A recent report by the Local Government Association (LGA) has found that by the middle of next decade the UK will face a skills gap that could cost the economy up to £90bn. It predicted that by 2024 there will be 21.8m people chasing low and intermediate-skilled jobs – a surplus of 8.1m – while 4.2m highly skilled jobs (mostly in IT, financial services and telecoms) cannot be filled by the right candidate.
These figures, the study warned, will be exacerbated by Brexit.
Quite how much worse remains to be seen. Highly-skilled migrants offer an important solution to skills gaps, but their future relationship with the UK is uncertain to say the least. The Office for National Statistics (ONS) revealed that the number of EU workers fell by 50,000 in the final three months of 2016 – the biggest drop in five years. On top of this, a survey by human resources group CIPD found that almost a third of employers said that EU nationals were looking to leave their organisation “as a direct result of Brexit”.
Already, before any real negotiations have begun, the hole is costing companies around £2.2bn according to a report from the Open University. £1.7bn of this is going to specialist recruitment consultants (who will find themselves very busy in the coming decade) and temporary staff, while the remaining £500m is being poured into higher wages and starting salaries to tempt skilled workers.
Another problem is the issue of whole companies moving overseas. CIPD’s survey reported that one in five organisations are considering relocating all or part of their UK operations outside the UK (11%) or will focus future growth outside the UK (9%) as a result of the vote to leave the EU. This poses a particular threat to IT services, which are being increasingly outsourced. As most people who’ve had to deal with remote IT services will testify, this is often a nightmare to work with, but if Brexit is pushing talent overseas then UK businesses will have limited alternatives.
Many hope that the skills gap will only be a short to mid-term problem. Deloitte suggest that the two best answers are increased automation and the up-skilling of UK workers. ‘Increased automation’ are two words that very few people other than financial advisors want to hear, and ‘the up-skilling of UK workers’ isn’t exactly an eye-opener.
UK companies will have to invest billions into developing home-grown skills. For those in the most affected sectors, this provides a great opportunity: the LGA report claims that the current £10.5bn funding for skills and employment is “confusing, fragmented, untargeted and ineffective” in its current form. It’s an area that will soon require a lot more spending, and at a highly uncertain time, recruiters, consultants and professionals will want to make their voices heard.
Deloitte’s report assures that the UK is still the most attractive place for migrant workers. However, if the UK leaves the single market and companies start to shift their businesses abroad, this seems certain to change.
There’s a lot riding on the matter of reciprocal working rights between the EU and the UK. Given that dismantling these rights was a central argument of the Leave campaign, this puts the UK’s negotiators in a position that’s unenviable to say the least.