, specificallyinternalwebsites,employeereferralsandrecruitmentagencies.Thesemethods 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 toaspartofaResidentLabourMarketTest.Therearebetterwaystofindtheworkersthey need, irrespective of nationality.


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




Agency workers


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%

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.

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,thereisverylittledifferenceintheemploymentofferedtoUK,Europeanornon-Europeanworkers.

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.


Brexit is making it harder to recruit and retain European nationals

Since the referendum, employers have found:

Easier 2.22%

No

Yes

We already

have

Harder 42.22%

Has not changed 57.78%

The recruitment of European

nationals

Harder 35.56%

Has not changed 62.22%

The retention of European

nationals

Key

OverfourfifthsofemployersarefindingithardertorecruitEuropeannationalssincetheelectionandnoneare findingiteasier.

2%ofemployersarefindingiteasiertoretainEuropeannationalsbutoveronethirdarefindingitharder.Thisdoesn’tcome 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 muchmoreofteninrelationtoworkersfillinglowerskilledroles.


No

Yes

We already

have

Increasing salaries Automating your business beyond existing plans

Otherwise changing terms and conditions

Increasing apprenticeships and

similar schemes

Moving work off shore

Doing more to recruit UK workers

Targeting harder to reach workers, e.g. women

returners or ex-offenders

Key

90.48%

7.14%

2.38%

82.93%

14.63%

2.44%

53.66%36.59%

9.76%

71.79%

20.51%

7.69%

66.67%

28.57%

4.76%

90%

2.5%

7.5%

67.5%

25%

7.5%

Most companies are developing contingency plans, ready for the end of free movementThe 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:

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.

Therearesomepleasingtrendshere,forinstanceanincreaseinapprenticeshipsandgreatereffortstorecruitUKworkers.That37%ofcompaniesexpectedtomoveworkoffshoreisneverthelessaconcern,althoughcouldbemitigated 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 simplyworrythattheywillbeundulyinflexible.


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:

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.

Howthosecompaniescontinuetogrowafterfreemovementremainstobeseen.Themoreflexibletheimmigrationsystem, the more likely it is that these companies will continue to grow.

50%

40%40%

35%

25%30%

20%

10%


Education below degree level could be betterThe 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:

Schools Colleges

Masters PhD

Key

Very poor Poor Fair Good Very good

2.63%10.53%

50%

31.58%

5.26% 2.56%7.69%

46.15%

41.03%

2.56%

Bachelors

2.56%

20.51%

56.41%

20.51%

Vocation training

2.7%

16.22%

35.14%

43.24%

2.7%

Apprenticeships

2.7%

21.62%

40.54%

29.73%

5.41%13.16%

57.89%

28.95% 13.51%

48.65%

35.14%2.7%

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.


What would you need to change in the labour system to reduce your need for European employees?

For us, it’s really all about availability of

necessary skills...

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.

Cost of living in the UK, better primary and secondary education

Improved level of STEM students

Better skills and training for soft skills and technical skills/

knowledgeBroader global

knowledge base for UK citizens

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.

We would need UK nationals to speak

european languages

Schools and businesses working together

encourage more young people to pursue degrees

in Construction and Engineering

UK workers with better language skills and

more engineers

More schools education in electronics engineering

Demand of skills is based on the nature of the industry which is based on the

political need in the UK

Nothing - we seek experience of working in multiple countries in order to have skills to take on regional roles

Less strict requirements and labour laws for Non-

EU employees

More language skills

Better languages, more availability of

fund-raisers

Making languages a requirement in the

curriculum

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

Higher level of Technical

IT knowledge

More UK employees looking for our roles. There

is a shortage

Working ethos, languages,

broader work experience

Need more STEM & crafts/

trades in schools and universities


European migration has increased learning opportunities for UK nationals

We asked employers, in your organisation, has the employment of European workers:

Increased learning opportunities for UK nationals

Decreased learning opportunities for UK nationals

Had no effect

38.1% 2.4% 59.52%

Thesefindingstallywithwhatwearetoldinclientmeetingsandemployerfocusgroups.Employerstreattheiremployeesequally,includingintermsoflearning.Moreover,overseasworkersbringnewanddifferentperspectives,ideas and skills that help UK workers learn and develop, just as UK workers can help them.


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%

11.11%

37.78%

42.22%

2.22%4.44%

4.76%

11.9%

4.76%

33.33%26.19%

19.05%

Key

Significantlycontract Contract

SignificantlyexpandExpand

Remain the same

Expand out-side 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.


If EU migration were to stop altogether, employers would expect their business to:

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:

9.52%

35.71%

9.52%

38.1%

7.14%

4.76%

38.1%

21.43%

19.05%

AlmosthalfofemployersfelttheirbusinesswouldcontractorsignificantlycontractifEUmigrationstoppedaltogether.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 theleakedWhitePaper.ThatislikelybecausetheWhitePaperdoesn’toffercertainty.ThesoonertheGovernmentconfirmsthepositionthebetter.

Key

Significantlycontract Contract

SignificantlyexpandExpand

Remain the same

Expand out-side the UK Don’t know

4.76%

11.9%


Other useful documents

https://assets.fragomen.com/s3fs-public/fragomen_-_brexit_and_eu_citizens_living_in_the_uk_-_july_2017.pdf

https://www.fragomen.com/sites/default/files/fragomen_-_immigration_and_brexit_-_preparing_for_separation_-_march_2017.pdf

https://www.fragomen.com/sites/default/files/fragomen_-_eu_citizen_status_overview_-_june_2017.pdf

https://www.fragomen.com/sites/default/files/fragomen_and_british_future_-_immigration_after_brexit_report_-_march_2017.pdf

https://www.fragomen.com/sites/default/files/brexit_immigrationbenchmark_september2016.pdf

https://www.cipd.co.uk/knowledge/fundamentals/emp-law/recruitment/post-brexit-skills-shortages

https://www.fragomen.com/sites/default/files/fragomen_-_brexit_timeline_and_key_players_-_june_2017.pdf

https://www.rec.uk.com/__data/assets/pdf_file/0005/376160/Buiding-the-Post-Brexit-Immigration-System-09.06.17.pdf

https://www.fragomen.com/sites/default/files/fragomen_-_migration_advisory_committees_review_of_immigration_after_brexit_-_july_2017_v2.pdf

https://www.fragomen.com/sites/default/files/fragomen_-_position_paper_on_the_rights_of_uk_and_eu_nationals_-_august_2017_v4.pdf

https://www.fragomen.com/sites/default/files/fragomen_-_immigration_and_brexit-_a_tool_kit_for_responding_to_the_migration_advisory_committee_-_sep_2017.pdf

https://www.cipd.co.uk/Images/legal-guide-to-managing-a-migrant-workforce_tcm18-28897.pdf

https://www.fragomen.com/sites/default/files/fragomen_brexit_faq_-_july_2017.pdf

https://www.fragomen.com/sites/default/files/fragomen_-_uk_election_and_immigration_-_june_2017.pdf

https://www.fragomen.com/sites/default/files/fragomen_-_french_election_update_-_april_2017.pdf

https://www.fragomen.com/sites/default/files/brexit_whitepaper_quotes.pdf


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• 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 email to [email protected]

© 2017 Fragomen, Del Rey, Bernsen & Loewy, LLP, Fragomen Global LLP and affiliates.All rights reserved.

For further information contact [email protected]

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