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CIPD: Public sector predicts negative impact with EU migrant restrictions

Over half of public sector employers expect that restrictions on their ability to recruit EU nationals following the referendum result will have a negative impact on their work, a new survey shows.

According to the latest quarterly Chartered Institute of Personnel Development (CIPD) Group Labour Market Outlook report, 53% of public sector employers said that immigration restrictions would have a negative impact on their work, compared to 39% of private sector employers.

Only 4% thought it would have a positive impact. In addition, 49% of public sector employers said they expected increased difficulties recruiting EU migrants.

Gerwyn Davies, labour market analyst at the CIPD, said: “The report points to the UK economy beginning to face some likely headwinds following the UK’s decision to leave the European Union.”

He added that the impact of potential restrictions to migrant labour will certainly be exacerbated by the fall in business investment intentions.

“Given the current level of uncertainty and the projected increases in costs as a result of a weaker pound, it’s not surprising that employers aren’t currently persuaded to respond to likely controls on migration by investing more in skills,” explained Davies.

“However, this will put further pressure on the UK’s productivity growth potential, which is critical to employers’ ability to afford more generous pay increases.”

Davies warned that workers could “expect a period of low or negative real wage growth” as a consequence of increased inflation.

The report showed that basic pay increases in the public and voluntary sectors are expected to stay at 1%, compared to 2% for manufacturing and production and services.

When all employers were asked how they would cope if it became harder to recruit EU nationals, 43% said they would use strategic workforce planning, two-fifths would review their resourcing strategy and 30% expected to continue to recruit EU nationals and absorb the extra cost.

The preferred outcome for public sector employers after the UK leaves the EU is to stay in the European Economic Area (EEA), which over a quarter support. However, when asked what they expected would actually happen, they were more likely to say they didn’t know or that the UK would stick to bilateral free trade agreements than it would make an EEA arrangement.

Davies said: “It seems that few UK employers want or are ready for a hard Brexit outcome, which all the latest political commentary seems to be pointing towards.”

He added that employers should prepare for restrictions on EU migrant labour, and the government should consider helping them by making intermediate arrangements for immigration reforms.

More positively, the report showed that the public sector had the highest rate of employers planning to hire staff in the fourth quarter of 2016, at 74%, compared to 70% of private sector employers and 64% in the voluntary sector.

However, the percentage of employers saying they intended to make redundancies was at the highest for 18 months, at 24% of employers in both the public and private sectors and 26% in the voluntary sector.

Another recent CIPD survey showed that 61% of public sector employees felt pessimistic after the referendum result.

(Image c. Daniel Leal-Olivas from PA Wire and Press Association Images)

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