The UK wants to build a new high-speed rail line, a giant nuclear plant and a third runway at Europe’s busiest airport to shore up a creaking infrastructure. Brexit could throw a monkey-wrench into the works. Companies ranging from telecommunications provider BT Group Plc. to builder Balfour Beatty Plc. to engineering supplier Sevcon Inc. warn that the country already suffers from a shortage of skilled workers.
If Prime Minister Theresa May’s government cuts off the supply of European Union migrants who partially close the gap, the UK may not have enough cable-layers, carpenters and engineers to carry out those projects.
The UK “is less attractive to talented people already,” Sevcon CEO Matt Boyle said in an interview at the company’s headquarters in Gateshead, a town in northeastern England that voted overwhelmingly to leave the EU. “It’s becoming a problem getting people here for interview.”
Of the 110 employees designing and testing circuit boards and motors in blue polo shirts at Sevcon, which makes controllers and chargers for electric vehicles used in construction and industry, more than 10 percent hail from abroad. They include a Polish head of quality control, an Italian, two Spaniards, a Cypriot, a Latvian and two Germans.
In London more than half the construction workers are migrants, according to the National Institute of Economic and Social Research (NIESR).
In their occupational qualifications and pay levels, many of them fall between the low-skilled baristas and highly paid bankers who are the most conspicuous symbols of the UK’s surge in immigration.
Airport expansion
While construction companies and suppliers of building materials, like SIG Plc,. say activity is flagging in the wake of the June Brexit referendum, the government wants to go ahead with projects, like the Hinkley Point nuclear power plant, an expansion of London Heathrow Airport and a high-speed rail line from the UK capital to the north of England.
BT is counting on EU workers to complete its plans for spending £6 billion ($7.6 billion) through 2020 to speed up its fixed and mobile broadband connections—an upgrade the government urged the company to undertake. EE, the telecom provider’s mobile unit, says a majority of the engineers working on its network are non-British, mostly from the EU.
The supply chain for London’s Crossrail, a fast subway line that’s set to open next year, includes more than a thousand firms. The UK’s pending infrastructure projects could be a boon to them and others—if they can find the workers.
“Imposing new restrictions on people coming from abroad to fill vacancies will impact businesses’ ability to meet demand, as well as the delivery of public services,” Recruitment and Employment Confederation CEO Kevin Green warned last week, as the group’s jobs index showed a persistent shortage in the supply of workers.
May has yet to detail her plans for reducing inflows. The UK could make up for fewer EU workers by allowing in more migrants from outside the bloc. The country already exempts some so-called shortage occupations, such as computer programmers, from immigration restrictions that apply to other jobs. But securing visas can be costly and cumbersome.
Boyle said Sevcon missed out on a highly qualified candidate from India this summer because he couldn’t demonstrate one of the visa requirements—a sufficient bank-account balance. If similar terms were applied to EU citizens “it would definitely restrict us,” he said.
Cutting migration
Even the existing guidelines for non-EU workers might have to be tightened if May is serious about achieving her declared goal of cutting net migration by two thirds, to fewer than 100,000 per year.
UK contractors have turned to EU workers because their domestic counterparts are in short supply—and sometimes disappoint employers. Three of four candidates who applied for a job at GS Foam Concrete in Stockport, England, last year, never showed up for interviews, Managing Director Glen Jones said. The firm injects aerated concrete to reinforce transport projects, like Crossrail tunnels and London Bridge train station.
“The other one, we offered him the job, but he took a job nearer to his home because he didn’t want to work away from home,” Jones said by phone.
Big UK builders need to tap platoons of subcontractors at short notice, and workers from other EU countries are often more flexible than locals. They endure longer commutes and “adjust their hours up and down in a way that British workers either can’t or aren’t willing to do,” the NIESR said in a report.
The skills gap is widening because young Britons aren’t following their parents into occupations that require manual work. “A large number of experienced employees retire in the coming years,” said Southern Gas Networks Plc.’s annual report on July 27. The problem is echoed in recent filings from contractors, like Balfour Beatty and Carillion Plc.
Vocational training
The UK lacks the vocational training and long-established apprenticeship programs that supply employers in continental European countries, like Germany, with a steady stream of skilled workers. The government has launched a national infrastructure commission to advise on the UK’s long-term needs and it has promoted apprenticeships, but many young people prefer office work.
Bloomberg News
“Vocational training is seen as a second-class path” as the country has transitioned into a services economy over the last thirty years, said Heather Rolfe, associate research director at the NIESR. Even well-paid jobs are undermanned; just over half of forecast demand for engineers is being met, according to the Royal Academy of Engineers.
“It’s just not going to be feasible to train the number of people that we need in the time scale that we’re talking about, so we will absolutely continue to depend on importing talent,” said Hayaatun Sillem, deputy CEO of the Royal Academy of Engineers.