Brexit affecting UK labour and skills
Brexit is impacting UK labour supply as the flow of EU nationals into the UK falls abruptly
Brexit is impacting UK labour supply as the flow of EU nationals into the UK falls abruptly
The latest quarterly UK Labour Market Outlook from the CIPD and The Adecco Group, based on a survey of 2,001 employers, shows that while the short-term outlook for employment in the UK remains strong, labour and skills shortages are finally starting to bite:
The strong demand for labour is finally increasing recruitment pressures for employers. The growth in labour supply is failing to keep pace with labour demand, exacerbated by a ‘supply shock’ of far fewer EU nationals going to the UK. The fall of 95% in EU-born workers going to work in the UK has fed into a tightening of the labour market, evidenced from skills and labour shortages reported by employers:
While demand for labour is continuing, median basic pay expectations in the 12 months to June 2019 remain at just 2%, and mean basic pay expectations have only risen slightly, from 2.1% to 2.2% in the last three months.
However the squeeze on skills is having a clear impact on many employers’ pay decisions. Half of organisations (53%) that experienced increased difficulty recruiting staff during the past 12 months have increased starting salaries in response.
Where organisations experienced increased difficulty retaining staff over the past 12 months, just over half (55%) have increased salaries, with 30% raising salaries for the majority of staff and 25% doing so for key staff only.
The CIPD is pointing to the UK’s continued productivity crisis as a key factor behind employers’ inability to raise wages across the workforce. Gerwyn Davies, senior labour market analyst for the CIPD, comments:
“The most recent official data shows that there has been a significant slowdown in the number of EU nationals coming to work in the UK over the past year. This is feeding into increasing recruitment and retention challenges, particularly for employers in sectors that have historically relied on non-UK labour to fill roles and which are particularly vulnerable to the prospect of future changes to immigration policy for EU migrants. With skills and labour shortages set to worsen further against the backdrop of rising talk of a ‘no deal’ outcome with the EU, the need for the Government to issue consistent, categorical assurances about the status of current and future EU citizens, whatever the outcome of the negotiations, is more important now than ever.”
“Despite the declining unemployment rate, it seems that the downward pressure of persistently weak productivity growth is dominating any upward pressure on pay from labour and skills shortages. The battle for productivity growth and higher wages in the UK will be won or lost in our workplaces. Poor skills development, skills mismatches, lack of worker autonomy and inadequate management all have a significant impact on people’s productivity at work, which affects organisational performance and employers’ ability to increase wages.”
Are you a journalist looking for expert commentary and insights on the world of work?
Championing better work and working lives
At the CIPD, we champion better work and working lives. We help organisations to thrive by focusing on their people, supporting economies and society for the future. We lead debate as the voice for everyone wanting a better world of work.