Nigel Cassidy: We’re on the brink of the real EU exit with just weeks to go but so little resolved, what can you do now to ready your workforce for post-Brexit Britain? Hello, I'm Nigel Cassidy and this is the CIPD podcast.
We may have officially left Europe but the most important, messy details have still to be sorted out. Trade friction, immigration and recruitment headaches loom and that's whether or not there's a deal in time.
Until now the coronavirus pandemic has overridden everything and this has left organisations unprepared come 2021, in just three months’ time, how will you plug sudden skill shortages or go about hiring migrant labour? Will your EU workforce here still be legal? And now we’re all homeworking are there loopholes? What’s to stop you side-stepping Brexit and just employing European workers online from their homes?
With me Marina Fernandez-Reino, she’s a senior researcher at the Migration Observatory, a quantitative sociologist specialising in labour market discrimination. Hello to you.
Marina Fernandez-Reino: Hi, nice to meet you.
NC: From our home team the CIPD senior labour market adviser, he leads and comments on many topics, including migration, the labour market and the EU workforce, so it’s hello to Gerwyn Davies.
Gerwyn Davies: Morning Nigel.
NC: And Ian Robinson is a partner in Fragomen’s legal office in London where the team helps businesses make better use of the immigration system. Ian was formerly at the Home Office. Hello.
Ian Robinson: Hi Nigel.
NC: So Ian on 1st January, 2021 this phony war will finally be over, the UK will be out of the transition period, can you just explain with or without a Brexit deal, with or without food shortages and gridlock at the Channel ports just remind us what immigration rules will be different from Day 1 and indeed what non-EU overseas people can come into the workforce and how?
IR: So from Day 1 we will be in a situation on 1st January, 2021 where the UK ends its involvement in free movement. What that means in practice is that essentially there will be three groups of migrant workers in the UK: Europeans who were here before the end of the year, who can stay, they can make an application on the EU Settlement Scheme, it’s really straightforward and they should be encouraged to, there could be serious consequences if they don't and that will mean that they can work unencumbered; you will then have Europeans who enter the UK and non-Europeans who enter the UK after the 1st January, 2021, and for that group they will be able to come and work so long as they are in a skilled job, they speak English and they will be sponsored by an employer over here, there will also be minimum salary requirements to meet; and then you also have a third group – non-Europeans who were here before the end of the year and for that group all of a sudden, whereas right now they may be tied to a temporary visa they will be able to move into a permanent category. So you need to be thinking slightly differently about your existing employees from outside of the EU.
NC: So Gerwyn let’s just roll back a little bit building on what we’ve just heard there, remind us what sensible organisations have been doing, or should have been doing, in the run up to all this? I mean are there still some people in limbo or liable to be thrown out?
GD: Well one of the reassuring aspects to date is the success rate of the EU Settlement Scheme which Ian has referred to. We know that 3.6 million EU citizens have registered for that scheme which implies an extremely high success rate and I'm sure that's due in no small part to employer efforts to raise awareness among their workforces of both the need and the requirement for EU citizens to do that. And it’s important to remember that the deadline for applications is 30th June, 2021, so for those outstanding employers who haven’t raised awareness and perhaps have some concerns over one or two members of staff they still have eight months to do so. And so until then EU citizens have the same rights and conditions and enjoy the same rights and conditions as they currently do and will do so until the middle of next year.
IR: Actually employers who aren’t sure how to prepare their employees it’s not too difficult, begin by reassuring people that they can stay; go on to educate them about making an application, and making the applications is really straightforward; and then direct them to apply before that deadline. Plan your comms around known milestones. Get something out quickly and as soon as you can. Think about sending something out before Christmas when free movement is due to end and there'll be lots of communications from the government. And then again in the lead up to the end of June 2021 remind people that if they haven’t applied they really need to and that if they don't it could make it harder for them to find a job or rent a flat, among other more serious consequences.
NC: Yeah I can see that's really important advice there. So let’s move over to Marina Fernandez-Reino, the big change here is the move to a points-based immigration system, these are used in one form or another in various countries, can you just explain the landscape, remind us how this works and how it will change things?
