London is back open for business.
As our hospitality, tourism, and retail sectors across the UK seek to make up for the last 18 months of economic uncertainty, local footfall and consumer confidence continues to climb.
Despite this however, the UK is facing a tightening of our labour market. Problems with aspects of our immigration system are becoming more visible, and a significant skills shortage in our native workforce is looking likely to stall recovery plans before they are even off the ground.
As our Facing Facts report showed, London’s growth and elevation over the last decade was boosted by the willingness of migrants from the EU and beyond to come and work here. Whilst we also saw significant jobs growth for native workers, migrant workers filled essential labour gaps and skill shortages that otherwise would have held the economy back, and thus helped project the UK as one of the world’s leading economies.
The present day, however, paints a darker picture.
While there is some dispute over the exact figures, the UK’s Economic Statistics Centre of Excellence estimates that as many as 1.3 million people born abroad left the UK from July 2019 to September 2020, and up to 700,000 people may have left the capital during the same period – nearly eight percent of its population.
The UK should be able to turn to its own workforce, yet unfortunately it lacks many of the required skills, and we are consequently seeing gaps in the labour market. The health of the UK economy is now at stake, and if urgent action is not taken to overhaul the immigration system and kickstart a new reskilling programme, we will see the country fall behind our global partners.
All is not lost though, and there are solutions available. First, if the government were to introduce and quickly issue a temporary recovery visa for industries where there is clear evidence of labour and skills shortages (such as we have seen for HGV drivers), it would help to solve immediate problems. Shelves would remain stocked, care staff would not be stretched as thin, and regular fuel deliveries would seemingly end the current crisis.
To regulate the flow of in demand foreign labour however, further action should also be taken.
Second, while a ‘Shortage Occupation List’ (SOL) exists which offers a labour migration pathway in for occupations feeling the squeeze, the problem here is that its skills threshold is set prohibitively high. This subsequently prevents many of the jobs that are facing shortages from being filled as the jobs are deemed as too “low skilled” by the government.
However, if the skills threshold was removed from the SOL, this would ensure that the immigration system could flexibly increase and decrease depending on the economy and labour market needs. By keeping the salary threshold in place, this would create a levelling up effect for the current lowest-paid and most essential jobs facing shortages.
In order to maximise economic recovery, a temporary recovery visa and a more dynamic SOL must be coupled with a doubling down on government investment to train and reskill the UK’s workforce. We are already seeing many businesses investing more in training and, where possible, increasing base salaries to attract more people into certain sectors.
But labour is not always as flexible as the government would like it to be – it takes time and money to get an HGV license or acquire specialised skills for certain industries, not to mention the tenacious resilience required to do such extremely tough jobs. Given the vast uncertainty in how the labour market will respond with the end of furlough, and to give the government’s ‘back to work’ support time to gear up to operate at full tilt, we need short term fixes combined with long term planning.
Therefore, the government needs to work better together with departments across its immigration and skills policies so that it is better coordinated. From this, tailored support programmes and training for the UK’s workforce can be devised and maximised to ensure significant, long-lasting growth.
The introduction of temporary visas, along with an overhaul of the Shortage Occupation List and the prioritisation of reskilling London’s workforce therefore have the potential to accelerate London’s road to recovery as we continue life away from the coronavirus pandemic. Through these actions, we can identify gaps in our workforce and improve the attractiveness of jobs and sectors that have historically relied on overseas labour, whilst temporarily filling gaps through a flexible immigration system.
