Tackling the UK labour and skills shortage post Brexit

Alan Heron, Head of Procurement


Tackling the UK labour and skills shortage post Brexit

Many sectors across the UK are currently facing the challenge of a labour and skills shortage, and already rely heavily on foreign skilled and non-skilled workers.

As just one of these sectors, one of the key concerns within the construction, repairs & maintenance market following the Brexit vote is the potential restriction of the free movement of people.

Why is there a shortage?

The existing shortages are primarily due to two factors – namely the large number of job losses resulting from the recession, and an ageing workforce (and therefore a high retirement rate). The latter cause is likely to become more influential over the next decade as 22% of UK construction workers are over 50, and 15% over 60.

What impact does this have?

As a result of the skills shortage, wages are increasing, with a recent survey showing average earnings to have risen by more than 8% in the last 12 months alone – and with UK unemployment at a low of around 5.1% the labour and skills shortage in the construction industry cannot be resolved domestically.

In the same survey 66% of firms reported to having turned down work due to a lack of staff, and with both the ONS and OECD indicating that approximately 10% of the UK construction workforce are foreign born, there is obvious and legitimate concern that the industry’s skills shortage will worsen once the EU and UK part ways.

What influence will Brexit have? 

Of course the actual impact of Brexit will depend on the nature of the UK's relationship with the EU following the end of the leave process. However, as Theresa May has now indicated that the UK will be seeking a'hard' exit from the EU, softer options such as joining the European Free Trade Agreement (EFTA) which would still have allowed the free movement of labour are not being considered.

Although the UK could grant entry to skilled workers, or introduce a flexible system of working permits to reduce the impact on the skills shortage, the burden of this may act as a deterrent to foreign workers, who could freely work in an EU member state.

The effect on the procurement of construction, repairs, and maintenance is unlikely to be of significant tangible difference. In brief, as EU procurement rules are enshrined in UK law, the rules will remain in force until the UK Government repeals or amends the UK legislation.

Whilst some complain that the EU procurement process is too bureaucratic and relies on a box-ticking exercise, there is a counter-argument that promotes that the EU procurement process instils best practice and transparency. Whatever the view, the UK will still require some form of procurement rules, and how much they will differ from the EU rules will largely depend on the emerging relationship between the EU and the UK. However, the current UK procurement rules, particularly the Scottish regulations, go further than is required by the EU and therefore Brexit will be unlikely to have a significant impact on procurement.

What can we do?

Procurement can have a major impact on the delivery of construction, repairs, and maintenance, and it is the responsibility of procurement professionals to be innovative and bold in meeting the challenges that the labour shortage post-Brexit will likely present.

There are indeed ways and means to achieve this which will provide the compliance, efficiency and flexibility in procuring these services when it’s required. Solutions that can be tailored to individual specific requirements and also encourage greater participation from SME suppliers.

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