Labor Shortages during the Pandemic and Beyond: What Role Can Immigration Policy Play?
As European countries seek to revive their economies in the wake of the COVID-19 pandemic, an acute labor shortage in a variety of sectors risks stopping the recovery in its tracks. Challenges recruiting truck drivers, warehousing workers, and other logistics staff have hobbled already strained supply chains. In the United Kingdom, these constraints (which exacerbate trends set in motion by Brexit and the end of free movement) have recently resulted in empty supermarket shelves and long lines for fuel. Efforts by the hospitality industry in France, Germany, and other European countries (and their counterparts in Canada and the United States) to recover from prolonged closures or furloughs have also sputtered as employers struggle to recruit enough restaurant and hotel workers. And the pandemic has added to longstanding difficulties recruiting and retaining health- and long-term care workers because of low pay and challenging working conditions.
While many of these labor shortages are not new, the pandemic has made them worse in a couple of ways. First, the public health measures introduced to slow the spread of the virus and the ensuing economic downturn displaced many people from their jobs, especially those working in more precarious or low-paid roles. As business resumes, employers must meet the costs of hiring and training new workers and incentivize past employees to take up these roles anew.
Second, the pandemic has also upended the supply of available workers. The past 18 months have seen some workers opt to change professions in search of opportunities that are better paid, more stable, or offer safer working conditions. Meanwhile, the pandemic prompted some immigrants to choose to return to their country of origin. All of this is happening while ongoing travel restrictions and public health measures have impeded intra-EU mobility and immigration from third countries, spelling trouble for sectors in which immigrants tend to be over-represented, ranging from food production and hospitality to health care.
One result of this crisis is a renewed attention to immigration policy as a tool to meet some of these demands. Throughout the pandemic, for example, Germany, Spain, and other countries in Europe have gone to extraordinary lengths to admit seasonal agricultural workers from other countries (such as Romania and Bulgaria) or further afield (such as Morocco), including chartered flights and exemptions from travel restrictions. And more recently, acute labour shortages in the United Kingdom have led the government to expand its seasonal worker program for agricultural workers to include 5,000 truck drivers and 5,500 poultry workers to help alleviate labor shortages in these industries.
While shortages are being felt most acutely in low- and middle-skilled jobs, employers are starting to report renewed difficulties in recruiting workers in fast-growing, knowledge-intensive sectors, such as science, technology, engineering, and mathematics (STEM), which require advanced technical and soft skills. Governments were taking steps to reform immigration policies to ease the admission of specialized workers prior to the pandemic, as illustrated by Germany’s Skilled Immigration Act of 2020, and these renewed shortages may add urgency to planned reforms, such as the current push by the European Commission to complete reforms to the Blue Card Directive for skilled professionals and introduce a skills and talent policy package by the end of the year. As populations across Europe age and workforces shrink, and demand for workers for high-skilled and more precarious roles grows, these needs will only become more acute.
The pandemic also has reopened the debate about which labor shortages are genuine, as opposed to employers not offering competitive wages or decent working conditions. In part, this reflects the ongoing challenge of accurately assessing which occupations are currently experiencing shortages (and where) on a regular and frequent basis. But it also reflects broader questions about the strengths and drawbacks of using immigration policy to address current shortages compared with other policy interventions, such as greater access to upskilling and retraining for local workers, improving the quality and pay of hard-to-fill jobs, or increasing productivity.
The economic recovery offers an opportunity for governments to revisit their immigration, education and training, and labor market strategies and how these policy interventions can tie together. Evidence suggests that immigration can play a role in addressing labor market needs, both now as employers struggle to fill vacancies, and in the medium to long term to address emerging skills gaps. But immigration policy decisions should not happen in isolation from efforts to ensure decent working conditions and competitive wages for all workers or to equip workers to navigate fast-changing labor markets.
Research suggests several principles for policymakers to consider.
- First, if immigration policy is intended to respond to changing labor market needs, governments will need to make the application and processing timeline much faster and easier for immigrants and employers alike to navigate. Would-be foreign workers and employers should not have to wait months for a decision on whether their application is approved. Digitizing applications, hiring more staff to process applications and issue permits, and accrediting employers who play by the rules are just some examples of how to speed up these processes.
- Second, governments should ensure that immigration policies are not misused to simply secure cheap labor. Improving enforcement of labor laws is essential both for tackling exploitation of foreign workers and preventing downward pressure on wages and working condition for all workers. Governments could also consider additional safeguards such as delinking work permits from a single employer to allow foreign workers to change jobs after a certain period of time and reduce the risk of exploitation. Finally, there needs to be more scrutiny of why some jobs prove so hard to fill with local workers, and whether there are other options besides immigration to improve the quality of these jobs – such as incentivizing employers to raise wages or targeted investments in automation of routine tasks.
- Finally, governments should demonstrate their commitment to helping workers find decent work. With Europe’s labor markets poised to undergo significant transformations in the decades ahead, improving opportunities for upskilling and retraining for local workers, including long-term immigrants and their families, should be a top priority. Education and training systems will need to be recalibrated to provide workers with the technical and soft skills that are likely to be prized in future jobs, and to allow workers at all stages of their career to update their skills or retrain as needed to be productive.
As Europe embarks on its economic recovery, it will be crucial for policymakers to tackle emerging bottlenecks in recruitment. Flexible and responsive labor migration policies can play an important role in addressing emerging needs, both in the short term and in the medium to long term, and governments should not shy away from these policies. Current shortages also make the case for related reforms, such as improving the recognition of foreign educational and professional qualifications, and exploring how and where EU-level initiatives can achieve economies of scale. But the recovery also offers an opportunity for European countries to link up immigration policies more fully with the bloc’s broader economic goals, such as investing in a green economy and promoting decent work for all workers.