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Navigating Brexit: Future options for UK-EU labour mobility

18 Oct 2017
Sandcastles with Union Jack and EU flags

For a significant number of voters, immigration was the defining issue behind the vote to leave the European Union.

However, the ways and means by which the UK will manage labour mobility to and from the EU post-Brexit are still to be determined.

Theresa May’s speech in Florence outlined a proposed registration system for EU nationals living and working in the UK during the transitional period, adding that this would be a building block towards “taking full control of our borders”.

As part of the IoD’s Navigating Brexit series, we brought together members of the Institute along with policy experts, industry specialists and politicians to move beyond headlines.

Here we provide a summary of the thought-provoking proposals from our guest speakers on how we control immigration and continue to serve the needs of the economy along with the business community…

1. The view from the politician

Rt. Hon. Iain Duncan Smith MP is former Secretary of State for Work & Pensions and former Leader of the Conservative Party

Duncan Smith favours a move to a flexible work permit system, with the requirement of a job offer first, exempting intra-corporate transfers which would be unrestricted. He opposes a visa system, arguing that a work permit for EU nationals would be simpler and should be brought in under the current scheme, with some modifications.

He adds that for certain “high-value” categories of workers – such as academics, scientists and engineers - easier and faster permit procedures should be put in place.

Settling the status of EU nationals currently in the UK should be resolved with the EU first and foremost in negotiations and the Government needs to assign a cut-off date after which EU nationals would then be subject to the work-permit system.

Furthermore, transferring work permits from one job to another would be subject to conditions and EU nationals coming to the UK for work after the cut off date should not be immediately entitled to certain welfare benefits.

Turning to the Migration Advisory Committee’s shortage occupation list, he believes this should be better utilised after Brexit – saying some higher value-added occupations should be unrestricted for a period while low-skilled ones should be restricted by a cap and/or quota system.

IDS drew on his time as the Secretary of State for Work & Pensions, citing the Universal JobMatch service created under his tenure, to argue the DWP’s regional job centres should be involved when a permit application is being considered by the Home Office to take account of whether UK applicants in certain regions had been sufficiently explored by employers.

He also calls for an enhancement of the National Insurance number system to distinguish between those granted NI numbers for work versus other purposes, to allow a time limit to be set on their validity and address what he described as the “disappearance problem” as it would lapse upon expiry.

What are the next steps?

Duncan Smith says that our future immigration policy needs to go beyond Brexit and that the UK needs a new scheme for all corners of the world, rather than creating a preferential one just for EU nationals. 

2. The view from the economist

Jonathan Portes is King’s College London Professor of Economics & Public Policy. He is a former director at the National Institute of Economic and Social Research (NIESR) and ex-Chief Economist at the Work & Pensions Dept. and the Cabinet Office

Portes noted that while both sides have said they want to guarantee residency rights for current EU/UK nationals, what that would cover in detail beyond simply residency (and what criteria to use in defining the extent of who qualifies) would be much harder to negotiate.

He says the discussion is a trade-off between arguing whether migration is complementary to trade or is a negotiating card to have in hand, while observing how little progress has been made on including migration/labour mobility in existing Free Trade Agreements (FTAs) around the world.

Portes also takes issue with the categorisation of the majority of migrant workers as being “low-skilled”, noting that the majority of both EU and British workers were employed in middle-skilled jobs and that the current accepted definition for “low-skilled” on the basis of salary would actually exclude many middle-income workers.

He argues that the enforcement and burden thereof of any new work permit scheme as set out by Duncan Smith for EU nationals would fall primarily to businesses, universities and other institutions but not on government and that with respect to a transitional provision for EU migration, options could include free movement, as it currently exists now, modified free movement or a phased implementation of the new system.

What are the next steps?

Portes is sceptical about the feasibility and desirability of sector-based migration schemes, (citing a big difference between “occupations” and “sectors”). He believes it would it create more bureaucratic complications for both government and employers. Furthermore, he says the idea that Whitehall could centrally plan the labour market is nonsensical, and that Brexit should be a catalyst for reviewing current policy to create a new fairer and simpler migration system overall.

3. The view from recruitment

Julia Onslow-Cole is a ‎Partner and Global Head of Immigration & Legal Markets Leader at PwC

Onslow-Cole stressed the need for urgent clarity from the government on the future of UK immigration policy, as many businesses are putting off hiring decisions as a result of the current uncertainty.

She says that many of her clients are helping EU citizens within their workforce to register their EU treaty-derived rights or are already entitled to permanent residency in the UK (even though it is optional at this stage).

Addressing the issue of Home Office application refusals in this space to date, she says many of these are related to lack of sufficient insurance [coverage] or incomplete documents, and that a simple uniform process specifically for EU/EEA nationals applying to the Home Office is required.

She adds that it is very difficult to make the shortage occupation list flexible and responsive to the evolving needs of businesses, and as the civil service continues to shrink this resource, making it even harder to manage or expand this list after Brexit.

What are the next steps?

Onslow-Cole is also of the view that while highly skilled migrants and sector-based schemes for low-skill migrants might be taken care of under any new immigration scheme, many bright people in the “squeezed middle” categories of workers where many EU nationals are employed are in danger of being overlooked.

