Transcript - Episode 2: Mind the skills gap

Gaenor Bagley: Welcome to the second in our series of ‘Beyond Brexit’ podcasts. Today we are discussing immigration and the need for business to assess their resourcing requirements in light of the UK’s future exit from the EU.

I’m Gaenor Bagley, PwC’s Head of Corporate Purpose, and I also chair our EU Steering Committee, and I’m joined by Julia Onslow-Cole, PwC’s Global Head of Immigration, and a member of the Mayor of London’s Brexit Expert Advisory Panel.

So Julia, just remind us, what is the real impact of Brexit on immigration? Why is it such an important issue?

Julia Onslow-Cole: Well obviously business realises that in quite a short space of time their whole talent stream is going to change, so at the moment business has an enormous access to EU migration and obviously they are not going to have such a strong access in the future and therefore they have got to look very closely at the impact that this will have on their business and their supply chains.

Gaenor: It really means they’ve got to kind of plan more carefully about where their supply of talent is going to come from…

Julia: Absolutely

Gaenor: … because some avenues might be suddenly cut off without them planning ahead.

Julia: Yes, absolutely.

Gaenor: So are you seeing particular businesses impacted more than others?

Julia: Yes, so I mean I think that the businesses that are really going to face a very big impact are those that use low skilled EU migrants. So for example if you look at the construction industry, many of the construction companies use as much as 40-70% low skilled migration. One client I was talking to the other day thought that in five years’ time there might be a skills deficit of about 230,000 which is equivalent to the town of Luton, so they’re very concerned. If you look at the retail sector there’s three million people employed in the UK in the retail sector, initial prognosis is there is about 200,000 EU migrants, but in the actual distribution and warehousing behind that retail sector there are up to 70/80/90% low skilled migrants in some of those distribution warehousing facilities. Also the care sector is another sector.

Gaenor: Another example, yeah. So given the size of that impact, are you seeing businesses already plan and start doing different things about sourcing talent?

Julia: Well obviously this is a big issue for business and I think the first thing to do is that business must practically work out what the impact is going to be on their business and also on their supply chain. One of the things that we are doing at PwC is, very shortly we are about to launch a report which will be the first of its kind that looks at really new data that’s never been looked at before to give a very good analysis of what’s going to happen from the migration perspective on London in particular.

Gaenor: When you say ‘what’s going to happen’, you mean the kind of fiscal you know monetary impact of not having a source of talent?

Julia: Well what is actually the impact of the migrant population, you know historically what it has been and what it is now,  and therefore obviously if you change that then you can draw some analysis from it, but the point of the research that we’ve done is really just to give some factual basis to the discussion, and this has been really absent because it’s very difficult for employers to actually know who these individuals are, because often companies don’t actually track who’s a British citizen and who’s an EU national.

Gaenor: That’s interesting, and is your study … presumably it covers immigration in general, or is it just focusing on EU?

Julia: It covers migration in general and it also looks particularly at different sectors, so we’re very excited about this and I think this will make a huge contribution to the whole debate.

Gaenor: Yes, that’s fascinating actually, we’ll look out for that. So maybe we’ll have a separate discussion on that.

So it’s probably easy for us all to think about low skill, we probably see that in our day to day working. What about … is it a bit simplistic to say it’s just a low skill problem?

Julia: Yes, yes, I mean I think that obviously the government … we’re working and liaising with the government and the government’s very mindful of the low skilled, and I think that there are likely to be some categories, some new immigration categories to cover sort of temporary workers that are on the low skilled side.

The very high skilled, I think there is … there shouldn’t be too much worry about what’s going to happen with high skilled. There’s this sort of squeezed middle that I’m quite concerned about and these are sort of … butchers for example, they’re very talented people, they’re not low skilled, but they’re not necessarily high skilled in the definition that we have. A large number of butchers come from Hungary, we also have lift engineers, a large number of lift engineers are actually migrants, and laboratory assistants. There’s a sort of whole middle group of people that are actually not low skilled or high skilled and there is concern about where they will fit into a new migration system.

