Thursday, February 20, 2020

UK Government Simply Doesn't Get the Importance of Freight and Logistics

All Industry Experts Agree New Immigration Policy is a Disaster in Waiting
Shipping News Feature

UK – Three of the UK's most prominent transport and logistics industry associations have all come out strongly against the UK government's proposed points-based immigration systemthat will limit the number of low-skilled workers entering the UK. The shortage of staff in the sector is by no means new. The UKWA, the RHA and the FTA have all warned for several years that more needs to be done to address the shortfall of workers across the industry but such restrictive measures will only worsen the situation with the government focusing seemingly on higher skilled workers.

From January 1, 2021, EU and non-EU citizens alike will face greater hurdles if they wish to work in the UK, if government proposals go ahead. Currently the government has ruled out introducing a general low-skilled or temporary work route, stating that it intends to shift the focus of the economy away from a reliance on ‘cheap labour from Europe and instead concentrate on investment in technology and automation’ and expecting employers to simply adjust.

In order to be eligible to come to the UK and work, applicants will need to meet a certain set of criteria; an offer of a job by an approved sponsor, a job at an appropriate skill level, and must speak English at the required level. This will give them a total of 50 points. Applicants need a total of 70 points. The remaining points are split into salary bands (minimum £20,480 - £23,039 = 0 points, £23,040 - £25,599 = 10 points, £25,600 and above = 20 points), education qualification (PhD in subject relevant to job = 10 points, PhD in STEM subject relevant to job = 20 points), and a job in a shortage occupation, which is worth 20 points.

The UK Warehousing Association (UKWA) has warned that the logistics industry is likely to face a shortage of vital workers with the new points-based immigration system. Peter Ward, the Association’s CEO, commented:

“Companies operating in the logistics and warehousing industry need access to low-skilled, low-cost labour and with low youth unemployment figures in the UK, the sector has traditionally looked to the EU to supplement its workforce.

“While it is hoped that the majority of EU citizens currently working in UK warehouses and distribution centres will choose to stay in Britain by applying for EU settlement scheme status, it is clear that the inability to recruit shop-floor operations staff from other countries will add to the recruitment pressure that the logistics industry is already under.”

Ward questioned the Government’s suggestion that businesses will be able to reduce their reliance on foreign workers by increasing levels of pay and investing in automation. He continued:

“The logistics industry operates on the narrowest of margins and it is hard to see how any significant across-the-board pay increases for low-skilled staff could be introduced without passing on the additional costs, unless the days when online shoppers expect low priced goods with cost-free and immediate delivery become a thing of the past.

“And, while it is true that the use of automation is growing across the logistics industry, there are many roles within a typical warehouse operation that remain difficult to automate. Although recent developments have made automation more scalable and flexible, for many warehouse operators the outlay on the type of fixed assets found in automated systems, is impossible to justify. Furthermore, automation does not replace a workforce, but creates new jobs with different skills, which needs investment in training and cannot be achieved overnight.

“UKWA remains committed to working with the Government to find practical solutions to the issues that lie ahead, and we are seeking urgent talks to deliver the message that the logistics industry must have access to the workers needed to ensure that the UK’s essential supply chains do not suffer as a result of these changes to our immigration rules.”

In a similar vein, the Freight Transport Association (FTA) says that vital logistics workers must be excluded from the government’s restrictive post-Brexit immigration policy, further calling for government to realise how reliant the industry is on EU workers with the sector already suffering from a severe labour shortage, adding that the loss of these workers could cause business to come grinding to a halt. Sally Gilson, Head of Skills Policy at FTA, commented:

“The FTA needs the Prime Minister, Boris Johnson, to reconsider his post-Brexit immigration policy immediately; the UK economy simply cannot operate without the logistics workforce. The sector is already facing a severe labour shortage, 64% of transport and storage businesses are now struggling to fill vacancies, and with EU workers currently constituting 13% of the entire logistics workforce, it is obvious how detrimental this policy will be on the very businesses charged with keeping the UK trading. If the government insists on withdrawing access to EU workers, it will have to adapt and adjust its allowances for training; the burden should not solely lie on UK businesses.

“The FTA is also appalled that the government has deemed HGV driving, along with many other logistics occupations, to be ‘low skilled’ activities, these are, in fact, very challenging roles. Vocational occupations make a significant contribution to the UK economy; FTA is urging the government to realise it is not just academically trained workers that hold value.

“The logistics sector is the lifeblood of the nation’s economy, ensuring shops, hospitals, restaurants and schools etc. all receive the goods they need to operate. FTA is urging the government to give special dispensation to EU logistics workers, they must be welcomed post-Brexit transition period to ensure the sector can continue operating. While businesses within the logistics sector will do everything possible to keep the UK trading, without adequate levels of staff, operations will become strained and UK plc will inevitably suffer.”

According to the FTA’s Logistics Skills Report 2019, declining EU net migration has contributed to a 43% rise in job vacancies in the transport and storage industry over the past couple of years, a story we covered in depth last year.

The Road Haulage Association (RHA) echoed the FTA’s concerns that the government do not take the occupation of being an HGV driver more seriously, saying that the government's short-sightedness is putting Britain's supply chain at risk adding that more detail is needed on the points system and the criteria for establishing the basis of skilled work.

The average age of an HGV driver is 55, less than 1% are aged under 25 and the cost of training is approximately £5,000. RHA Chief Executive, Richard Burnett, said:

“Profit margins are so low, between one and two percent, that employers simply cannot afford to train new drivers. They need to employ those that are already qualified but with a 60,000 shortfall this is impossible.

“Since its inception in 2017, hauliers have invested £320 million into the Apprenticeship Levy yet only £20 million has been withdrawn. It’s just not working. It’s a tax on our industry. For years we have been talking to the Home Office about getting the HGV driver skills shortage added to the UK Shortage Occupation list that includes all of the occupations that currently have a skills deficit.

“With a shortfall of approximately 60,000 drivers, we are of the firm opinion that this industry should certainly be near, if not top of the list. It’s a triple whammy. We’re not getting the money to train new drivers, the driver shortage isn’t recognised and now we’re being told that operators can’t employ immigrants to fill staff rotas.

“Many UK operators are totally reliant on European drivers. Putting a stop to the immigrant workforce will have a massive impact on the supply chain, and the next-day deliveries we have all come to expect will be a thing of the past. There is a clear lack of communication between Government departments i.e. the Home Office and the Department for Education. The left hand doesn’t know what the right hand is doing and urgent reform is desperately needed for the Apprenticeship Levy. Otherwise all pipelines for recruitment will dry up.

"95% of all goods in the UK have made the journey to their ultimate destination on the back of a truck and the UK economy is totally reliant on an efficient supply chain network. It cannot be allowed to grind to a halt as a result of government short-sightedness.”

Just as when then Brexit secretary Dominic Raab said in 2018 that he ‘hadn’t quite understood’ the importance of the Dover-Calais trade route, it seems ministers still can’t grasp the importance of an industry which every person in the country relies on for every one of life’s essentials. Today the Home Secretary Priti Patel suggested staff shortages resulting from lower immigration can be covered by ‘the 8 million people in the UK who are economically inactive’, that’s students, those too ill to work and, according to some analysts, the retired. Watch this space.

Photo: Overseas workers make up a sizeable complement of the logistics workforce for companies such as Amazon.