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UK industry risks talent shortage as fewer overseas skilled workers apply to enter private sector

17 February 2020

Tech sector hit hardest by fall in skilled workers coming to UK

The number of skilled workers from overseas applying to enter the UK’s private sector has fallen 9% since the Brexit vote, raising fears over an increasingly severe talent shortage after the UK leaves the EU, according to new figures revealed today.

Figures from UK Visas and Immigration show that over 4,000 less applications for Skilled Worker Visas were made by non-EU workers seeking to work in the UK’s private sector in 2018/19*, dropping to 44,300 from 48,600 in 2015/16, the year of the Brexit referendum.

EU citizens are currently free to work in the UK without a visa, giving UK businesses access to a large pool of talent from across the continent. 

With the UK having left the EU and a short transition period expected, there is a risk that skilled worker migration from the European continent could fall further creating potential challenges for some key UK industries. 

Although the direct impact of Brexit could be considered a major factor, there are also concerns over the indirect effects, such as suggestions that the weak pound has led to more skilled workers looking to competing economies for employment.

Stuart Lisle, Senior Tax Partner at BDO, comments: “There is already a skills shortage in several key industries like technology and manufacturing. It is now vitally important that British businesses are still able to bring in talented workers from overseas where necessary, once our exit from the EU is completed.

“We want to see the Government prioritise the needs of UK businesses and create a worker visa system that attracts the best talent with economically-relevant skills.”

Tech sector hardest hit by fall in skilled immigration

The UK’s technology sector has been the hardest hit by the fall in applications for skilled workers to come to the UK since the Brexit vote. The number of non-EU skilled workers applying to enter the UK tech sector has fallen by 17%, from 23,700 in 2015/16 to 19,700 in 2018/19.

Access to talented programmers from overseas has been one of the main drivers of growth in the UK’s fintech industry in recent years. This access to foreign talent has allowed London to take a leading position in fintech, and helped businesses in the sector overcome a shortage of skilled British workers.

Manufacturing has also seen the number of skilled workers applying to enter from outside the EU fall 14% since the Brexit vote, from 2,610 in 2015/16 to 2,258 in 2018/19. The British Chambers of Commerce reported last year that 81% of manufacturers said they had difficulties finding staff.

Stuart Lisle says: “Being able to outcompete rival economies for talent is one of the reasons the UK has become a global fintech hub in the last decade. If we want to take a similar position in areas like AI, automated vehicles or advanced manufacturing, it’s vital that the Government makes sure the UK retains its ability to attract the world’s best after the EU transition period ends.”

Home-grown talent

It is more important than ever that the UK creates its own home-grown work force with the right skills and talents for the industries of the future. 

STEM subjects need to be brought to the fore and new innovative ways of attracting our school children and college students into these subjects and ultimately these careers must be found. Business has a key role to play to play in this.

Stuart Lisle says: “The pipeline of talent for UK business is a fundamentally important need for British business. Businesses should take an active role in working with the education sector to engage with students and unlock the talent that we have to deliver sustainable economic success. 

“Providing mentoring programmes and working with schools to deliver better careers advice are easy wins to engage students in the right subjects and sectors.”

BDO’s New Economy report outlines the difficulties businesses face in bridging the skills gap, and suggests three policy changes the Government should consider to help businesses attract the talent they need:

  • Extend childcare support for working parents of children aged one to four
  • Improve the UK’s apprenticeship system to focus on quality of outcomes, not just volume
  • Reinstate the two-year post-study work visa for foreign graduates in STEM subjects at UK universities – a policy since adopted by the Government.

The full New Economy report can be downloaded here.

ENDS

BDO LLP

BDO LLP operates in 17 locations across the UK, employing nearly 5,500 people offering tax, audit and assurance, and a range of advisory services. BDO LLP is the UK member firm of the BDO international network.

BDO’s global network

The BDO global network provides business advisory services in 167 countries, with 88,000 people working out of 1,800 offices worldwide. It has revenues of $9.6bn. 

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Emma Ordidge
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