Falling immigration leaves labour market at 'tipping point'
What affect will the failure to reach a post-Brexit agreement on the status of EU nationals in the UK have on the labour market, and is the government doing enough to respond to the problem?
7 July 2017
Falling immigration and a failure to reach a post-Brexit agreement on the status of EU nationals working in the UK have left the nation's labour market at "tipping point", according to a think-tank report.The Resolution Foundation warned the failure to resolve employment issues in the negotiations between the UK and EU could be "hugely disruptive" to Britain's economy.
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"The British labour market is at a tipping point, with big Brexit and non-Brexit related changes from lower migration to a higher minimum wage coming together over the next few years."How government and firms respond to these changes is as central to preparations for Brexit as negotiations in Brussels."Responding to the report, a government spokesman said, "Since the referendum, the government has engaged with businesses across the country and we are now intensifying this process to ensure the voice of the British business community is being heard and reflected throughout our negotiations."
Read David Sapsted's article on Establishing Right to Remain – which discusses the uncertainty over immigration which the UK faces following Brexit – in the Summer 2017 issue of Relocate Magazine.
For related news and features, visit our Brexit section.
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The UK labour market facing crisis
A survey of 500 companies across a range of sectors found that only 38 per cent said they expected to respond to a drop in the supply of foreign workers by hiring more British nationals. About 15 per cent said they would change their business models by investing in new technology, increasing automation and other measures.The report said the UK labour market faced a crisis because falling immigration was coupled with the rising cost of cheap labour. It said the government must do more to prepare businesses for the coming Brexit changes.Stephen Clarke, economic analyst at the Resolution Foundation, said, "Low-paid labour will no longer be as cheap and will no longer be as available as British firms have grown used to. Businesses will respond to these changes in a number of ways, depending on their ability to automate or recruit more workers. "But in almost all cases, they'll need a helping hand from government to get the wider economic conditions right. With Brexit negotiations finally under way, that support for business should begin right now. This means clarity over the government's new immigration regime, a renewed drive to bring older and lower skilled people into the labour market, and action to ensure our employment and benefit regimes keeps pace with these changes in the world of work."Remaining uncertainty over labour market
Caron Pope, managing partner at Fragomen, the world's largest immigration law firm, agreed the government was not doing enough to reassure businesses. "It doesn't look as though the government is taking much notice at the moment and the immigration regime of the future is still unknown," she said. "Employers have been clamouring for answers for a year in every sector. Uncertainty breeds uncertainty, which is not good for anyone."The report said that the trend of falling immigration into the UK was likely to continue because of uncertainty about the status of workers, improved job opportunities in Europe and the fall in the value of the pound.Torsten Bell, director of the Resolution Foundation, said, "Leaving the EU will have a profound effect on people's lives, and nowhere will this be felt more strongly than in the workplace.Related news:
- REC data suggests further tightening of UK labour market
- Record number in work but real wage levels fall
- UK manufacturers echo calls for ’soft’ Brexit
"The British labour market is at a tipping point, with big Brexit and non-Brexit related changes from lower migration to a higher minimum wage coming together over the next few years."How government and firms respond to these changes is as central to preparations for Brexit as negotiations in Brussels."Responding to the report, a government spokesman said, "Since the referendum, the government has engaged with businesses across the country and we are now intensifying this process to ensure the voice of the British business community is being heard and reflected throughout our negotiations."
Read David Sapsted's article on Establishing Right to Remain – which discusses the uncertainty over immigration which the UK faces following Brexit – in the Summer 2017 issue of Relocate Magazine.
For related news and features, visit our Brexit section.
Access hundreds of global services and suppliers in our Online Directory
Get access to our free Global Mobility Toolkit
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