MF-R: So actually even though the government call this a new system, a points-based system, it’s actually not a points-based system as such because usually points-based systems are not employer-led, that is the worker doesn’t need to be sponsored by an employer in order to come to a country it’s just that he has certain characteristics that the country deems attractive, so this migrant is accepted. So that's typically how points-based systems work. In this case the UK system is a typical employer-led system, you need to be sponsored for a job in order to come to the UK. You cannot come with an offer for a middle skill or a high skilled job. So in this case it continues to be the same as the previous system the main difference, as Ian has said, is that it changes completely the rules for EU migrants because they will be now subject to immigration controls, they will need to come to the UK with an offer, as non-EU migrants did before. The main difference to the previous system is that now non-EU migrants, so those from outside of the European Union, they will be able to come more easily because the requirements for coming to the UK are lower down. In this case they no longer need to be sponsored for a graduate level job, so some middle skilled jobs you are able to come on a work visa to the UK and also the salary requirements have been lowered, compared to the past years. So before it used to be £30,000, now it’s £25,600. So probably what we will see, although very difficult to do forecasts in terms of immigration flows, is that there will be an increase in non-EU immigration and a decrease in EU migration.
NC: Gerwyn Davies do you have a view on that? How is this going to change the mix in the workforce during 2021 and going forward? Overlaying it of course is COVID with so many employers at the moment just unsure about their labour needs.
GD: Yeah well it’s very difficult to foresee the future because of the variables thrown up by the pandemic but one thing we do know is that demand is likely to be a lot lower than it already would have otherwise been, due to the pandemic, because of the limited bandwidth that employers have, management time, depressed demand for workers - we’ve seen vacancies fall to a record low in recent months and while that has recovered it’s still nowhere near pre-pandemic levels. And we’ve also got this issue of the job retention scheme and job support scheme. So there's a fight to save jobs rather than to recruit new workers. So the pressures on the new system in January are far less than they would have been if you’d have asked me that question this time last year.
But looking ahead I think it’s still inevitable that we will see lower migration due to the restrictions and that's because of the cost and administrative burden that is involved in recruiting overseas workers and what we’ll see is a shift in the composition of migrants towards more highly skilled professionals and to a lesser extent medium skilled professionals and away from low skilled workers, simply because there is no route for low skilled workers apart from the prospect of a youth mobility scheme, the outcome of which is still yet to be decided because it’s part of the Brexit negotiations as we speak.
NC: Ian Robinson in the light of all that, I mean a new immigration rule book, okay a bit of a breathing space now because of the pandemic and so on, but I mean this may be great for lawyers, legal companies like yours, huge amount of paperwork, what is your sense of how prepared, how aware people managers, employers, are about all this and how it has to be dealt with and basically how you can use the immigration system to make your workforce as good as it could be.
IR: When we speak to clients more often than not our clients are prepared but of course our clients spend a lot of time thinking about immigration. When we’ve surveyed other employers only about 20% of them feel like they are ready, the IT sector, in particular, feels more prepared than most; hospitality too, but many, many employers just aren’t ready. There is so much for them to get through but it is possible in the time that we have. The first step is to workforce plan. The biggest decision is do you need to recruit Europeans and non-Europeans in future? They also need to be budget planning, UK immigration is so, so expensive, if we were to sponsor a single person for three years that would be about £5,500 in government fees alone. If they were married with three children coming for five years that would be £27,000 in government fees – big, big cost attached that you need to be ready for.
And then it’s about making sure that your recruiters and your line managers and others in the business understand what’s coming, the extra friction, the extra cost and then to some extent extra delay although the new system will be a lot quicker than the current non-European immigration system.
And then taking decisions such as will you allow if you’re already sponsoring migrants your temporary assignees with ICT visas, an intra-company transfer visa, a visa that allows a person from an overseas entity to transfer to the UK? Right now they are capped at five years but they will be able to move into a new visa category and stay permanently. Is that something that you want to encourage and allow? Do you want to use the intra company transfer category at all in future, because whereas now we have about 30,000 coming into the country every year because it’s quicker that tier 2 generally and easier for various good reasons, it will be just as quick and just as possible to use the skilled worker visa and keep people permanently.
Finally think about your right to work. For the first six months of next year you will just need to see that a person is European but are you also going to check that they have the right to work because if not a year, three years, ten years from now it may turn out that they don't and all of a sudden they’ve realised, they learn that they’re here illegally and can't get any job, can't rent a flat, can't access healthcare. The sorts of issues that we saw with Windrush.
