Is a ‘Brexodus’ depleting UK factories of vital workers?

By Rhys Handley, Monday 27 November 2017

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UK manufacturers are struggling to plug a workforce gap resulting from high employment levels and dwindling numbers of EU workers.

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“It is unclear quite how access to EU worke rs will ultimately be affected by Brexit”

While the proportion of the UK workforce made up of people from other EU countries is small – just 7%, according to the Recruitment & Employment Confederation (REC) – when it comes to lower-skilled work, that percentage nearly doubles to 15%. 

And, whether or not immigration of low-skilled EU workers is a problem for the UK, certainly that has been the perception of some and a key factor behind the scale of the Leave vote in the EU Referendum.

That 7% equates to around 2.2 million EU nationals working in UK businesses. However, the Bank of England has reported that there is a shortage of factory workers because the EU nationals who have been taking those jobs are either leaving the UK, owing to the uncertain, possibly hostile, situation, or not coming here to start with. As a result, as the REC also found, UK employers are increasing pay offers to entice British staff into factories.

But is this a change for the better? In a specialist sector like print, unskilled workers can be vital. Are higher wages going to persuade Brits to take the jobs EU workers are supposedly vacating, or should printing companies be worried that letting their Euro workforce fly the coop will leave them short-changed by a limited pool of suitable prospects?

The big picture

The UK’s unemployment rate currently sits at 4.3%, a figure that hasn’t been bettered since 1975, and net migration is at its lowest level in three years – to a large degree attributable to fewer EU citizens arriving in the UK and more leaving. The combination of these two factors is limiting the potential workforce available to print companies and other businesses, although the effects have yet to hit those factories looking to employ, according to the BPIF.

“The impact is not significant yet, but there are concerns,” says BPIF chief executive Charles Jarrold. 

“It depends on where a business is located, but where there is relatively full employment, businesses are very reliant on EU workers to meet peaks in demand.

“It is unclear quite how access to EU workers will ultimately be affected by Brexit. Our industry is very keen to ensure that businesses can access the people and skills they need, from the UK and elsewhere.

“Where businesses are very reliant on EU labour, it’s time to start thinking about how they will be able to operate efficiently if that supply of labour becomes more restricted. For instance, can the core of permanent employees be expanded to reduce the use of temporary workers?”

A theme that crops up repeatedly is the need for further investment – in training, technology and more long-term employment for staff. But, according to Mike Gilligan, director of print recruiter Mercury Search & Selection, this need is nothing new.

“Investing in staff is vital to create a new generation of printers,” he says. “Companies must keep pace with technology and focus on training and development to survive.”

“But this need is not caused by the Brexit question, it has always been there.”

Case studies

So, are printing businesses around the UK becoming aware of a potential shortage of workers? And if so, what are they doing to address the problem?

Direct mail specialist GI Solutions employs 300 people across its six factories. For chief executive Patrick Headley, the vote to leave was a call to action – he set about converting large swathes of the company’s temporary workers, many of whom are EU nationals, into permanent employees.

“We have absolutely benefited from EU labour over the years, so we did our best to be protective of them once the vote went through,” he says.

“You are only as good as the people you employ. With the rise in wage offers and cost of paper, you cannot keep all your prices low. But I don’t think our customers mind paying a little more. The key thing is our great team.”

For Reflex Group’s chief executive Ian Kendall, fluctuations in labour availability have led to a “quite serious” employment situation in some of its 16 factories, and a little investment now will go a long way.

“Paying my lowest-paid workers more is good for them, but in the short term it’s not great for me,” says Kendall.

“But investing in our machines, skilling up our staff, and making sure we hire the very best will only make us more efficient.

“Some may try to spin rising wages as terrible for businesses, but if British printers pay their factory workers more they will benefit economically over time.”

220-staff Alexir Partnership, which has factories in Kent and Sussex, takes a more pastoral approach in its efforts to maintain a strong factory workforce. Employees are offered wellbeing services and some EU migrant staff have been given support in finding accommodation and setting up bank accounts.

Managing director Jeremy Keable says: “Many of our migrant workers are young and need to feel safe moving to work in the UK. We endeavour to give them stability – rates of pay and consistent working hours are vital to that.

“They also need to feel like part of a team and that they are welcome. 10% of the workers in our Kent sites are EU migrants and it’s 40% in Sussex. We help them feel absorbed in the wider workforce and provide training to help them be as professional as possible.”

Keable says Alexir has employed EU workers for 20 years, and this approach has put the business is in a good position to retain its staff. “That investment keeps us well-guarded against shifts like this,” he adds.


OPINION

Lower-skilled roles must be made more appealing

Kevin Green, chief executive, Recruitment & Employment Confederation

We know that EU workers have already started to leave the country because their future here is uncertain and they no longer feel welcome. Because of that, high employment rates and increasing vacancy numbers, employers are struggling to fill roles – and we haven’t even left the EU yet. We are facing an overall shortage of staff and for businesses this could result in a halt in growth.

Our research shows that eight in 10 employers either have no or only little capacity to take on more work without increasing staffing levels. So, in a worst-case scenario this could mean that businesses are discussing scaling down, or closing altogether if they don’t have access to workers.

Increasing wages significantly above the current rates could simply be unsustainable for many businesses if they’re not able to pass those costs on to clients and consumers. More automation could solve the problem for some low-skill roles in the future, but it won’t work for every sector.   

Employers are willing to pay higher starting wages to attract candidates. But this isn’t translating to pay rises for existing workers. Real wages are still falling and this is a blow, especially for workers faced with limited disposable income and rising costs. The stark reality right now is that if you want a pay rise, your best option is to move jobs. 

So far, employers have had little success attracting UK workers into low-skilled vacancies. We found that low wages are not the only reason. Workers feel that these jobs offer no progression, the work doesn’t appear to be attractive or roles are not easily accessible in the area where jobseekers live and public transport might be inadequate. 

If you’re struggling to hire for entry-level roles or lower-skilled roles you can always talk to recruiters or examine what you can do to make jobs more attractive, such as wages, benefits, clear career and progression paths.


READER REACTION

Is your business suffering due to a shortage of labour?

Julian Hocking, managing director, Nationwide Print

“The number of printers that have disappeared in recent years means not only is there a problem with sourcing workers from EU countries, but with anyone at all. People tend to leave the industry when the companies they work for shut down, and there aren’t enough people entering the industry to replace them. We are happy to take anyone on wherever they are from as long as they have the right attitude. There is no doubt that print businesses need to pay more attention to training. There will be an even bigger problem down the line if we do not.”

Andrew Jones, managing director, Stephens & George

“I do not think it is any worse than it has been in the past, there are always bumps along the road and unemployment always fluctuates. We have five European employees, two of whom relocated from London when we acquired The Magazine Printing Company. They have made a good life in Merthyr Tydfil, saving money on the lower rent. Print has always been a well-paying industry compared with other sectors, but you can’t raise your lower wages in a way that devalues the work of our qualified, skilled workers – otherwise they won’t see the sense in doing their work.”

Bill McFedries, chief executive, CFH Docmail 

“We are in the fortunate position that we have a very loyal workforce with low staff turnover. While we do have employees from Europe in the business, we have not yet been impacted by the uncertainty. It is something we will continue to monitor closely. Having a fantastic team is our biggest asset and anything with the potential to put that in jeopardy is something we take very seriously. We are very concerned about the impact of Brexit, on both our staff and our bottom line. General market uncertainty has an ongoing material impact on the placement of work.”

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