Stuart Gentle Publisher at Onrec

Post-Brexit restrictions on migrants for low-skilled jobs failing to encourage enough firms to invest more in UK workers, new research suggests

CIPD research on employers’ use of the post-Brexit immigration system signals need for major changes to skills policy and industrial strategy to tackle skill and labour shortages

New CIPD research exploring how UK employers have adapted to the point-based immigration system after Brexit shows it works adequately for most employers that have hired high-skilled migrant workers since January 2021. However, two years on just 15% of employers have used the system to sponsor migrant workers, despite six in 10 (57%) employers having hard-to-fill vacancies. The report also suggests that restrictions on employers’ ability to hire migrant workers aren’t incentivising enough employers to invest more in the recruitment and training of UK workers as intended.

In response, the CIPD is calling for a major revamp of skills policy and industrial strategy, to encourage and enable more employers to recruit, train and retain a wider range of workers.

The introduction of the new points-based immigration system in January 2021 was supposed to prompt employers to hire more UK-born workers for low-skilled jobs and increase investment in workforce skills development and technology.

The CIPD’s research suggests that this does not appear to be happening. It’s the minority of mainly large employers that have sponsored migrant workers since January 2021 that are most likely to be taking a range of actions to tackle hard-to-fill vacancies.

In response to their organisations’ hard-to-fill vacancies, employers that have sponsored migrant workers since 2021 are more likely than other employers to have:

  • Hired apprentices (34% vs 23%)
  • Hired UK graduates (28% vs 14%).
  • Introduced or increased investment in automation (23% vs 12%)

Likewise, employers who have sponsored migrant workers are also more likely than those who have not to report that in the last three years they have:

  • Recruited Black, Asian or minority ethnic people (75% vs 52%)
  • Recruited people with a history of long-term unemployment (29% vs 13%)
  • Recruited people with a disability or long-term health condition (57% vs 31%)

Ben Willmott, head of public policy for the CIPD, the professional body for HR and people development, commented:

An anticipated benefit of changes to immigration policy was that it would encourage employers to invest more in local workers, but in too many instances this doesn’t appear to be happening as intended.

“If the Government wants to support the employment and training of UK-born workers, it needs to work more closely with employers to address failing policies such as the Apprenticeship Levy.  

“There is also the need for wider reform of skills and other areas of policy such as innovation, business support, Statutory Sick Pay and labour market enforcement as part of the development of a new approach to industrial strategy. One that can boost labour market participation, training and productivity growth across all sectors of the economy.”

“In addition, changes can be made to the immigration system to make it more effective in tackling skill and labour shortages. The shortage occupation list should be regularly reviewed and broadened where necessary and there is a strong case for extending the Youth Mobility Scheme to include EU nationals.”  

The CIPD’s research found that over half (54%) of employers that have used the new system believe it is effective in helping address skill and labour shortages, compared to a third (34%) that feel it is ineffective. Overall, it finds the new system has been used effectively to address rising skills shortages in certain sectors, including health, social care and IT.

The report also highlighted areas where the immigration system could be improved. Users of the system cited drawbacks with the internal administration time required to hire through the sponsorship system (48%). Employers were also concerned about the costs of hiring through the system (44%) and the overall time involved in hiring through this route (42%).

To tackle skill and labour shortages the CIPD has the following recommendations for the UK Government:

On immigration policy 

  • Regularly review and where necessary extend the shortage occupation list to address skill and labour shortages damaging economic growth or key services
  • Extend the Youth Mobility Scheme to include EU nationals
  • Review the operation of the points-based system to identify areas where it could be made more user-friendly for employers, to reduce the time and cost of sponsoring migrant workers.

On industrial strategy and skills policy

  • Reform the Apprenticeship Levy into a more flexible skills and training levy
  • Improve the quality of locally delivered business support for SMEs including people management and development support via key stakeholders such as Local Enterprise Partnerships, Growth Hubs and chambers of commerce.
  • Develop a refreshed approach to skills policy and industrial strategy, recognising the interdependence of key policy areas such as skills, innovation, growth/business support and labour market enforcement.