Brexit intensifies labor shortages as businesses struggle to hire

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Brexit has exacerbated labor shortages in the UK over the past year, with industries most dependent on freedom of movement being hit hard, according to a report led by academics at the University of ‘Oxford.

The study found that in sectors of the economy such as hospitality and business support services, the number of EU workers had fallen sharply, a substantial increase in job vacancies and few opportunities for employers to recruit from non-EU countries.

The academics found no evidence that employers had responded by raising wages to attract UK-born workers to fill positions previously held by people born in the bloc.

In a detailed study, the authors were careful not to blame all labor shortages on Brexit, especially as there have been recruitment difficulties in sectors such as travel in many countries recovering from the pandemic.

The early retirement of workers over 50 has also caused significant problems in the UK labor market unrelated to Brexit.

But labor shortages and vacancies were highest in the sectors most heavily dependent on EU workers before the pandemic, according to the report. Employers at these companies were unable to use new visa routes to find foreign workers, mainly because wage rates were low.

Sectors included hospitality and support roles such as warehouse staff and security.

In sectors such as health and agriculture, where employers have access to non-EU workers due to special visa regimes, there has been a significant shift from EU to non-EU migration, the report says. .

The data reviewed only covered the period to June 2021, but EU citizens in employment were down 6% from the same month two years earlier, while non-EU migrants in employment increased by 9%.

Madeleine Sumption, director of the University of Oxford’s Migration Observatory and lead author of the report, said the figures showed that “the end of free movement has made it harder for employers in low-wage industries to recruit staff”.

But she warned that the answer to this challenge was not necessarily to increase the number of visas available to low-skilled foreign-born workers.

“Work visa programs for low wages are notoriously difficult to police and often expose workers to exploitation and abuse. It’s also surprisingly difficult to measure shortages and how to target immigration policy toward them,” Sumption said.

Free movement did not suffer from these difficulties because workers were not tied to employers and had most of the same rights as British citizens, but a perceived lack of control over migration was a significant factor in the vote to leave the EU in 2016.

One of the report’s most striking findings is that, contrary to the predictions of Brexit supporters, employers have not responded to shortages by raising wages.

“Early figures showed no evidence of tight labor markets. . . increased wage growth in low-wage jobs,” he said, and noted that employers had instead cut production.

The report concluded that the government may want to “wait” in the hope that labor shortages will disappear over time as businesses and the economy adjust. This would avoid the difficulties of new visa regimes for low-skilled people, but would come at the cost of “disrupting some businesses in the short to medium term”.

The Home Office said it had reduced the time it takes for employers to recruit visa-eligible people from abroad.

“However, employers should look to the domestic labor market rather than relying on overseas labor by investing in the UK through training, pay rises and career options” , he added.

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