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Solving the UK's post-Brexit blue-collar labor shortage

Richie Santosdiaz | forbes | 7 March 2017

A major concern for many in the business community is access to labor, which is important for any economy to maintain operations and in the long-term provide strong economic growth. Currently in the U.K., freedom of people and goods allows for European Union (EU) citizens to work freely in the EU. This includes those in highly skilled professional industries, as well as blue-collar positions such as in factories, the hospitality industry and farms.

If the UK has a hard Brexit, which looks likely, it means EU citizens would one day face restrictions if they want to work in the U.K. With the immigration system at present in the U.K., a non-EU citizen who wants to work there generally would either have to invest and/or start a business, be sponsored by a company, have an authorized government exchange, marry an EU national, have a youth mobility visa (only for certain nationals such as Canadians) or be awarded an “exceptional talented visa.” The latter is extremely difficult to achieve as only a maximum of 1,000 places are allocated a year to talented and promised individuals in their fields.

A common route is that a U.K. business, if it is a registered sponsor, can sponsor a non-EU worker. With the current rules, this means only graduate-level roles making a certain salary, which by April this year will be £30,000 ($38,000) can qualify. In certain circumstances, some professions that are on a shortage list from the U.K. Home Office may not have to make that figure. On top of that, the U.K. business has to have the authorization and sponsorship license to do so, which costs money and involves paperwork; the company would also have to be willing to sponsor the individual.

This would restrict access to only the professional graduate-level class making a sizable salary, which would isolate a significant percentage of those that come to the U.K. at present. Included in the professional graduate-level class would be lawyers, investment bankers, consultants, scientists and academics. A problem many have in various services, which recently has included the hospitality industry, is that they currently employ a significant amount of EU workers. Owners of popular restaurant chains in the U.K. recently jointly published a letter showcasing various concerns about their industry. One letter addressed to Prime Minister Theresa May suggested that assurances be given so that EU workers will be able to work in their restaurants after Brexit.

Many do not realize that there might be a solution for the Home Office to use one day if it chooses to. For those familiar with the U.K. points-based visa system, there are currently four categories in operation:

-Tier 1 – which includes the entrepreneurial visa and exceptional talented visa

-Tier 2 – company sponsorship and inter-company transfer visas

-Tier 4 – student visas

-Tier 5 – temporary worker-government authorized exchange and Tier 5 Youth Mobility Scheme visa

Tier 3 is missing, as it is currently suspended, as that category at present is for the Home Office to use in case it will need low-skilled workers to come to the U.K. for temporary work. In March 2013, former Prime Minister David Cameron announced that Tier 3 was to be "shut down completely." Given the situation at present, U.K. businesses who need low-skilled work can easily fulfill their requirements with EU workers. In a post-Brexit Britain, this may become a challenge where a Tier 3 may have to be used to invite blue-collar workers to fill the positions that Brits will not be able to do, nor want to do.

According to Vitoria Nabas, an immigration lawyer and managing partner at London-based Nabas International Lawyers, “It would be very interesting to see a creation of a Tier 3 category to fulfill jobs with EU labor-skilled workers.”

If a Tier 3 visa was activated, which was never in force, as EU workers were able to fulfill blue-collar positions, it remains to be seen what this means for U.K. businesses. Likewise, the Home Office may even create a new visa category for EU citizens, pending what is agreed in the Brexit negotiations with the EU. However, based on the current point-based system, businesses who may want to sponsor low-skilled workers would most likely have to apply to be sponsors, pay a fee to do so and adhere to the U.K. Home Office’s standards of maintaining record-keeping of its foreign workers.

Nabas says, “The current system to sponsor a foreign person is irrational and scrutinizing for small- and medium-size companies. The creation of a new category that could support EU workers could ease the process to these companies and, of course, the workers.”

For as many EU workers in blue-collar roles, there are also many EU nationals working in highly skilled professional positions in the U.K. Assuming the U.K. will leave the EU in a hard-Brexit, it will be assumed that highly skilled EU workers may have to follow the protocol their non-EU counterparts must do with an employer, which most likely will mean using a Tier 2 visa.

U.K. businesses who currently hire a significant proportion of their staff from the EU might be very concerned about the future. It may be unlikely that those EU citizens currently living in the U.K. will be deported, as this may mean a reciprocal for the millions of Brits who live in the European continent that is part of the EU, notably in countries like Spain and France. However, with the set-up of the points-based system in the U.K., there may be a solution at hand if the U.K. leaves the EU market entirely.

Richie Santosdiaz is an economic development expert at PA Consulting Group

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