CIPD: “Pendulum has swung away from the UK as an attractive place”

The latest quarterly Labour Market Outlook report, from the Chartered Institute of Personnel and Development (CIPD) and The Adecco Group, found that while the short-term outlook for employment remains strong, labour and skills shortages are accelerating.

It said this could be, partly, as a result of a sudden reversal in the growth in the number of both EU and non-EU migrants in employment in the UK.

The report found that the difference between the proportion of employers who expect to increase and decrease staff levels remains extremely positive.

However among employers which currently have vacancies, 70 percent report that at least some of their vacancies are proving hard-to-fill, higher than in summer 2018 and spring 2018 - 66 percent and 61 percent respectively.

In addition, more than two in five employers report it has become more difficult to fill vacancies in the past 12 months, while over a third say retention pressures have risen during the same period.

According to the report, the number of non-UK-born workers in the UK decreased by 58,000 between quarter two of 2017 and the same period in 2018, compared with an increase of more than a quarter of a million from quarter two of 2016 and the same period in 2017.

The CIPD added that contrary to popular narrative, the labour supply shock is being driven primarily by falling interest from migrants outside of the EU.

The number of non-EU-born workers in the UK decreased by 40,000 between the second quarter of 2017 and the same period in 2018, compared with an increase of almost a quarter of a million during the same period in the previous year.

The institute said labour supply looks set to be further constrained from 2021 when migration restrictions for EU citizens are introduced, especially for lower-skilled workers.

Gerwyn Davies, senior labour market analyst for the CIPD, said: “The data implies that the pendulum has swung away from the UK as an attractive place to live and work for non-UK born citizens, especially non-EU citizens, during a period of strong employment growth and low unemployment.

“This has heightened recruitment difficulties for some employers. It also underlines the risk that more non-UK-born citizens and employers will be discouraged from using the post-Brexit system if more support is not provided and it is not made simpler, fairer and more affordable; especially for lower-skilled roles.”