The skills shortage has been a high-profile concern for British businesses throughout the past several years. Companies feared that, with the possible end to freedom of movement between the UK and the EU, they would lose access to many of the tens of thousands of skilled foreign workers they rely on. The issue of unskilled workers, on the other hand, has received little attention.
To address the skills shortage, Home Secretary Priti Patel reassured businesses that the government would work to “encourage people with the right talent” to emigrate in a recent interview with BBC Breakfast. However, she also stated that they would aim to “reduce the levels of people coming to the UK with low skills” by not introducing a route for low-skilled or low-wage workers.
Instead, all new immigrants would be required to qualify under a new points-based immigration system. As a result, the agriculture, hospitality, medical, and food industries, all of whom rely heavily on low-skilled immigrant workers to fill menial roles, are faced with a labour crisis. Additionally, skilled workers who are self-employed would be affected, limiting the UK’s access to construction contractors, graphic designers, software developers, and other IT professionals —potentially exacerbating the skills shortage.
The UK is to implement a point-based immigration system
The proposed system would award points for a variety of qualifications, including English language skills, an existing job offer, technical qualifications, a PhD in a STEM subject, meeting the salary threshold, or making significant investments in the country. To qualify, an applicant would need 70 points, which can be achieved by meeting 4 of the listed requirements.
This system will categorically exclude all unskilled workers, as these would, by definition, fail the technical qualifications, salary threshold, investment, and educational requirements. While an existing pilot scheme to bring in up to 10,000 temporary agricultural workers would continue, the agricultural industry expects to face serious labour shortages alongside the hospitality, medical, and food processing industries.
Similarly, skilled self-employed workers would not qualify due to the lack of an offer of employment or proof of a stable salary. This, in particular, is a serious problem that could prove problematic for the construction and IT sectors, who are already suffering from a skills shortage.
Businesses are responding with dismay
Representatives of the nursing, farming, and food industries have responded to the news with dismay. The Royal College of Nursing stated that the plan would prevent the medical industry from meeting the health and care needs of the population. Meanwhile, Minette Batters of the National Farmers’ Union described it as a “failure to recognise British food and farming’s needs,” while the Food and Drink Federation pointed out that bakers, meat processors, and other typically foreign food workers would not qualify to work in the UK under the new system.
Industries are told to “adapt and adjust”
Patel’s message to businesses is to “adapt and adjust” to the end of free movement by breaking their reliance on cheap European labour, training the UK’s 8.5 million “inactive” British workers and encouraging them into employment. Businesses have responded with skepticism, as this group is primarily made up of students, the long-term unemployed (such as stay-at-home mothers and other carers), and retirees.
Wage and price adjustments will be necessary
Demand for low-cost consumer products have long driven wages down in many of the affected industries. This is in large part why these businesses are so reliant on foreign, lower cost labour. In order to attract local British workers, businesses will need to raise wages, resulting in higher prices for consumers. This, in turn, will make these businesses less competitive on an international level.
Businesses who work primarily with skilled workers will also be affected to some degree. While the salary threshold for skilled immigrant workers will be reduced to £25,600 from £30,000, many businesses will still need to raise entry-level wages for young skilled foreign workers, or otherwise increase their reliance on the local labour pool. In theory, this is intended to secure more jobs for British workers. Unfortunately, the UK already enjoys nearly full employment, meaning that the available labour resources are already insufficient to meet demand.
Unintended side effects
If this new immigration system is implemented, it is likely to translate to decreased economic growth, and higher prices for consumers. Businesses will ultimately adapt, of course, though not in the ways proposed by the government. While farmers, food processors, and hospitality businesses might be forced to raise prices, others may respond to the additional pressure by turning to automation and outsourcing.