UK SMEs are totally unprepared for a new era of lower migration

With formal Brexit negotiations set to start in just seven days’ time, the survey identifies a huge gap between the kind of immigration system employers expect and what the new government is planning. The research highlights the fact that it is not just the new government, but businesses too, that need to step up their preparations for Brexit.

The ComRes survey, commissioned by the Resolution Foundation of employers who employ EU/EEA nationals finds that almost half of firms have totally unrealistic expectations of what the post-Brexit immigration regime might be. 17 per cent of firms expect no change to the current system of freedom of movement for EU/EEA nationals to the UK, while nearly a third expect to see that system maintained for those with a job offer.

The Prime Minister in contrast has ruled out either option, stating that her government – rather than firms’ demand for workers – will control migrant numbers. The Conservative Manifesto recommitted the government to reducing net migration down to the tens of thousands.

More immediately the survey found that almost half of employers who employ EU/EEA nationals do not expect any change in the number of EU nationals in their workforce over the next 12 months. A quarter expect to increase the number of migrant workers they employ, roughly the same proportion as expecting a decrease.

This is despite there having already been a sharp fall in net migration – from a high of 335,000 on the eve of the referendum to 248,000 at the end of last year – even before the Brexit negotiations have formally begun.

The Foundation says that lower migration, coupled with a higher minimum wage and a tightening jobs market, could put an end to the era of readily available cheap labour that has characterised the UK labour market in recent years.

The gap between what businesses want from a future migration regime, and what the government is likely to offer, is even starker. Close to two-thirds of firms say that either no change to existing freedom of movement or a switch to allowing movement for all with a job offer would be best for their business.

The Foundation says that while Britain’s post-Brexit migration policy should not be solely determined by what businesses want, it is vital that the new government listens to business and gives firms the clarity they need to start preparing for a new immigration regime. And with Brexit negotiations starting next Monday, that clarity should come well before Britain leaves the EU given the significant time it takes firms to change how or what they produce.

Ensuring a smooth transition towards a lower migration post-Brexit labour market should be a key objective of the new government. A failure to do so could deal a major blow to productivity, the think tank says, and with it prospects for future pay and jobs growth.

Torsten Bell, director of the Resolution Foundation, says, ‘As the fall-out from last week’s election rumbles on, the new government will need to be making fast preparations for Brexit negotiations that start in just seven days’ time. But it’s not just government that needs to step up preparation for Brexit.

‘Many British firms are totally unprepared for this change, particularly when it comes to migration. Ministers have compounded this uncertainty by choosing not to answer questions over what a post-Brexit immigration regime might be.