Employers’ responses to the end of free movement: the rhetoric and realities of automation

8 November 2022

Automation was seen by the UK government as an important strategy that would allow employers, post-Brexit, to reduce their use of migrant labour, particularly for jobs in ‘low-wage’ sectors. In a policy statement on the new Points Based visa System (PBS) in February 2020, the UK government noted:

“(After Brexit) We will not introduce a general low-skilled or temporary work route. We need to shift the focus of our economy away from a reliance on cheap labour from Europe and instead concentrate on investment in technology and automation. Employers will need to adjust”.

In this policy rhetoric and elsewhere, automation was presented as a relatively straightforward strategy for employers, allowing them to rapidly move away from an EU labour force in the post-Brexit era.

Our research, however, reveals that employers have not adjusted as seamlessly as envisaged. Why not?

The PBS does not meet the needs of the UK’s low wage sectors

The new Points-Based visa System  (PBS) for migrant workers, introduced in the UK in January 2021, has made it harder for EU citizens to work in the UK. Under the PBS, both EU and non-EU citizens now need to apply for a Skilled Worker Visa, which requires them to have a job offer from a sponsoring employer, meeting a minimum salary threshold of £25,600.

Whilst Skilled Work Visas are available at lower salary levels if the worker is a new entrant to work, has a PhD, or if the job offer is in a role on the Migration Advisory Committee’s Shortage Occupation List, the reality is that there is now no straightforward access to the UK labour market for workers in lower paid jobs.

This change was always likely to pose significant challenges to employers, particularly in sectors where they relied heavily upon EU migrant workers to fill lower-paid jobs. In 2020,  EU migrant workers were employed in one-in-seven jobs in food preparation, one in 10 jobs in cleaning and warehousing, and one in 12 jobs in leisure, travel and personal services. Under the new PBS, the majority of the jobs in these sectors are not eligible for Skilled Worker Visas.

Changes to workforce recruitment and retention strategies in industries that rely heavily on migrant labour have been highly varied, across employers, sectors and over time, reflecting the impact of factors including Brexit, the COVID-19 pandemic, longer-term labour shortages, and changing economic conditions.

A recent report by the Migration Observatory in partnership with the Renewing Work Advisory Group of Experts (ReWAGE) has synthesised evidence on the effects of some of these factors on the low wage labour force in the UK. The report finds that whilst Brexit is not the only reason for labour shortages, it has definitely played an important contributing role.

The report finds that employers in some low wage sectors have seen large reductions in EU workforces since Brexit, and have been unable to easily recruit EU or non-EU workers on Skilled Worker Visas, as these are not available for most jobs in these sectors. The report finds that, for example, in hospitality, there has been a 25 per cent decline in the number of jobs held by EU workers between 2019 and 2021. However, only 1 in 1000 workers in hospitality was employed at the end of 2021 via a Skilled Worker Visa. Responses from employers to shortages have been varied, with some looking to increase wages or change working conditions to attract new workers, and other have sought to recruit greater numbers of workers from outside the UK.

Automation: a solution to post-Brexit labour shortages?

Automation is another potential strategy to address Brexit-related labour shortages, but the realities of automation have been more complex than much of the policy rhetoric envisaged. This reflects the costs, tensions associated with automation strategies, different rationales for investment, and uncertainties over outcomes.  In the seasonal agricultural sector, for example, some employers have responded to shortages in migrant labour by automating some processes in pack houses. However, the rapid crop rotation approaches adopted in many farms mean that automation often requires costly, bespoke technological solutions which are not easy to implement.

Our ongoing ESRC Labour Mobility in Transition project (LiMITs) has also been exploring employer responses to Brexit and COVID-19 in 4 sectors often classified as ‘low-wage’ or ‘low-skill’ (warehousing, social care, food and drink manufacture and hospitality), although the use of the term ‘low-skill’ remains highly contested. Our sector-level literature reviews, along with interviews and round-tables with employers, unions and sector-level bodies, reveal that some automation is taking place, for example, the greater use of digital telehealth technologies in the care sector.

However, for many employers, there remain considerable barriers to automation, and automation does not appear to be being used as a direct response to Brexit-related labour shortages for a number of reasons.

First, much automation had already occurred prior to any Brexit related labour shortages. Research suggests that this automation is often concentrated on ‘easy win’ areas (for example, in some areas of picking and packaging of food and drink manufacture and warehousing). For tasks that are seen as more difficult or complex for workers to undertake, and where technological solutions may be even more complex, the benefits associated with investments in automation may still not be realisable.

Second, the costs of investing in automation strategies may be too great for many employers. One study of robotics in health and social care for example, reported costs per unit varying from £125 for a technology to assist users with weight loss, to £1.5 million per unit for some robotic surgical systems. For the latter, any such decisions are inevitably going to be very long-term investments, rather than a short-term strategy to address acute labour shortages.

Finally, the adoption of new technologies may not automatically provide the solution to labour shortages that is assumed in some of the government policy rhetoric around the new migration regime. Automation may be accompanied by profound changes to the nature of work undertaken by workers, and the skill requirements of jobs, which may lead to significant human resource challenges for employers and reductions in job quality for workers.

Our recent submission to a Parliamentary committee on workforce skills highlighted the importance of moving beyond a zero-sum approach in which skills substitution and automation are seen as mutually exclusive solutions to labour shortages and recruitment and retention challenges. On the contrary, investment decisions in new technologies and in related skills investment are closely intertwined. Challenges in finding suitably qualified migrant labour, and a lack of investment in training may also inhibit investment decisions in new technologies.

New research offers more nuanced insight into post-Brexit labour shortages

Our ongoing research is pointing to the fact that employers (and other stakeholders) in low-wage sectors never saw automation and substitution as a straightforward solution to any post-Brexit labour shortages. These stakeholders have pointed to the need for a more nuanced understanding of the specific sectoral level challenges and labour shortages being experienced. The ability of employers to adjust wages upwards as a response to shortages may be constrained by consumers’ willingness to pay more for products and services.   Furthermore, there is recognition that some of the issues facing these sectors pre-date Brexit and reflect much longer-term challenges around recruitment and retention.

We will be continuing to explore these complexities in our Limits project,  through a survey of 1,600 employers currently in the field, and intensive case studies with employers, in 2023 and 2024. The regulation of migration is impacting upon employers and migrants in a range of ways, which are indeed varying across sectors and time. Approaches to automation in the post-Brexit environment are also varied, shaped and constrained by a range of factors, but are by no means the straightforward solution to any Brexit-related labour shortages that the UK government may have envisaged.

Share this: