Brexit may spell skills short­age

Econ­o­mist An­drew Webb on how a lack of clar­ity could re­duce sup­ply of ready labour

Belfast Telegraph - Business Telegraph - - Front Page - By an­drew webb, man­ag­ing di­rec­tor of webb ad­vi­sory @An­drewjudewebb

❝ Some com­pa­nies are al­ready strug­gling to find car­pen­ters, join­ers and brick­lay­ers

❝ The num­ber of nurses reg­is­ter­ing from the EU is down by 96% in the year since the ref­er­en­dum

The avail­abil­ity of ap­pro­pri­ately skilled peo­ple is never far from the minds of em­ploy­ers and pol­i­cy­mak­ers. Re­port af­ter re­port notes the im­por­tance of skills to eco­nomic suc­cess, and there is a no­tice­able in­crease in re­ports on skills across the UK and North­ern Ire­land from em­ployer bod­ies such as the CBI and Cham­ber of Com­merce.

As re­ported in late sum­mer, a Cbi/pear­son ed­u­ca­tion and skills sur­vey found that more than four in five com­pa­nies in North­ern Ire­land ex­pected to hire in high­skilled roles in the next three to five years, but only three in ev­ery 10 com­pa­nies were con­fi­dent of hav­ing the sup­ply of tal­ent needed to fill them.

Most re­cently, the Bank of Eng­land re­ported the views from its net­work of re­gional agents dot­ted across the UK. The re­gional agents’ views were col­lated into var­i­ous mea­sures, in­clud­ing an in­dex of re­cruit­ment dif­fi­cul­ties. This is at its high­est level since 2015, sug­gest­ing skills short­ages are be­gin­ning to bite. That they could re­sult in pay in­creases would be no bad thing for the re­cip­i­ents, but pay in­creases driven by short­ages erode com­pet­i­tive­ness and send out a neg­a­tive mes­sage to po­ten­tial in­vestors.

In­di­vid­ual sec­tors are also be­gin­ning to air their skills short­age stud­ies. A Re­cruit­ment & Em­ploy­ment Con­fed­er­a­tion sur­vey noted a marked de­cline in the avail­abil­ity of work­ers across the UK, cou­pled with an in­crease in de­mand for staff across the pub­lic and pri­vate sec­tors.

The Fed­er­a­tion of Mas­ter Builders’ state of trade sur­vey of SMES in the in­dus­try found there had been growth in the sec­tor, but also that many held con­cerns about the fu­ture. Just over 60% said they were al­ready strug­gling to find car­pen­ters and join­ers, while many were un­able to find brick­lay­ers. Fur­ther re­cent sec­toral stud­ies I have been un­der­tak­ing also sug­gested dif­fi­cul­ties in find­ing the right staff.

The North­ern Ire­land Skills Barom­e­ter, which es­ti­mates the ex­tent of fu­ture de­mand across a range of skills lev­els, sup­ported the find­ing of these stud­ies — that the de­mand for skills will out­strip pro­jected sup­ply over the next decade. There is a mar­ginal un­der-sup­ply of skills at grad­u­ate lev­els and a more acute short­age at mid-tier skills lev­els.

Of course, one easy way to fill skills gaps in re­cent years has been with mi­grant work­ers. North­ern Ire­land has been do­ing just that for some time. Close to a decade ago, es­ti­mates sug­gested that around 5% of the labour force was made up of mi­grants. More re­cent es­ti­mates sug­gest that 13% of the to­tal work­force is from out­side the UK or Ire­land.

Un­der­tak­ing re­cent re­search by the North­ern Ire­land Ho­tels Fed­er­a­tion, the im­por­tance of work­ers com­ing from out­side North­ern Ire­land came back to the front of my mind.

Within the hos­pi­tal­ity sec­tor, al­most one in three work­ers is from out­side the UK and Ire­land — cru­cial to the suc­cess­ful func­tion­ing of the tourism sec­tor. Other sec­tors with a strong re­liance on work­ers from out­side the UK and Ire­land in­clude man­u­fac­tur- ing, ad­min­is­tra­tion and re­tail.

A lack of clar­ity around how work­ers from out­side the UK will be treated (in terms of ac­cess) dur­ing and af­ter the Brexit process could re­duce this hith­erto easy-to-get sup­ply of labour.

To put the im­por­tance of this source of labour sup­ply into con­text, in the three years prior to the global fi­nan­cial crash, when North­ern Ire­land was en­joy­ing sig­nif­i­cant em­ploy­ment growth, ap­pli­ca­tions for Na­tional In­surance num­bers to adults from over­seas to­talled 53,000 — close to 18,000 per year.

There are in­di­ca­tions that the ar­rival of work­ers from out­side the UK has started to de­cline.

For ex­am­ple, es­ti­mates of cur­rent nurs­ing va­can­cies ap­pear to be in ex­cess of 50,000 across the UK, and the num­ber of nurses reg­is­ter­ing from the EU is down by 96% in the year since the Brexit vote.

Lo­cally, statis­tics on Na­tional In­surance num­ber reg­is­tra­tions from peo­ple out­side the UK de­clined by 7% and 5% in 2015/16 and 2016/17 re­spec­tively. The scale of these re­duc­tions in labour sup­ply places an even greater im­por­tance on em­ploy­ers and pol­i­cy­mak­ers en­sur­ing that train­ing and em­ploy­ment pro­grammes of­fer rel­e­vant train­ing and en­gage those harder-to-reach groups, such as the long-term un­em­ployed and older peo­ple.

The un­cer­tainty sur­round­ing Brexit ap­pears to be im­pact­ing on the num­ber of peo­ple com­ing here to work. Where might labour come from if the flow from out­side North­ern Ire­land re­duces fur­ther?

The an­swer most likely lies in train­ing and em­ploy­ment pro­grammes. We are not short of pro­grammes, not by any stretch of the imag­i­na­tion.

Per­haps in­creas­ing skills short­ages will push our pol­i­cy­mak­ers to put their shoul­der to the wheel and de­velop more in­no­va­tive, more co-or­di­nated train­ing and em­ploy­a­bil­ity pro­grammes that make progress in re­duc­ing North­ern Ire­land’s sig­nif­i­cant lev­els of eco­nomic in­ac­tiv­ity.

We are al­ready see­ing some in­no­va­tive ap­proaches to ad­dress­ing skills short­ages.

For ex­am­ple, Belfast City Coun­cil has just teamed up with two of the new ho­tels com­ing to the city to form a Ho­tel Em­ploy­ment Acad­emy.

Peo­ple who com­plete two weeks of train­ing are guar­an­teed an in­ter­view for one of up to 200 jobs.

More ini­tia­tives of this type could prove cru­cial in the years ahead.

In next week’s Econ­omy Watch, we hear from Danske Bank econ­o­mist Conor Lambe

The hos­pi­tal­ity in­dus­try has been a pop­u­lar choice for over­seas work­ers in the UK

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