How Brexit and immigration policies deepen the UK skills gap

The UK faces increasing challenges in attracting and retaining skilled professionals, exacerbated by shifts in immigration policy and the impact of Brexit. These factors have shaped the dynamics of inbound migration, contributing to growing concerns about skills shortages across industries. Understanding the role of immigration policies, the effect of Brexit, and the resulting skills gap is essential for addressing this issue.

How Has Brexit and Immigration Policy Impacted the Skills Gap?

The UK’s departure from the EU has significantly altered migration patterns, particularly for skilled workers from the European Union (EU), European Economic Area (EEA) and Switzerland. Under the new immigration framework, European nationals are subject to the same visa requirements as non-European nationals, which has reduced the ease of movement for workers who previously filled vital roles in the UK.

Healthcare

Before Brexit, the healthcare sector heavily relied on EU nationals, who made up a large proportion of its workforce. According to the NHS, recruitment from the EU has slowed dramatically since the end of free movement, compounding pre-existing staffing shortages. The Skilled Worker visa has partially mitigated this by enabling those in recognised healthcare roles to apply for a Health and Care Worker visa, which enables those eligible to pay reduced visa fees and benefit from reduced minimum salary thresholds. Nonetheless, administrative hurdles such as the need to secure sponsorship, combined with the UK’s departure from the EU, have deterred many professionals from applying.

Construction and engineering

The construction and engineering industries have also been impacted. EU workers were a key source of labour, particularly for roles requiring mid-level skills that often do not meet the minimum salary thresholds required under the current Immigration Rules. Many UK organisations also relied on short-term labour from the EU, with specialist workers travelling to the UK to undertake short work assignments. UK employers are now struggling to fill vacancies, which in turn is delaying projects and increasing recruitment costs.

Hospitality and agriculture

Sectors such as hospitality and agriculture, which rely on seasonal and lower-wage workers, have been particularly affected. Despite the introduction of short-term visas for some agricultural roles, businesses have reported difficulties accessing sufficient labour to meet demand..

What Are the Causes of Skills Shortages in the Post-Brexit Era?

Immigration policy barriers

The current immigration system recognises that high-skilled workers can be sponsored, but it imposes strict requirements that limit access to the international workforce. The general salary threshold of £38,700 and skill level requirements exclude many mid-level roles. Employers also face high costs, including visa application fees, the Immigration Skills Charge, and the Immigration Health Surcharge, which collectively increase the financial burden of hiring international workers.

Loss of free movement

The end of free movement has reduced the pool of available workers from the EU, particularly in industries where EU nationals previously accounted for a significant proportion of the workforce. For example, the hospitality and construction sectors have seen a notable decline in applications from EU citizens, leading to unfilled vacancies.

Political uncertainty

Brexit-related uncertainty has made the UK less attractive to international professionals, with many professionals wanting to secure EU citizenship – along with the benefits this brings - as opposed to British citizenship. The Government’s clear focus on reducing immigration also makes the UK less attractive to those considering emigrating to another country for work. 

Consequences of the Inbound Migration Decline

Economic impacts

Skills shortages hinder productivity, delay projects, and increase operational costs for businesses. The construction and engineering sectors, which are essential for infrastructure development, face growing difficulties meeting demand. Similarly, reduced staffing in healthcare and hospitality has affected service delivery and customer satisfaction.

Increased recruitment challenges

Employers report greater difficulty in filling vacancies, particularly for mid-level and seasonal roles. This has increased reliance on domestic workers, where available, and has driven up costs for recruitment and training. Businesses are also exploring automation and outsourcing as potential solutions, but these options are not always viable.

Competitiveness on the Global Stage

The UK’s ability to position itself as a global leader in technology, research, and innovation is at risk. Skilled professionals are critical for advancing key industries, and difficulties in attracting international talent could stifle growth in emerging fields such as renewable energy and artificial intelligence.

Addressing the Skills Gap

Immigration policy reforms

Streamlining visa processes and reducing associated costs could help attract skilled workers from abroad. Expanding the Immigration Salary List (previously known as the Shortage Occupation List) to include more roles and lowering salary thresholds for specific industries could also ease immediate pressures. Targeted visa schemes for mid-level roles, such as those in hospitality and agriculture, could address gaps in these sectors.

Strengthening workforce training

Investing in domestic talent is essential for long-term resilience. Enhanced apprenticeships, vocational training, and partnerships between industries and educational institutions can equip UK workers with the skills needed to fill critical roles. Since winning the General Election, Labour has confirmed its plan to upskill the domestic workforce in order to reduce immigration, and Sir Keir Starmer has recently confirmed that those who sponsor skilled workers will be expected to train people from the local labour market. 

Incentivising EU Workers

To address the decline in EU migration, the UK could introduce specific incentives for EU nationals, such as reduced visa fees or streamlined pathways to residency. Recognising professional qualifications from EU countries could also simplify the process of hiring EU-based talent. Earlier this year, the UK Government was involved in discussions enabling the free movement of young people aged between 18 and 30 between the UK and EU (also known as the Youth Mobility Scheme), but thus far, the Government has rejected the possibility of extending the Youth Mobility Scheme to include EU nationals.

Improving retention through work-life balance

Creating a more appealing environment for skilled professionals by enhancing working conditions and offering flexible arrangements could reduce the desire to leave the UK. In this regard, the Government has published the Employment Rights Bill, aimed at upgrading the rights of workers to improve work conditions. Policies aimed at improving quality of life, such as affordable housing and access to public services, may also help retain talent.

The future

Brexit has undeniably reshaped the UK’s workforce, creating new challenges for industries reliant on skilled professionals. While government initiatives such as the Skilled Worker visa and Global Business Mobility visa routes offer partial solutions, more comprehensive measures are required to address the root causes of skills shortages.

A balanced approach that combines targeted immigration reforms, domestic workforce investment, and quality-of-life improvements will be necessary to ensure the UK remains competitive in attracting and retaining talent. Collaboration between government, businesses, and educational institutions will be key to developing sustainable strategies for mitigating the impact of these changes.