The end of freedom of movement has not led to a significant increase in wages, Government advisers have said.
A study of the agriculture, manufacturing, hospitality and transport sectors by the Migration Advisory Committee (MAC) found few organisations had increased wages to compete for staff despite the smaller number of workers available after Brexit.
In 2021, then-prime minister Boris Johnson argued that labour shortages following Britain’s exit from the EU would be part of a transition to a “high-wage, high-skill” economy, encouraging firms to invest in the domestic workforce.
But the MAC study, published on Wednesday, found few businesses previously dependent on EU workers had increased wages beyond the amount required by the rising minimum wage or the cost of living.
It said: “Organisations often felt unable to pass on the cost of higher wages to their customers and some felt that even with increased wages, they would still struggle to attract and retain the labour pool available to them.”
Some, however, had increased wages for specific “tedious” positions or “less desirable” work such as night shifts.
Others looked at improving working conditions by focusing more on employee wellbeing or adapting roles to meet the needs of staff, although this was easier in the hospitality sector than in transport, manufacturing or agriculture.
Total job vacancies in the UK remain above one million, according to the Office for National Statistics, with figures published on Tuesday showing 1,051,000 vacancies between March and May 2023, in comparison there were 1.3 million unemployed people.
Vacancies peaked at almost 1.3 million between April and June 2022 and have been steadily falling since.
Wednesday’s MAC report also found employers had sometimes struggled with alternative recruitment strategies.
Agricultural businesses found the Seasonal Worker scheme, which allows workers to work in the UK for six months, was not a long-term solution due to the time and money spent training a new workforce every six months.
The report said: “Having new waves of staff every six months meant they were constantly working at lower levels of productivity while new staff were being trained.”
Efforts to recruit UK workers had also had mixed results, with a younger and less experienced workforce requiring higher training costs and tough working conditions causing many to leave jobs within weeks.
One logistics company told the MAC: “Our core colleagues, 50% of them will leave before 12 weeks, and our agency partners, it’s 80% leaving within 12 weeks. So it’s getting to the point where you need to bring in 10 people to gain by three.”
Other businesses found UK applicants “regularly” did not turn up for interviews and had only showed interest for “tick box benefits reasons”.
The MAC found automation had not been a “panacea” either, with businesses finding the high cost of machinery meant the return on investment was limited.
The report added: “Organisations were unsurprisingly reluctant to reduce their levels of production. However, some had been forced to make decisions that reduced their production in response to labour shortages.
“This included organisations reducing their operating hours, relocating operations to areas with more staff available despite incurring additional costs to do so, and reducing the proportion of production happening in the UK.”
