Crunch Boosts Local Hires As Migrants Go Home

Crunch boosts local hires as migrants go home

By Andrew Taylor
Employment Correspondent
Published: November 6 2008 02:00
Last updated: November 6 2008 02:00

Just as the barriers are about to be raised, it seems migrant workers may no longer want to come to Britain in such large numbers.

Phil Woolas, immigration minister, attending a conference last week to discuss the government's new immigration rules, might have expected to draw fire for suggesting the government's new points system ( see right ) could be used to control population growth.

Instead he was told by business leaders that, with the pound under pressure and unemployment rising at its fastest rate for 17 years, the UK no longer looked quite so attractive to potential economic migrants.

Dave Kaye, chief operating officer of First UK Bus, explained that his company had employed about 1,700 drivers from eastern and central Europe, mostly from Poland, in the past four years. “It has meant that we have been able to expand,” he said.

But Britain's biggest bus company now expects to recruit “predominantly” in the UK, as the number of Poles wanting to come and work has dropped and rising unemployment has meant there will be a greater choice of British-born workers looking for a job. “I think that most people [from Poland] who wanted to be a bus driver or an engineer . . . in the UK are now over here,” says Mr Kaye.

First UK Bus employs about 20,000 drivers, but needs to replace about 4,000 a year due to staff turnover. “We are now beginning to see [British-born] workers who had left the industry starting to return as conditions have worsened in other sectors, such as construction,” he says.

Lucy Neville-Rolfe, director of corporate and legal affairs at Tesco, told the conference a similar story: “As unemployment has grown, we have actually seen people [migrants] going home. And that has kept the dole queues shorter and, indeed, may have actually disguised the scale of the slowdown earlier this year.”

The retailer has recruited about 4,000 migrant workers from eastern and central European countries since they joined the European Union in 2004. “Most have come from Poland, Slovakia and Hungary, where we also have stores,” said Ms Neville-Rolfe. “They have a great work ethic and have been very successful, with at least 100 ending up as managers.”

Tesco, like First UK Bus, however, believes rising unemployment should make it easier to fill jobs locally. It is already employing more older and disabled workers and, like other supermarkets, supports the government's welfare-to-work policies, designed to get 1m of the 2.6m currently on incapacity benefits into jobs.

In another sign of the times, Kingfisher, the home improvement retailer, this week announced that it planned to double its Polish business over the next five years by opening more stores, to take advantage of the return of migrant workers.

Pawel Walus, operations director for Kingfisher's Castorama DIY stores in Poland expects about 80 per cent of migrants to return home, following the strengthening of the Polish zloty and rises in local wages.

Ian Cheshire, Kingfisher chief executive, said: “Even though we don't expect it [Poland] will escape the recession … I am absolutely convinced that it will perform better than France, which will probably perform better than the UK.”

The inflow of migrant workers from the eight eastern and central European countries that joined the EU in 2004 has already slowed considerably. In the second quarter of this year, the numbers fell by more than 27 per cent compared with the same period last year, to just under 38,000.

This is the biggest year-on-year fall since the UK opened its borders to them.

The new points-based immigration system is designed to stem the flow of low-skilled migrant workers from non-EU countries and gives preference to entrepreneurs, financial high-flyers and professionals such as scientists and engineers.

The next stage in the points system – covering the recruitment of skilled workers – is due to come into effect on November 27. But thousands of employers seem likely to miss the deadline.

By the middle of last month, only about 700 employers had registered to become official sponsors, allowing them to recruit migrants. Up to 20,000 companies had been expected to apply to become sponsors, says Julia Onslow-Cole, head of global immigration at consultants PwC.

By the beginning of October, only 3,500 companies had applied.

Doubts over recruitment needs may be one reason why some employers had not done so, says Ms Onslow-Cole.

Martin Broughton, chairman of British Airways and CBI president, complained that official guidance notes had been published only last month and this had left “scant time for firms to adapt”.

The new rules impose more onerous responsibilities on managers to check the credentials of workers. Companies and individuals face large fines and imprisonment if they employ people illegally.

“Obligations such as compliance with illegal working laws, tracking, and recording changes in the migrant workforce, are good HR practice, something companies should do in any event. However, the fact so few companies have applied to date may, in part, be a reflection of the current economic situation, whereby companies are reconsidering their hiring needs and believe they can wait for a sponsorship licence when the need arises,” says Ms Onslow-Cole.

Mark McQuillan, partner at law firm, Addleshaw Goddard, said: “The sponsorship system is complex and the obligations on a sponsor are wide-ranging. For example, the guide to being a sponsor is 130 pages long. This appears to be deterring employers from applying to be sponsors.

“Each sponsor is required to have an authorising officer, who must be an employee, director or company secretary. The authorising officer is required to take responsibility for all the sponsor's obligations. This is a significant burden to impose on an individual, particularly in a large organisation where it will be more difficult to control what other users of the system are doing.”

Sin Keall, partner in city law firm Travers Smith, said: “Many employers who wish to become sponsors do not have HR systems in place which are up to the standard required by the UK Border Agency. Therefore some organisations may have delayed their application while they update their systems and processes.”