All I Want for Christmas Is My EU Workers Back, Says U.K. Plc

All over Europe, companies are wishing their workers a happy holiday and looking forward to a productive New Year when they return to work in 2018.

In Brexit Britain, there’s a catch. Businesses that rely on European Union countries for labor are concerned that employees will return to their families in continental Europe for Christmas — and stay there.

The pound’s decline since last year’s vote to leave the EU has eroded their wages; there’s uncertainty over their legal status as Britain’s EU departure inches closer; and they may simply feel unwelcome.

It’s already happening. Over the summer, oven manufacturer Aga Rangemaster Ltd. shut its factory in Leamington Spa, central England for two weeks, as it does every year. When it re-opened, just 32 of 50 temporary workers, mostly from Eastern Europe, came back.

“We found that most of the people were back overseas, working mostly in Germany for what is now a really high rate,” said Richard Marchington, sales director at Apex Recruitment, the consultancy Aga used to find the workers. “There’s sentiment behind it as well, which is the fact that these people feel that they’re not wanted in this country.”

‘Sea of Uncertainty’

Even before Britain’s scheduled departure from the EU in March 2019, Brexit’s impact on immigration is clear. Net immigration in the year through June fell by a record 106,000 — data that precedes the anecdotal summer departures.

“This is not a great time of year, because people go home and they think about the future,” said Paul Drechsler, president of the U.K.’s main business lobby, the Confederation of British Industry. “If the future is: ‘I’m repatriating 20 percent less than I was a year ago because of the exchange rate,’ or ‘I might be out of a job in 12 months,’ they will make those sort of choices” — to leave.

“That is happening at a steady pace,” he said. “If you’re 30 years old and thinking of starting a family, you don’t tend to do it in a sea of uncertainty.”

While Drechsler praised an agreement struck this month by Prime Minister Theresa May with her EU counterparts on the rights of each other’s citizens post-Brexit, he also pointed out what May and her ministers have repeatedly stressed: that “nothing’s agreed until everything’s agreed.”

That’s helped make EU residents in Britain “a little more transient,” says Stephen Phipson, chief executive officer of the manufacturing lobby group EEF.

‘Will They Turn Up?’

About 11 percent of Britain’s manufacturing labor comes from EU countries. “The fear was they’ll be going back for Christmas, and are they going to turn up again for work in January?” said Phipson.

May is aware of the issue, and in a visit to Warsaw on Thursday, she sought to reassure the nearly 1 million Poles resident in Britain — the biggest EU contingent — that “they are a strong part of our society, and we want them to stay.” She pledged to enshrine their rights in U.K. law.

One problem for British employers is that with unemployment at historical lows, they’ve come to rely on a wide pool of European labor that the government now wants to restrict. The experience at Aga, which manufactures the iconic cookers that are staples of rural middle-class houses, is far from unique.

Drechsler listed industries including construction, health care and agriculture as areas for concern. In Cornwall, southwest England, the local administration last month warned of “crops rotting in fields” after it found that farm staffing levels had fallen to 65 percent. And over the summer, hotels in Bournemouth on the south coast struggled to fill staff vacancies, according to British Chamber of Commerce Director General Adam Marshall.

In hospitality, finding enough British workers has been a problem for decades, according to David Myskow, general manager of the Holiday Inn at Kenilworth, central England. “They don’t want to clean bedrooms,” he said. “They don’t want to wait on tables.”

‘Costing Them Money’

Myskow runs franchises of Starbucks and the Marco Pierre White restaurant out of the same building as Holiday Inn, employing about 100 people. Since the referendum, his EU contingent has dropped to 32 workers from 40, as some workers found “it wasn’t worth their while coming here.” He’s now trying to fill vacancies through programs to get people with disabilities into work.

At Aga, while Apex managed to fill most of the roles, it was “a slog” because many British temporary workers “say they’re O.K. for it and then don’t show up,” said Marchington.

He said many of his customers are now seeking to replace workers with machines. “They’re investing in technology and automation more, because they’re having to,” Marchington said. “It’s costing them so much money not to have the unskilled labor.”

Such plans typically envisage a 3- to 5-year transition, Marchington said. They could make the U.K. more productive once they’re complete. The problem is in the shorter term. “You can’t just do that overnight,” Marchington said. “That’s the issue, and that could cause a dip in the economy.”
Source: Bloomberg

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