Citing fintech as an example, she questions whether salary and outdated ‘traditional’ notions of sectors and skills should be the main determinants for work permits.

She adds that there might eventually be a place for regional visas once the Home Office has the capacity to oversee it through devolved administrations after Brexit – arguing that places like Scotland are particularly dependent on EU workers in the public sector, and beyond, owing to demographic challenges.

4. The view from the legal profession

Helen Smith is an Immigration Solicitor at North Star Law Ltd.

Smith examined the current arrangements for EU/EEA/Swiss nationals in the UK, noting that they have the legal rights to live in the UK ‘if they are exercising their treaty rights’ by either being a worker or self-employed, a student (with private medical insurance), or a self-sufficient person (also with the private insurance requirement). If they have been exercising these rights for five years they automatically qualify for UK permanent residence.

She notes that the insurance provision requirement has been creating the most difficulty for EU nationals looking to move to apply for permanent residence.

Looking at the other domestic UK immigration systems applying to all immigrants, she notes the extreme comparisons on fees for EEA/Swiss nationals to register to exercise their treaty rights versus those for employing non-EU workers, as well as skills definition for Tier 2 sponsored workers versus the lack of any skills requirements for EEA/Swiss citizens to work in the UK.

She stresses that any new work permit scheme for EU/EEA nationals needs to be much cheaper and quicker given the proximity of those citizens to the UK and labour combined with the realities of a shortage in skills within certain sectors.

Referring to previous worker registration schemes for the A8 countries (the member states that joined the EU during its 2004 enlargement), Smith reckons this could be brought back for a transitional period after Brexit before any work permit scheme is implemented, along with reviving a seasonal agricultural scheme which could be expanded to other exposed sectors like the care sector which is particularly dependent on migrant labour.

Smith also looked at the previous Tier 1 general category, which allowed self-sponsoring highly skilled people to come to the UK to look for work as something that could be revived for EU and Commonwealth nationals or linked to future UK trade agreements. Finally, the post-study work visa route should be re-examined, as this was particularly successful in Scotland.

What are the next steps?

Smith urges businesses to undertake firm-level audits of their workforce to assess their exposure to Brexit as part of any scenario planning exercise. This would include encouraging and supporting EEA workers to apply for permanent residency while cautioning that this might be particularly difficult for low-paid workers (or part-time) who might not qualify under the current Home Office definition of a “worker” salary-wise to be granted this.

She also suggested examining the non-EEA visa routes to see where current staff might fit in under existing Home Office rules, and warned that the shortage occupation list would have to be reviewed/updated on a much more regular basis and expanded –working with trade bodies- to keep pace with the changing nature of the labour market.

5. The view from the engineering sector

Dr Hayaatun Sillem is the Deputy CEO & Director of Strategy at the Royal Academy of Engineering

Dr Sillem feels that between Brexit, the forthcoming Immigration White Paper/Bill and Industrial Strategy, the government has both a challenge and an opportunity on its hands to ensure that it can produce an immigration and wider economic policy that was more in step with the needs of industry to address the on-going skills crisis.

This, she argues, will mean continuing to meet the short to medium term needs with international talent while developing an up-skilled workforce for the longer term.

Sillem adds that understanding the various evolving needs of businesses for specific skills within the engineering sector is quite difficult to gauge or quantify. Furthermore, amassing this information and data would require significant formal input from trade bodies and professional networks into any government management of work permit applications and this would naturally apply to the management of the shortage occupation list as well.

What are the next steps?

Dr Sillem argues that positioning the UK as an outward-facing global nation in terms of trade and investment needs to go hand-in-hand with sending out a message about it being a home for attracting global talent, which could and should expand to how it might include labour mobility facilitation into its trade strategy.

The mutual recognition of professional qualifications, fuelled by the input and involvement of business membership organisations, could be a key area where this could be tackled under future trade deals as well as being driven independently by bilateral efforts between sister trade organisations across borders.

6. The view from the tech sector

Romilly Dennys is an Executive Director of COADEC (Coalition for a Digital Economy)

Dennys outlined the particular exposure of tech firms –particularly among start-ups - to Brexit given the comparative lack of financial resource to obtaining professional planning advice and their particular dependence on young EU nationals for self-taught coding skills not often covered by traditional work permit schemes or degree accreditation.

She disagrees with Duncan Smith that a job offer should be a necessary prerequisite for EU nationals to work in the UK, arguing this would hit many European entrepreneurs who come to the UK with ideas to create a business.

What are the next steps?

Dennys suggests that a six-month high-skilled tech visa would allow qualifying candidates to come to the UK to find or create work and this could be expanded on the basis of skills/qualifications rather than granted on a sector-specific basis, given tech and digital skills criss-cross throughout so many different sectors and industries.

She adds that the biggest burden on start-up founders for bringing in foreign skills and talent were the sponsorship requirements on themselves. Tackling this, she floats the idea that a greater number of professional trade bodies such as Tech City could assume more of a responsibility in acting as sponsors rather than solely upon the firms themselves. 

Navigating Brexit for business

To help you navigate your way through the complex Brexit minefield, we have created a hub where you can find the latest information, guidance and advice to support and inform you and ensure you are fully up to date.

Visit our Navigating Brexit hub

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