How will the engineering sector be affected by Brexit?

With the crossroad decision of Brexit now another 6 months away, the Government’s proposals on a ‘skills based’ immigration system in their previous White Paper is still bringing a storm of issues to the engineering sector.

Brexit, according to some, commences the end of Free Movement which has long permitted Europeans to help plug skills deficits and vacancy shortages across the engineering industry. Large sections of the highly active workforce are pooled from abroad, rousing questions as to how the UK will continue to source their engineers while engineering businesses prepare to ramp up their recruiting efforts with little choice but to apply for a Sponsorship Licence.

What does a Sponsorship Licence mean for engineering firms in the UK?

Fortunately for many UK industries, the Government’s White Paper offered a relief. Engineering companies that are understandably anxious about the ramifications of Brexit can rest assured since the Government announced the process of attaining a Sponsorship Licence will be reformed. The steps will be ‘streamlined’ and the requirements ‘light touch’, which is a huge achievement.

However, many businesses and lobbying organisations such as the Confederation of British Industry (CBI) have criticised the process in the past as ‘administratively laboursome’ and particularly costly – impacting both smaller and larger businesses. Since EU migrants will be subjected to visa regulations in post-Brexit Britain, this will also mean each engineering company will have to apply for a Sponsorship Licence in order to issue each and every non-UK and EEA employee with a Certificate of Sponsorship, allowing them to legally work in the UK.

Until the streamlined process comes into effect, businesses acquiring a Sponsor Licence will be required to prove that they are a legitimate business by passing the ‘genuine business test’. Immigration control may also choose to visit the business to assess all the staff and managers. Following this, engineering companies must be able to prove that they will also keep up-to-date and highly organised HR systems and records. It is yet to be seen whether the Government’s revised system will appease the critics and make the process easier to navigate and use for employers. However, if procuring the necessary Sponsor Licence proves to be too costly and complicated for some engineering businesses, they will have little choice but to restrict by recruiting local talent only. This will undoubtedly have a negative impact on major UK engineering projects.

However, even with frictionless mobility, engineering roles including mechanical, civil, chemical and electrical account for over 50% of jobs on the UK’s Shortage Occupation List. This means that the UK is already in shortage of the necessary engineering skills it requires to fulfil projects and maximise workforces.

Looking at the figures from a 2018 report by EngineeringUK, the UK faces a potential shortfall of 22,000 graduate-level engineers per year that are required for current ongoing projects. On top of this, there are approximately 124,000 roles that will require core engineering skills and this therefore in turn presents the possibility of an additional shortage of 59,000 workers. Overall, the annual shortages in the engineering industry therefore look to be between 83,000 and 110,00 staff members.

Shortages ahead for the sector

Yet the gap between the estimated shortages will not diminish under the Government’s proposed immigration plan. Not only will businesses need to meet the Sponsor Licence requirements, but the individuals working for them will need to pay and apply for a Tier 2 Work Visa. This means that non-UK employees in the engineering sector will be required to meet the Tier 2 requirements which include passing an English language test and earning a minimum of £30,000. For the engineering industry that relies on graduate talent and the cross-collaboration of expertise, such restrictions will only hinder the sector’s efforts at recruiting – especially when most entry-level positions earn around the £22,000 mark.

Whilst the Government has been keen to emphasise the previous Tier 2 Visa annual cap of 20,700 will be scrapped after Brexit, many engineers will still fall victim to the salary requirement and the Sponsor Licence application process. Currently, the Tier 2 requirements revolve around a 70-point based system that are made up of:

• 50 points for a job offer and a Certificate of Sponsorship from the company looking to employ you
• 10 points for proof of English language ability: and
• 10 points for adequate maintenance funds - the amount of maintenance required changes if you are planning to bring family members

The future for the engineering sector under these restrictions look bleak. Major car manufacturers and plants are being forced to pack up their stores in anticipation of Brexit while CBI director, Carolyn Fairbairn, confirmed that many UK-based businesses will be doing the same and relocating their production overseas. To this backdrop, the engineering sector of Britain looks on the verge of a crisis. If we can no longer recruit and maintain the workforce the UK desperately needs, the engineering sector will crumble from within.

*article updated on 11/04/19 to reflect further delay until October 31st

Alice Williams is a content writer and commentator for the UK’s leading Immigration Advice Service.