Gaenor: And so when you’re seeing businesses being confronted with this problem, are they just focusing on the immigration solution, in other words, if I don’t get them from Hungary can I get them from Poland? Or are they thinking about – well OK if I need lift engineers how can I grow my own? Is that the conversation you’re seeing happening?

Julia: Yes, that’s such a good point Gaenor. I mean it’s an immigration issue, so I mean I think business has to look at immigration, it has to look at the impact on its business and consider what it’s going to do from a migration point of view, but also we have the new government industrial strategy and the minister Greg Clark is very keen for business to comment on that industrial strategy and say – what do you need business by way of skills training and education, and so business must actually think about these things of course, it’s education and training and upskilling, and there’s a lot of contribution they need to make as to what needs to happen on those fronts.

Gaenor: Yes, and also that could be different from geographies as well as industry and as well as different types of skills.

Julia: Yes, and that’s an interesting point as well because I think that people forget that there is this big connection between London and the rest of the country, so I was really pleased to assist Sadiq Khan on his Advisory Brexit Group, and you forget for example on financial services that 230,000 jobs in the Greater London area and city financial services, but there’s one million outside of London that are dependent on those jobs, so in Edinburgh and Bournemouth, so it’s very important that we make sure that we have the right solution for London and that we have the right solution for the whole of the country.

Gaenor: Yes, absolutely right. So what would you suggest that businesses do? I mean we’ve talked about – look at their workforce, and we’ve talked about – identify comments that they should be raising to government. Is there anything else that they should start to do?

Julia: Yes, I think there’s two other things really. The first is that, it’s very clear now that we’re not going to get an early reciprocal agreement on EEA nationals, therefore there is a lot of concern about EEA nationals, and you yourself have spearheaded some real good support in PwC for EEA nationals, we’ve set up this helpline for them, and I think we’ve seen across the board our clients are actually rallying round helping existing EEA nationals register and make applications to register their EU rights, and that’s a really good thing to give some comfort to people, to know that they’re here and they are exercising such rights, and about a third of these applications are actually being refused at the moment so I think it’s very important to support your employees and make sure that they are aware of how they can register and if the applications are not successful, you know, why that is.

Gaenor: Yes, and that tends to be, doesn’t it, administration, there are some details that need to be in place so let’s make sure that those get done well in advance.

Julia: Absolutely, and then another thing that I think is very important is that as well as the other things that we’ve discussed, it’s very important that business considers what do I want as a business out of a trade agreement with a third country. So for example, we’re seeing different things happening in the US, there’s been this executive order, there may be an executive order relating to H1B visas, so when we make a trade agreement in the future with the US would business like to see some concessions for our citizens going into the US under H1Bs?

Gaenor: What are H1Bs?

Julia: H1Bs are a sort of common visa type in the US.

Gaenor: These are working visas as opposed to tourist visas?

Julia: Yes, yes, it’s a common type of visa that a lot of our companies are using in the US, so we could just basically say – well we’ll give you a concession under that kind of visa regime and in exchange they could have a concession under our UK visa regime. So I just think it’s perhaps a bit further down the track, but it’s something global businesses should be thinking about.

Gaenor: So I think broadly think about other flows of people, not just that the immediate problem which appears is the European Union ones.

Julia: Absolutely, yes.

Gaenor: That’s good. So that’s really clear, so there seem to be some clear things about understanding your workforce, start to think about long term talent planning, really help your current EU nationals, and if it’s relevant help them apply, and really think about what are you asking the government based on your industry, your place and your skill level.

Julia: Absolutely.

Gaenor: So thank you Julia for your insight, and thank you everyone for listening. We’ll continue to discuss these issues in more detail over the coming weeks.

For more insights from PwC on Brexit please visit pwc.co.uk/Brexit.

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