After the government unveiled its post-Brexit, points-based immigration system yesterday, Retail Week finds that many trade bodies and retailers have been left blindsided and scrambling to understand the wider implications.
With insight from:
- The director of the British Chambers of Commerce on the “significant adjustment” required for UK business
- A retail trade body source on why automation is not “a silver bullet”
- Clipper Logistics boss Tony Mannix on how his firm is tackling the recruitment shortage
This week, recently appointed home secretary Priti Patel could be found doing the rounds with major television and radio networks explaining the government’s new points-based immigration system.
The system, designed to curb what the government terms ‘low-skilled workers’ from the EU coming to the UK after Britain leaves the union on January 1, 2021, sets out strict criteria, which prospective employees will need to meet.
Effectively, so-called ‘low-skilled’ workers will no longer have a route to employment in the UK, whereas more skilled workers – those with an A level-equivalent qualification – will be able to qualify for working visas, provided they can reach a total of 70 points by meeting a number of weighted criteria.
An existing job offer prior to entering the UK and the ability to speak English will both be mandatory requirements.
Patel said that “employers will need to adjust” to the system in the next 10 months, signalling that there will be no further consultation on the issue with business.
The points-based system will then be brought before Parliament as part of a new Immigration Bill, which Retail Week understands may be brought before the house as soon as next week.
Patel also said that business needs to “move away from its reliance” on immigrant workers through “staff retention” and “wider investment in technology and automation”.
A number of trade bodies have warned, however, that the crackdown could leave certain areas of business struggling.
“Companies are already investing heavily in home-grown talent across the UK, but critical labour shortages means firms will still need access to overseas workers at all skill levels”
Adam Marshall, British Chambers of Commerce
The director-general of the British Chambers of Commerce, Adam Marshall, warned: “The speed and scale of these changes will require significant adjustment by businesses.
“Companies are already investing heavily in home-grown talent across the UK, but critical labour shortages means firms will still need access to overseas workers at all skill levels.”
Other trade body representatives across grocery, logistics and supply chain have been even more blunt. They say they feel blindsided by the fully formed nature of the system proposed by Patel, and angry that the government appears unwilling to consult on the proposals further.
As one source close to a trade body says: “We’ve spent the last 18 months liaising with both this government and the previous one to get our points across, to show what the industry is built on and the labour that underpins that. There’s a real feeling that we’ve been ridden roughshod over on that.”
As the sector reels, Retail Week analyses what effect this new system will have on retail.
Untapped workforce
One of the home secretary’s major points yesterday was that the UK currently has a large untapped workforce of what she termed the “economically inactive”.
Patel said: “We have over 8.45 million people in the UK aged between 16 and 64 who are economically inactive. We want businesses to invest in them, invest in skilling them up.”
But the latest Office for National Statistics (ONS) figures show that, while this number is broadly true, the majority of that is made up of students, the sick, full- or part-time carers and the retired.
As one source close to a food and drink trade body says: “There are lots of reasons why people might be economically inactive. The idea that all of these people can somehow be incentivised into work, or plugged into the food supply chain by paying them a bit more, doesn’t really match up with reality.”
However, chief executive of Clipper Logistics Tony Mannix says his business has been thinking about the potential disruption that might come from migration restrictions for years and has started to address it in a way that dovetails with its commitment to diversity and inclusion.
Mannix makes a comparison with the days before an internationally mobile workforce existed, when retailers had to find seasonal staff for the peak trading period and often turned to overlooked groups, such as older people and non-working mothers.
A similar approach has been taken now. For Clipper, that has meant working with charities representing those with learning disabilities, ex-offenders, ex-military and others through its Fresh Start programme.
“We asked if we could find people that had been overlooked and that we could train,” says Mannix. A target of 300 such employees was set for year one and, 18 months later, the number is almost 1,000 out of a workforce of about 8,000.
Rise of the robots?
The home secretary also pointed to automation and technology as a means for UK businesses to make up the shortfall in the immigrant workforce.
In UK retail, automation has begun to pick up pace and there are several businesses, such as Ocado, which have pivoted to become world leaders in that space.
However, as one source from a retail body points out, automation still requires a human workforce.
“Warehousing, for example, has undergone a huge transformation in terms of the robotics and innovation that it uses now, but there are still large amounts of employees needed alongside these technological advances.”
“They seem to think of automation as a silver bullet. The government overestimates the capacity it can deliver and underestimates the problems associated with it”
Another issue is around the seasonal nature of food peaks – such as Christmas and Easter. As one food trade body source says: “Producers will have short timeframes when they face increased demand and it’s important to be able to bring people in quickly. You can’t automate that to be at full capacity when it fluctuates.”
Another retail trade source was more withering of the government’s claim, saying: “They seem to think of automation as a silver bullet. The government overestimates the capacity it can deliver and underestimates the problems associated with it.”
Mannix says that fully automating warehouses is going to be out of reach for all but the largest retailers and warehousing firms.
Instead, he believes many smaller business will look to pivot to what he calls “modular technology” – effectively “automating a process, rather than a whole warehouse or building”.
Down the line
The consensus among experts who spoke to Retail Week was that frontline retailers won’t be too badly affected, at least not at first, but that the real pinch will be felt further down the supply chain – by warehousing and logistics firms, food producers and seasonal pickers.
One source close to a national grocery chain says it has spent the last few years looking to secure EU workers’ right to stay with working visas, but worries about the effects this will have on staff availability in its supply chain.
“It’s the fruit pickers, the lorry drivers, those working in meat processing plants, doing the sorts of jobs lots of people in the UK just don’t want to do. That will affect us – that will affect our supply chain.”
Another trade body source sums it up: “If you’ve got a reduced workforce in one part of the chain, that will have knock-on effects in other areas. The government really hasn’t thought that through in its analysis.”
“It’s the fruit pickers, the lorry drivers, those working in meat processing plants, doing the sorts of jobs lots of people in the UK just don’t want to do. That will affect our supply chain”
The issues would only be magnified if the government was unable to achieve a tariff-free, zero-for-zero agreement with the EU by the end of the year – an eventuality those with knowledge of the negotiations have told Retail Week in the past is not guaranteed.
Chancellor of the Duchy of Lancaster Michael Gove told businesses that trade with Europe to prepare for “significant change” with some “inevitable” border checks earlier this month. Businesses will also have to “accept some friction,” he said.
As one trade body source says, if the UK crashes out of the EU on World Trade Organisation rules, combined with the chilling effect of a reduced workforce, the real-world effects will be profound.
“Yes, the government has won a mandate to carry Brexit through, but it’s our role to make them aware of what the consequences of that will be.
“If you have friction in trade, make it more challenging for both the import of goods and ingredients, and harder to find the people you need, there will be real-world costs in terms of the price of food, the availability of food and the variety which the UK consumer has grown used to.”
While the government’s bill has yet to pass Parliament, the size of the Conservative majority in the house means its passage looks assured. As the drawbridge comes up on ‘Global Britain’, retailers must adapt to the new realities, and do so soon.
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