MF-R: That's a relevant issue and one of the main challenges of the EU Settlement Scheme. I mean the EU Settlement Scheme has been highly successful in that there has been, I think, 3.7 million applications. There are always certain groups of people that are not going to apply and this could be for several reasons, some people are more likely to miss the deadline, some others with particularly vulnerabilities, personal or social vulnerabilities that make them less likely to apply or to be aware of the scheme. So obviously we might have this problem in the future because in theory all the EU migrants that are currently living in the UK that do not apply they will become irregular migrants after June 2021 so they won't have the right to work or to rent or to access the NHS. So at the end even if the programme is very successful, so imagine 95% of people register in the EU Settlement Scheme if only 5% do not register this could mean thousands of people not registered. What is going to happen with these people in theory? The Home office at the moment say that people who miss a deadline will be able to apply if they good reasons for not applying but we still don't know what that means and how lenient they are going to be in accepting late applications. So that's important obviously for all employers to know that all their EU workers at the moment they need to apply to the scheme if they want to continue working.
NC: So Gerwyn Davies how lenient do you think they’ll be? Or I suspect you’re going to say just don't test them out, get it sorted now.
GD: Well certainly the discussions that we’ve had with Home Office officials suggest a real mindset change and that a lot of leniency will be applied to cases. A lot of resources have been put in, in terms of the helplines that the Home Office have put in to help people with some of these challenges. So I think it’s fair to say that the Home Office have learnt the lessons from the past and hopefully that will lead to a much brighter future.
NC: And Gerwyn while we’re with you just give us a bit more of a sense, we’ve already touched on this, but the differences we’ve been talking about labour from around the world as if it’s homogenous but clearly we’re talking about skilled, unskilled, semi-skilled jobs, the EU, the rest of the world if you like, I mean we’ve obviously had some experience of massive change with farm workers coming in from the EU, shortages of those, give us a bit of a sense across different business sectors and skills how things are going to shape out?
GD: Well again the pandemic is leading to some big structural changes in the labour market so we’re seeing permanent job losses in many of those low skilled sectors such as hospitality and retail and there's a big question mark over whether they return at all. So again compared with 12 months ago I think we’re at a very different point in terms of trying to predict what the future changes will be. Nonetheless it is inevitable that there will be labour shortages at the low skilled end simply because there is no route for low skilled employment.
At the same time I think what we might see, while the government have been relatively generous I think in terms of the salary and skill thresholds we might see more employers decide that the administrative burden and the costs associated with the new system will mean that perhaps there's less gain to recruit for medium skilled occupations, areas such as lower management which they have been recruiting EU workers in particular for, and I think what we might see is perhaps a greater emphasis on high skilled work and actually see more immigration because of those structural changes we’re seeing a lot more digital roles being created, so digital marketing and data analysts and those areas that we’ve got big skill shortages for. We’re seeing big growth in areas such as green technologies where we’ve already got skill shortages despite the ample labour supply we have. And of course that adds to the existing list of skill shortages which are in traditional areas such as engineering, accountancy and all the highly skilled roles.
I should add in terms of the regional impacts it also looks to have a particularly negative impact on London where we know there is a high concentration of migrants across all sectors, but of course because of that low skilled impact the impact will be most keenly felt among those low wage sectors.
NC: It’s almost Marina as if the hollowing out of our cities that we’ve seen because of the pandemic that's kind of almost being followed by a secondary effect in employment.
MF-R: The main challenge we have to measure the effects of the change in migration policy is that we have the COVID crisis at the same time which is a huge economic crisis and it’s going to accelerate many of the changes in the economy and the labour market that were already happening. Certain jobs in the hospitality sector, also in retail jobs, we don't know if these jobs are going to come back because people are increasingly, for example, buying online. And this process might have accelerated because of the pandemic. So how these things are going to evolve in the coming months it’s a bit uncertain but it’s probably certain jobs that are being very hard hit by the COVID probably we won't see I think jobs in these sectors coming back, at least in the next year.
NC: Now one thing we can be certain of Ian is that millions more of us are working from home and if countless millions of us continue to do that, there's absolutely no sense that that won't be the case in 2021, it’s almost as if events themselves are kind of weakening or overriding Brexit itself because in theory what people are saying is well what’s to stop me just sending existing, or hiring new EU workers in their homes and they work for us from there? I guess you’re going to say there are quite a lot of issues but on the face of it, it does seem like a bit of a loophole, what’s the point of having Brexit we can just all work wherever we are?
IR: Well interestingly when we’ve surveyed employers about 40% of them expect to do less business in the UK as a consequence of this and one of the solutions is that work can be done remotely from within Europe. We are also seeing a trend in governments towards nomadic visas. So Estonia has a digital nomad visa where people can go and work there for a year, have a lovely time of life but work remotely for a job in the UK for instance. Barbados are doing something similar which sounds very appealing this morning.
NC: I've been to Estonia I can tell you it’s extremely cold in the winter. I've not been to Barbados, I'm very happy to go on a fact-finding trip for you if you want. This is all just new thinking isn't it?
