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Engineering SMEs face a skills shortage after Brexit

Amit Katwala

Small and medium engineering firms could be hurt the most by a fall in immigration after Brexit, according to an expert.

The United Kingdom’s negotiations with Brussels began today, almost a year after the narrow referendum vote to leave the European Union.

However, it’s still unclear what shape the UK’s immigration policy will take at the end of the process, with the government pushing for end to the free movement of people to Britain. It has been suggested that EU migrants may need a job offer before being able to move to the country in future, or that the government could implement an ‘Australian-style points system’.

Colin Brown, director of engineering at the Institution of Mechanical Engineers, warned that smaller firms would be the most affected. “Skills supply is a particular issue for SMEs who do not have the international networks, or brand awareness, of larger companies,” he told Professional Engineering. “They will find it particularly difficult to hire non-UK nationals if those candidates are unable to respond to their normal channels of recruitment, which tend to be local advertising.” 

A quarter of UK companies surveyed in new research by the Chartered Institute of Personnel and Development were concerned that a system that required EU migrants to have a job offer before moving would have a negative impact on them.

In the manufacturing and production industry, 23 % of companies surveyed thought it would have a negative impact, while 58 % believed there would be no impact.

“Access to skilled and unskilled labour is a huge concern for employers,” said Peter Cheese, chief executive of the CIPD. “If the Government does not provide a straightforward, flexible and affordable immigration system for EU nationals post Brexit, as set out in our recommendations, significant numbers of employers are likely to face real skill shortages, which may hold back their growth and performance.”

The CIPD research found that some IT and engineering firms valued the flexibility afforded by free movement. “Our consultancy is very project-driven,” said one engineering company interviewed for the report. “So, some of the skills that we need, some of the projects that we have, we don’t really have the right people in our universities. So, we’re reliant on people from Italy and Belgium for very specific courses, and very specific work. So that flexibility is really important, again, because we don’t know what projects we’re going to win, and how we’re going to man those.”

A points system has its own drawbacks, particularly for SMEs. According to Brown, this might not bring in employees with the diverse skill set that small companies often need. “SMEs will also struggle with any points system that requires people to be specifically highly skilled to gain enough credit,” he told PE. “With fewer employees overall, they often rely on those with a wider range of skills, to cover a wider range of tasks. These can do well when they are developed in house specific to their needs. Put simply, they can neither afford nor absorb the technical superstars who would do well under a points system.”

Industry representatives have called on Theresa May’s government to soften their commitment to a ‘Hard Brexit,’ which would see the UK leave both the European single market and the customs union.

Last week EEF, the manufacturers organisation, warned that the current approach could see firms leaving the UK. The CIPD survey found that one in five companies were considering moving all or some of their UK operations overseas.

“The new Government’s priorities must radically re-focus Brexit negotiations around trade and close cooperation ensuring a smooth exit from the EU,” said EEF chief executive Terry Scuoler. “There are numerous ways of establishing a new relationship with the EU and, given we’ve just wasted a year, the Government needs to move away from its previous rhetoric and start repairing relations with EU partners.”

He called for a new strategy with single market and customs union access at its heart, and a transition arrangement to manage uncertainty for businesses. “Business groups can help with the negotiations over trade, which is the model every other Government involved in trade negotiations operates, and we need to be brought in quickly to do this,” he continued. “We need to build a political consensus based on our collective national interest.”

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