Brexit, Immigration and Filling the UK Skills Gap

13/07/2016

Lizzy Chesters, Professional and Financial Services

Brexit, Immigration and Filling the UK Skills Gap

In October of 2015, over 230 start-up founders and investors signed a letter warning the Prime Minister David Cameron of the risks associated with restricting the number of skilled migrants entering the country from outside Europe.

But this was not news to Government.

The UK skills gap has been around for a long time and is getting worse.

The Tier 1 Visa scheme was designed to encourage skilled migrants from outside of the UK to work in our country – particularly in the tech sector. As we discussed in our recent blog, The UK Technology Skills Gap, the Institution of Engineering and Technology found that the technology skills gap has expanded for the ninth year in a row and it is increasingly difficult for employers to find staff.

Whilst 27% of all job growth in London is produced by the tech and digital sector, by 2017 the country will require an additional 750,000 workers in this sector alone in order to continue on this trajectory.

When the EU was originally formed, the free movement of Western Europeans was confined to those who were ‘economically active’.

However, in the early 90’s and following the creation of The Maastricht Treaty, the freedom of movement was bestowed upon all EU citizens so that EU migrants faced no hurdles to migration.

Following the UK’s recent decision to leave the EU, there has been a great deal of speculation surrounding the issue of immigration and how to appropriately manage the influx of people to this country.

But, any further stem to the flow of non-UK national skilled workers would not only be damaging to the tech industry, but to the economy that it supports – an economy that is already possibly under threat following our departure form the single market.

The struggle to recruit

The Tech Nation Visa scheme was created to secure talent from outside the EU.

The scheme was relaunched on 12th November 2015 because only 17 applications had been accepted over a 2 year period: clearly, our strategy to obtain much-needed, non-UK national skilled workers is not working.

Furthermore, in March the government almost halved the cost of the Tier 1 Visa, from £437 to £281 in a bid to attract more talented immigrants. Nonetheless, the threat of the June referendum was enough to make migrants reluctant to move to the UK and companies wary of hiring them. So we are yet to see whether the reduction in Tier 1 visa fees will have any impact on improving the numbers of skilled migrants.

Many argue that the UK’s current immigration strategy is too liberal but in the case of skilled workers in the digital sector this is far from the case. Regardless of the referendum outcome, there needs to be an overhaul of the visa system to attract the workers the UK requires in order to, not drive, but maintain economic growth.

A silver lining?

Certainly, leaving the EU should give the UK greater powers in preventing immigration from lower skilled groups, who may not offset their cost to the economy with contribution through taxation (although we are yet to find out whether this will be at the expense of having access to the single market).

And, given that the UK will theoretically be supporting fewer immigrants in total, the government will be able to open up borders to more developed nations, such as the US, Canada and Australia.

Similarly, a recent study carried out by Adecco Group, in partnership with international business school INSEAD and the Human Capital Institute, put the UK immigration in seventh place in terms of its ability to attract, develop and retain highly-skilled foreign workers.

The frontrunners were Switzerland, Singapore, Luxembourg, the US, Denmark and Sweden – many of which are countries that are not part of the EU. This bodes well for the UK.

Indeed, in the US, the H1-B visa scheme – similar to our Tier 1 Visa scheme - is heavily oversubscribed, receiving over 233,000 for fiscal 2016 and only 85,000 were available.

In conclusion

Brexit may prove to be a positive influence on the flow of skilled workers from abroad into our country.

Regardless, we must improve the system for accepting highly skilled individuals from abroad.  It is vital that the government tailors its policies to attract the most appropriate talent, to ensure the UK does not lose its place as a global leader in the fields of digital and technology.