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Posted by hkarner - 1. August 2017

Date: 31-07-2017
Source: The Wall Street Journal
Subject: Brexit Cited As Fewer EU Citizens Seek Work in U.K.

Some industries concerned that labor shortages could crimp expansion plans and slow economy

About 40% of the 150 employees at Colpac, a food-packaging business in Flitwick, Bedfordshire, are from other EU countries.

FLITWICK, England— Neil Goldman, who employs workers from across the European Union’s in his food-packaging business, blames the U.K.’s Brexit vote last year for making vacancies harder to fill.

Britain has for years been a magnet for European job seekers drawn by decent wages, the English language, and plentiful openings in the country’s easy-to-hire economy. That attraction now appears to be waning as a consequence of its vote to leave the EU, as well as accelerating growth in the eurozone.

In industries as diverse as agriculture, health care and manufacturing, executives are growing anxious about labor shortages that they fret could crimp expansion plans and restrain the British economy. Already, growth in the U.K. is sputtering as quickening inflation squeezes consumer spending.The Confederation of British Industry, an employers’ lobby group, has said continued access to high-skilled and low-skilled workers from abroad is critical to sustain economic growth.

Any ebbing of the flow of foreign workers shouldn’t come as a surprise, since Brexit was designed in large part to make that happen. Reducing immigration from the EU is a central plank of Prime Minister Theresa May’s Brexit strategy. Quitting the bloc, she says, was a vote to take back control of Britain’s “borders, laws and money.”

Indeed, Brexit advocates say, scarcity has a silver lining: Labor shortages could help boost Britain’s lagging productivity if firms respond by investing in new machinery and training. On the other hand, economists caution, foreign workers are themselves an important source of productivity-enhancing skills.

Mr. Goldman, chief executive of Colpac Ltd., based in Bedfordshire some 40 miles north of London, employs 150 people, about 40% of whom are from other EU countries. He said he spent the months after the referendum in June last year soothing foreign employees worried about their future in Britain. A handful of them have already left and he says he is struggling to find replacements.

“Ever since that day, I’ve been reassuring and encouraging everyone that Britain is open for business,” Mr. Goldman said.

The U.K. experienced waves of new arrivals from the EU over the past two decades, especially after it opened its doors to workers from new member states in Central and Eastern Europe in 2004. The influx fueled its economy but also stoked public anxiety. Last year’s Brexit vote was in part a backlash against immigration, polls suggest, though it also reflected British discomfort at what detractors see as the EU’s excessive influence over U.K. affairs.

More than 2.3 million workers from other parts of the EU were working in the U.K. in the first quarter of 2017, 2½ times as many as a decade ago and the highest number ever recorded. EU nationals account for about 7% of Britain’s 32-million-strong workforce.

There are signs that employment swell is ebbing. The number of EU nationals receiving national insurance numbers, which are required to start work or claim benefits, was 6% lower in the year through March than a year earlier, according to the Department of Work and Pensions. National insurance registrations by Polish citizens were down 23%, and those by Spaniards down 9%.

Net migration to the U.K. in 2016 from the eight EU countries that joined the bloc in 2004—a group that includes Poland, Lithuania and Hungary—fell to 5,000 from 46,000 a year earlier, according to the Office for National Statistics.

In some sectors the falloff is especially striking. The Health Foundation, a charity, said in June that 46 EU nationals applied to work as nurses or midwives in the U.K.’s state-run National Health Service in April, compared with more than 1,000 that month a year earlier.

There isn’t a big pool of unemployed Britons to fill any emerging gaps. Unemployment in the U.K. was 4.5% in the first quarter, the lowest level since 1975. A recent survey by the National Farmers’ Union found that of 13,400 workers recruited in the industry between January and May, just 14 were British. Farmers say the pool of foreign labor from which they draw seasonal workers has shrunk dramatically, and Brexit hasn’t even happened yet.

Uncertainty over the future status of EU citizens in the U.K. after Brexit—the EU and U.K. have yet to negotiate an agreement on the question—is one factor persuading some footloose workers to look elsewhere, recruiters say. Current and potential workers “need some certainty around residency rights,” said Jane Gratton, head of business environment and skills at the British Chambers of Commerce.

Another reason for skipping Britain: A battered pound means foreign workers’ earnings don’t go as far when spent at home. The eurozone’s expansion and a strengthening euro means some workers are looking to countries such as Germany instead. Others are choosing to stay home altogether to take advantage of buoyant domestic labor markets.

“There are more choices available to EU migrants that have free movement,” said Gerwyn Davies, senior labor-market analyst at the Chartered Institute of Personnel and Development, an association for human-resources managers.

In Poland, wage growth hit an annual 6% in June, according to official figures. Maciej Witucki, chief executive of Warsaw-based recruitment firm Work Service SA, which helps Poles find jobs abroad, said a May survey by his firm found the proportion of Poles considering moving abroad for work had declined to 14% from 19% a year earlier, though many still identified the U.K. as their No. 1 choice. Germany and the Netherlands were other top destinations.

Ryan Scatterty, managing director of Thistle Seafoods Ltd. in Peterhead, Scotland, which supplies supermarkets with fishcakes and other chilled seafood products, says he needs to find around 50 new workers every year to replenish those who leave his 500-strong workforce to return to their homes elsewhere in the EU. That used to be straightforward, as departing workers would often recommend their friends and family.

“We are just not seeing that coming through anymore,” he said.


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