Scotland should copy New Zealand to get workforce back on track
The reality of a shortage of labour and skills affects all parts of the UK acting as an economic drag on our whole economy and unless specific and deliberate measures are taken to address it, it will undoubtedly prevent the kind of economic recovery we all want to see.
There is a shortage of labour and there is also a shortage of required skills in a range of areas and there are a number of reasons for this. Demand is above pre-pandemic levels whilst supply is below pre-pandemic levels.
When the pandemic hit, older workers responded to the initial reduction in labour demand by no longer looking for work, so they became inactive as opposed to unemployed.
Since the pandemic the number of people unable to work due to health reasons seems to have increased. However, data shows that many of the older population who are economically inactive because of long-term illness left the labour market before they became ill and decided to retire. Indeed, with the advent of remote working older workers found they enjoyed their time at home and did not wish to return to the workplace and took the opportunity to retire.
But the other driver for the labour and skills shortages we face which poses a real threat to our economic recovery and potential prosperity is Brexit.
A House of Lords report last month pointed to an increase in early retirement and changes to migrant worker patterns since the Brexit referendum as exacerbating the main drivers of these shortages. It found that:
“Over the last few years, many EU workers, who have filled these roles, have left the UK”
There is no dispute about the fact that before the EU referendum, before the pandemic, free movement from the EU was a major source of labour migration to the UK. By 2020 an estimated 55% of foreign-born workers who said that they had originally moved to the UK for work-related reasons, were born in EU countries. Now, many have left the UK since the UK left the EU which coincidentally also saw a pandemic.
Even if they wanted to return to the UK, many will find themselves unable to do so due to the UK’s restrictive post-Brexit immigration policies, even though our economy, our labour market needs them to fill the gaps we are suffering and which are acting as a drag on our economy and current and future prosperity.
Between Brexit and the start of the pandemic, the number of National Insurance numbers issued to people from the EU fell by 24% - impacting our NHS with the number of specialist doctors in the UK from EU or The European Free Trade Area more than 4000 lower than if pre-EU trends had continued. And, just to be clear, this shortfall is not being made up for by non-EU workers. The situation is particularly acute in rural areas, prompting the Migration Advisory Committee to warn of the risks of rural depopulation.
Of course, we need to invest in skills and education but there is an urgency about this situation that requires urgent action.
The situation is particularly worrying for Scotland given that this is the only country in the UK where our population is projected to fall in the next decade. The UK Government needs to ensure it is easier for businesses to recruit from abroad as and when they require, for all skills levels.
The temporary exception to the “skilled workers” criteria under its point-based immigration system for care workers and introducing a bespoke visa for seasonal agricultural workers is fine as far as it goes, but it is clearly inadequate to address the scale of the workforce challenges faced by the sectors to which it is directed and also taking no account of the needs of a range of other sectors. Similarly, the Kickstart scheme – well intentioned as it was - is simply inadequate to address these challenges.
In the absence of any attempts to address this very serious situation in a way which will make the necessary impact on the challenges before us, a Scottish visa should be established so that those who wish to live in and contribute to Scotland’s workforce may do so. Similar successful schemes have been established in Canada, Australia, New Zealand and Switzerland, on a regional basis, so that the different labour needs of Scotland need not suffer from a one-size UK approach since Scotland’s demographic and geographical needs are entirely different.
In addition, it makes sense to allow asylum seekers who come to the UK to enter the workforce. Currently they are stuck in hotels or home office accommodation – at huge cost to the taxpayer – but many of them have skills we need and a desire to work, whilst we suffer skills and labour shortages. This defies all common sense. Indeed, Refugee Action has calculated that if asylum seekers were given permission to work, this could generate up to £330m annually for the UK Treasury.
Labour and skills shortages are a global challenge which means it is all the more urgent that our competitive edge to attract the labour and skills we need should be all the sharper. Our economic growth depends on our ability to do so. There is much more that could and should be done to address this.
Patricia Gibson is the former Scottish National Party MP for North Ayrshire and Arran. She also served as the SNP's Environment, Food and Rural Affairs Westminster Spokesperson.
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