Preparing for the post-Brexit migration system

On a recent trip to the US, Theresa May said that new immigration rules introduced after Brexit must continue to bring numbers down but in a way that does not damage the UK economy.

While the specifics of what ‘good for the UK economy’ really means are unclear, businesses will likely take heart from the potential for ‘light touch migration’ rules for EU nationals as part of any wider Brexit trade deal.

Retailers will be keeping a particularly close eye on developments. According to the British Retail Consortium, EU citizens account for 6% of the industry's workforce. Not only are these workers concerned about their status: their employers will be anxious about the prospect of maintaining staffing levels and retaining talent, particularly with regards to technology skills.

The new system

Last month, the Migration Advisory Committee (MAC), an independent body made up of mainly economists, published a report on current and predicted patterns of migration from the European Economic Area (EEA) and its impact.

Contrary to the image painted by some Brexit supporters, the MAC found that EEA migrants do not have any substantial impact on employment or unemployment among the UK-born workforce, or indeed the wages of UK-born workers. In fact, EEA nationals contribute more to the UK economy than they take out, by increasing innovation and helping to raise productivity levels.

The MAC’s findings have informed its advice to the government on a post-Brexit immigration system could work. The MAC has recommended bringing EEA migration into the current system used for non-EEA workers. This would mean EEA workers will need a visa to work in the UK and only the highly skilled will be eligible. The existing Tier 2 scheme could act as a template, though the MAC has recommended some changes, in particular the abolition of the annual cap and an extension to workers in medium-skilled jobs.

Potential issues

The recommendations have been controversial and have taken many UK businesses by surprise. We’ve heard first hand from many of our clients that they would be forced to close or reduce their UK offices if they could not easily move their staff between the UK and Europe.

The problem with the current system – which the MAC’s model will emulate - is the time it takes to secure visas, the cost of providing these visas and the complexities of managing a system which places a lot of emphasis on self-management with a lack of support from UK immigration authorities.

In particular, costs may be an issue for smaller businesses. The cost of a Tier 2 visa issued for 5 years is over £7,000. Small companies have a lower charge but even so for many businesses these fees will be untenable. 

There are also question marks over exactly how many workers will be covered by the new system. Tier 2 is currently limited to very highly skilled roles (RQF level 6 and above), although the MAC has recommended opening Tier 2 up to RQF level 3 and above. A lower barrier will help, but there is a minimum salary level for Tier 2 which will mean many skilled roles will not qualify and employers outside London will struggle to meet the salary requirements. This could result in employers being unable to secure talented workers with unemployment at an all-time low in the UK.

What should retailers do?

Whether or not the UK decides to implement MAC’s recommendations, free movement is most likely to end when the UK leaves the EU. With this in mind, and a no-deal scenario looking increasingly possible, it is sensible for employers to consider how they plan to retain staff that are EEA migrants or prepare contingency plans training more UK-born workers. This is something they should being thinking about now, rather than waiting for a new system to be established, given the amount of time developing a high-quality training system can take.

With regards to retaining current talent, it is a good idea for those EEA nationals who are eligible to apply for their permanent residence status do so now to give them some security. Employers should support applications, given that it remains unclear what will happen in a no deal situation, and that any new system may be oversubscribed. Moreover, with a cost of only £65 and a relatively short processing time, securing permanent residence looks likely to be a simpler process than the post-Brexit system, which could fall foul of its reliance on new technology.

Clearly there is much further to go before we will see whether the government will adopt the MAC’s proposed system – not least that there is first the hurdle of whether or not Theresa May will manage to secure a transition deal with the EU. Employers’ concerns about a loss of talent are justified, but ahead of any decisive outcome they should aim to prepare their staff to the greatest extent possible.

Join Charles Russell Speechlys, Essential Retail and Kantar discuss how retailers can attract and retain talented technology workers in an ever-increasing digital world in an webinar on 23 October. Register here.