Jessica Pattinson: Brexit work permit crisis set to be '˜new normal'

Scotland is facing a labour and skills crisis, as Britain's work permit system was simply not designed to cope with the impact Brexit is already having on the labour market. With more EU nationals leaving the UK and fewer arriving, employers are having to look beyond the EU to fill vacancies, but are struggling to get work permits, as the limited number available is being allocated to employers able to pay above the current salary threshold of £50,000 a year.

Many sectors will take years to create new domestic talent pipelines, Picture: Jane Barlow

With net migration from the EU decreasing, as uncertainty grows over EU citizens’ rights and the post-Brexit immigration regime, the UK government announced on 28 February that EU nationals who arrive in the UK before the end of the so-called “implementation” or “transition” period can stay permanently.

It’s a shift from the UK’s previous stance that arrivals after “Brexit day” on 29 March 2019 would only be able to stay temporarily and be subject to immigration controls at the end of the transition period. This concession may have come too late for some employers, who have already lost valuable talent due to uncertainty. It remains to be seen whether this shift will convince EU nationals that the UK remains an attractive place to work and develop their careers.

It is therefore becoming increasingly necessary for employers to look outside the EU for talent. However, the Tier 2 (General) Restricted Certificate of Sponsorship (RCoS) work permit – the mainstay of the UK’s employer-sponsored work permit system for highly skilled workers – is capped at 20,700 a year.

Many sectors are already feeling the impact of this quota, with everyone from doctors to oil and gas workers and graduate recruits missing out on work permits. With permits in short supply, preference is given to higher-paid workers or the few roles officially recognised as being in shortage or occupations skilled to PhD level. The yearly quota is released on a monthly basis and, until very recently, there had only been one case of a month being oversubscribed (June 2015) since the quota system was introduced in April 2011.

Since December 2017, permits have run out every month. This unprecedented three-month run has seen the minimum salary required for approval pushed up to £50,000, as sectors such as finance, healthcare and engineering search globally for skilled people to replace the Europeans who are leaving.

Given the salary differences between London and Scotland, this has priced some employers out of the system, while they continue to face a drain in their EU labour pool.

Employers had no chance to adequately prepare for this sudden and dramatic labour market shift. In many industries it will take years, if not decades, to create new domestic talent pipelines.

It will therefore be necessary for many Scottish employers to continue to pursue international recruitment strategies. However, unless there is a change in government policy, they are likely to continue to experience issues with the work permit quota being totally exhausted on a monthly basis; a “new normal” rather than a short-term issue.

To counteract the impact of Brexit, we need creative, flexible and dynamic policy-making, to ensure key industries in Scotland are able to secure the vital workers they need. Immigration policy should be an extension of the UK’s economic aims and labour requirements.

It should protect and strengthen key industries, including those providing critical public services, and act as a catalyst for innovation and growth in new industries. We should be asking what support these industries need to expand, diversify and innovate, rather than putting them at risk with a one-dimensional immigration policy unable to recognise that in many sectors it is a shortage of labour, rather than a shortage of jobs that is the “new normal”.

Leaving UK businesses with less access to international talent ahead of Brexit and beyond makes little sense.

If there is a silver lining to the current problems, it is that there should be little doubt about what is needed from a post-Brexit immigration regime.

In the meantime, we can only wish good luck to employers who were applying for a work permit this month. The deadline has passed for applications for one of the 1,126 work permits available, with the salary cut-off predicted to be higher than the £50,000 we have seen in past months.

The number of work permits available will increase to 2,200 in April, which we can only hope will bring the salary cut-off down to a more reasonable level.