Three years on, how has Brexit impacted the workforce?

31 January marked the third anniversary of the UK leaving the EU and an end to freedom of movement for workers. What impact has Brexit had on right to work routes for employers and what does the future hold? Jonathan Beech, managing director of Migrate UK, says agility is crucial.

With the third anniversary of Brexit at the end of January, this landmark has clearly had an impact on the UK workforce. According to think tanks UK in a Changing Europe and the Centre for European Reform, there are around 330,000 fewer workers than before we left the EU.

But while leaving the UK has led to an increase in immigration from non-EU countries, this clearly hasn't made up the overall shortfall. There are six sectors highlighted in particular for shortages - transport and warehousing has lost 128,000 EU workers or 8% of the workforce; wholesale and retail 3%; food and hospitality 4%; and manufacturing and construction are both 2% lower.

While the EU Settlement Scheme was the main vehicle for retaining EU citizens during Brexit, since July 2021 most new EU citizens wishing to move to live and work in the UK now need to rely on complex "family life" immigration rules (being a partner of a "settled" person, for example) or work sponsorship, all of which are helping to contribute to these shortages.

Current barriers

While new schemes have opened since Brexit including the graduate scheme and a High Potential Individuals (HPIs) visa that allow a degree of working independently for two to three years, these workers are not necessarily working in sectors facing the most acute workforce shortages.

Among our clients, this includes the healthcare, hospitality and transport sectors in particular. HPI and graduate visas, for instance, are limited in the time allowed before an applicant would need to move to a different immigration category.

In addition, business routes for those wishing to move to the UK to set up businesses and work independently have also been eroded, with the closure of the entrepreneur and investor routes - and a low take-up of global talent, innovator and start-up routes which are even more complex.

Notwithstanding, it was announced at the end of last month that one of the major endorsing bodies for the global talent visa, Tech Nation, has had its funding withdrawn and will close in March.

These elements are also impacting UK growth - whether through talent shortages at a senior level or the creation and start-up of additional new businesses that would come from a greater injection of entrepreneurial talent and skills from the EU.

Over the last ten years the UK has also created an impression of being a hostile environment for migrants with the mantra of reducing immigration to "tens of thousands", which again is impacting EU workers looking to settle here for the future.

Right to work routes

With such talent shortages, double the number of small businesses are now looking at sponsorship as an option in 2023, according to the Federation of Small Businesses.

But equally, many businesses are reluctant to initially consider this route or the other routes available for their recruitment shortages as they're often unaware of all the different options.

Another frequent issue is the perceived pain points in terms of bureaucracy and red tape businesses think is needed to explore overseas recruitment.

Or there's a belief that their business isn't large enough to qualify and these routes are only available to large corporate companies. With sponsorship, for example, an organisation mainly needs to prove that it has a genuine vacancy at the required skill and salary level.

Another perceived barrier is cost. While this can vary according to the size of business and the immigration route chosen by the employer and employee - again for a sponsor licence this is far more cost-effective than might be apparent. For example, for a small business this costs as little as £536 for four years and once in place it's ready for use.

What's needed now

It's unlikely we'll ever now see a return to free EU movement regardless of government, but looking ahead a more agile Shortage Occupation route could be an effective key to the future for sectors under pressure such as healthcare, hospitality and transport - especially in the short term. These routes could be adapted and added to as necessary by creating a transparent and true dialogue between government and industry.

An overhaul of the post-Brexit points-based system based on an individual's attributes, linked to UK regional need (rather than an arbitrary skills level as is currently), could help create a far more flexible and responsive workforce for UK plc.

This could be similar to current proposals in Australia, with more emphasis being placed on shortage occupations.

Ease of movement between jobs could also be introduced (independent routes rather than single sponsor), and more transparency over "tradeable points" based on an applicant's attributes and employability.

Taking a fresh look at what's really needed could help decrease business and public sector talent shortages. These immigration ideas, along with other homegrown options such as developing existing and future skills in school leavers or job changers, would really benefit UK plc and deliver the growth and services the country truly deserves.