IR: Yeah and I do think that you will see it more. We are spending a lot more time than ever before talking about commuters and people who work in the UK just during the week and need to work in Europe. We’re having a lot more conversations about immigration in Europe, whether it’s some of the trickier countries like Spain and Italy or the more welcoming countries such as Germany or the Netherlands. And that's as a consequence of several things but in particular the cost of the UK immigration system and the fact that it gives pause for thought before you bring people over here.
NC: If we’re going to keep the same EU workforce but just send them home I mean that sounds like a neat solution. I guess Ian there are going to be complexities and issues with regard to where they’re domiciled, who they pay tax and various other dues to?
IR: Yeah that's right and actually we’re seeing this already as a consequence of COVID, people went home to spend time with their families when the pandemic first took hold and they haven’t been able to return for logistical or personal reasons. And then employers are already facing difficulties with right to work, do you have permission to work in the country that you happen to be visiting, with tax, with payroll? And there is an extra level of complexity to remote working where it’s overseas that employers need to take very, very seriously. I suspect though that the question will come up more often with, for instance, overseas employees who want to go back for Christmas and then spend the month of December working in Argentina, South Africa or wherever they may be. It’s going to come up much more often over the next few months and years.
MF-R: I mean working remotely can deprioritise let’s say the legibility for permanent residence for EU workers, so imagine that you are now an EU worker and you've got the pre-settled status which is the less secure status that you get when you apply to the EU Settlement Scheme and you really been here for less than five years. So if, after December 2020, you leave to your country of origin because you might think that here the pandemic is getting worse and you just do your work remotely from there, if your absence is longer than six months then you might not be able to apply for settled status afterwards so at the end you need to start the process all together but as I said you lose your residency rights because the pre-settled status cannot be renewed. So I think probably workers, and Ian is probably more aware of this, but I don't know if all employers or all EU workers that have this less secure status are aware of the conditions in order to get permanent residence in the future.
NC: Gerwyn do you think people managers are across that, clearly it’s an issue as we’ve heard for the workers themselves but employers could unwittingly damage somebody’s employment aspirations?
GD: To be honest many won't be aware of those finer nuances but what I would say from a labour market perspective is that we’ve done research recently which shows that where possible remote working can be successful. The recent homeworking experiment has not led to an adverse impact on productivity and one of the reasons for that is that the communication challenges which this would have ordinarily have raised in years gone by have largely been overcome because of the new technologies, so people are able to hold weekly team meetings via Zoom or Microsoft Teams and as a result we’ve not seen the negative impact that one would have associated with this kind of pandemic.
NC: It does though also raise Ian a slightly broader issue about the moral responsibility on employers if they’re in a situation certainly of having to sponsor people it does kind of tie them to that worker in some ways. We’ve also just heard from Marina there that if employers don't fully understand the implications of say a bit of homeworking or establishing an early relationship and then finding they can't bring the people back, do you think that employers are going to have to be more concerned about those sort of moral questions when they’re trying to bring people in?
IR: To begin with employers are going to need to be much more concerned about compliance questions. Sponsoring an overseas worker is reasonably straightforward once you have a licence but afterwards any change in circumstances needs to be reported to the Home Office. You need to make sure that a person’s visa doesn’t expire. You have a duty of care to your employees to ensure that they understand their entitlement to permanent residence and so on, and to ensure that they aren’t lost, to Marina’s point earlier. So employers will find that they need to spend a lot more time thinking about this for their sponsored workers. If they’re going to be recruiting Europeans from outside of the UK next year, or indeed non-Europeans they will need a sponsor licence and I can't stress how important that is.
There's also the question, and I'm asked this an awful lot interestingly by the farming sector, do we need to make sure that our employees have actually applied for settled status or pre-settled status under the Withdrawal Agreement? And the answer in pure legal terms is no you don't, certainly as it stands there is no obligation to check that an employee has applied. In my opinion there is a duty of care owed by employers to their employees oftentimes simply because if a person doesn’t apply their life could be turned upside down and the more you can do to educate them, to direct them, and make sure that they know what is needed, the better. If you don't, if you don't know who your Europeans are that will make it harder but the more information you can make available the better – CIPD will have good information, the Home Office has a good employer toolkit, other providers too. Just try and help people would be my view.
NC: Marina from your work at the Migration Observatory I just wonder whether experience other countries have had when they’ve changed their immigration systems, other flows around the world, do they give the UK any clue as to what the future might hold?
