When Freedom of Movement was ended in January 2021, it constituted a shock to the UK labour market. This research set out to explore the effects on four sectors – agriculture, hospitality, manufacturing, and transport and storage – which had historically tended to rely on EU workers.  

Previous research using German data had indicated that industries and firms responded to changes to local labour supply in one or more of the following ways:  

• Trying to attract new workers by raising wages and improving conditions 
• Automating elements of work to make it less labour-intensive
• Reducing the level of production.

The independent Migration Advisory Committee, which advises the government and commissioned this research, tasked us with finding out whether companies most likely to be heavily affected by the end of Freedom of Movement had taken the same approach to replacing their previous EU workers.  

It was important to carry out the research in ways that meant we could get beyond common narratives or preconceptions. We took a place-based approach, visiting the nine organisations that took part at their headquarters or main place of work, enabling us to meet and observe a range of people and processes, as well as conduct in-depth interviews.   

The research confirmed all these organisations had experienced labour shortages after Freedom of Movement ended. Some of the businesses found attracting or retaining staff particularly challenging because the work they needed done was seen as low status or unattractive. The organisations that struggled the most were those that had failed to take steps to ensure workers felt valued. Many organisations were now making attempts to change this, but those that had done so before the end of Freedom of Movement generally fared better. 

Few had increased their wages to attract or retain staff. Some organisations said they felt unable to pass the cost of higher wages onto consumers, others doubted that wages alone would solve their recruitment challenges. 

Automation was regarded as an inevitable part of an organisation’s evolution, and several of the companies had made small innovations and investments in technology to reduce the need for labour or to improve working conditions. But the appetite and ability to automate were often limited – automation was not generally seen as a solution to labour shortages that was cost effective in the short term.  

As a last resort, a few of the organisations felt forced to reduce production, for example reducing operating hours, or reducing the proportion of production taking place in the UK. However, all the organisations were reluctant to take these measures.