MF-R: I'm thinking now for example a major immigration programme that was implemented in my country about 50 years ago when there was a regularisation programme for almost a million irregular migrants, so they have the opportunity to register and be let’s say legal in the system. So it was in a sense highly successful because obviously it was in the interest of migrants to register but even though not all of them registered, not all of those who were eligible registered, so the irregular migration programme was not completely solved by this programme but it certainly helped. I think that in this case this is certainly a major change and the fact that this major policy change is occurring in a moment where there is also a major economic crisis unfolding it’s problematic.
IR: In terms of experience of such an overhaul of an immigration system I tend to think of a few years ago in Australia where they reviewed their 457 programme which was their work permit programme, huge amount of disruption. When President Trump brought in the travel ban back in 2016, huge amount of disruption. Reform in China, big disruption. When this is happening the key components to your response are going to be good data; know who your people are; know what they’re doing, what they’re paid and what it would cost you to bring them in, in future; good communications to the business so that they understand what is happening, where the changes are, but also so that you can manage expectations; and then finally advocacy, make sure that government understands the issues that you are facing and then they’re more likely to be resolved. How you do that if you’re a big company is very different to if you’re a small company but actually this is where nobody gets into the building with the Home Office as quickly as CIPD can, given the relationship, and if this isn't a hostage to fortune Gerwyn but the more you can feed into your local representatives the better I would say.
GD: One quick point on the point about influence in the Home Office you'll see in various government reports that the CIPD has been a vocal presence and a key influence on the future direction of government policy and we will be evaluating its impact next year as part of our role and look to identify some changes that government could make. So for instance one of them that we think they could be and should be looking at is the idea of umbrella sponsorship organisations. So that would be an overarching body like a membership body that could free employers with some of the compliance pressures, not least because one of the things they tell us is that they really fear making a mistake, so they can have that level of reassurance that an organisation like the CIPD or whoever, the CBI, can offer.
But to add to Ian’s wise words on what organisations can do the only thing I would add is the greater need to focus on internal development and look at the wider range of options other than just immigration, the debate around immigration has been too narrowly focused on recruitment difficulties and skill shortages and we haven’t looked at the panorama of options that include automation, but especially internal development. While we’ve seen immigration levels increase over recent years we’ve seen public funding in skills fall, we’ve seen employer funding for skills fall and with the more public funding as we’ve seen the government announce a skills guarantee to help people embrace lifelong learning. It’s also employers’ responsibility to help the retention issues that have undoubtedly contributed to some of the recruitment difficulties through things like apprenticeships which have been falling alarmingly over the last couple of years and again if I was in Whitehall one of my asks to government would be the need to reform the apprenticeship levy and turn it into a training levy so that organisations have more flexibility to train the workforce and invest more in skills.
MF-R: Well yes but this is more a change that will occur in the medium, long-term. At the end there needs to be probably a coordination between employers and the policy initiatives for the government in order to upskill the labour force and to automate certain process and rely less on labour for certain processes. But it’s true also that for certain sectors, I'm thinking now the social care sector, it’s difficult sometimes, these sectors are heavily reliant on migrant labour, especially cheap migrant labour because the salaries are very low and it’s likely to be like that in the short-term. I mean some sectors are likely to continue relying on low paid migrant labour in the short term, so I don't see how there can be dramatic changes in the short-term.
NC: And a final thought, maybe a bit of advice from you Ian?
IR: Well really I suppose this really just emphasises why it’s so important to workforce plan. So there will be a temptation, certainly at the moment to think tactically, headcount plan, fill the vacancies that need filling as you go along. If you can use this time to reflect on your workforce and think about where you can build by bringing in younger people who are available in the labour market, where you need to borrow. And then immigration essentially becomes an issue when you need to buy in skills really in most instances. Workforce plan, look at costs, look at need and try and get the balance there so that you have diversity but also making the most of the people who are available to you now.
NC: Well that's it. If you heard our last podcast we considered drug and alcohol abuse, touching among other things on the controversial idea of testing employees. Afterwards Jayne Brownlee of the Alcohol and Drug Service drew attention to some useful case studies and other info they have online; I was particularly struck by their urging to approach any testing from a health and safety perspective rather than the risk to an individual. She says you can too easily get caught up in arguments about the rights and wrongs of the legal status of one substance against another. Please subscribe wherever you get your podcasts so you never miss an episode. But that's our lot this time, let me thank our excellent guests on this topic with all they had to say as we count down to the real Brexit, that's Marina Fernandez-Reino, Ian Robinson and Gerwyn Davies. From me Nigel Cassidy and all of us at the CIPD until next time it’s goodbye.
