Brexit Delivers on Pay But Takes Away Workers

(Bloomberg) -- Some are handing out bonuses or raising pay, others are subsidizing housing or upgrading mobile homes to include showers and central heating. Whatever they're doing to attract or retain workers, British farmers are increasingly worried about a labor shortage.

Brexit is delivering on at least one of the priorities for its ardent supporters as Europeans start to stay away and earnings for workers in Britain picked up by the most in a year. But it also means it's delivering on one of the warnings: that labor costs would increase and supply chains would get interrupted.

Employment in the U.K. among nationals from eight eastern states including Poland and Lithuania fell for the first time since 2009 in the fourth quarter, according to figures this week from the Office for National Statistics.

It's the biggest sign yet that the days of plentiful and cheap labor for the agriculture industry are over. The decline of migrant workers also doesn't bode well for the wider post-Brexit economy. Industries such as fishing, health and retail also depend on recruiting non U.K. nationals.

“There were all sorts of layers of additional cost that growers certainly last year were having to add in order to get their workers and get them to stay,” Worcestershire apple and hop farmer Ali Capper said this week on the sidelines of the National Farmers Union's annual conference in Birmingham, where delegates demanded solutions from the government. When you're reliant on staff coming from abroad, “you can't just replace them,” she said.

Some estimates show 98 percent of temporary harvest workers are recruited from elsewhere in the EU. Environment Secretary Michael Gove, a leading figure in the campaign to leave the EU, told the NFU that he now wants special immigration rules to allow foreign farm workers to stay.

Read More: Brexit Cheerleader Wants Foreign Farm Workers to Stay

The lack of clarity over government policy doesn't impress poultry farmer David Brass as he struggles to find eastern European workers to help rear his 135,000 chickens in Cumbria, northwest England. With U.K. unemployment near a 42-year-low, he may end up relying on robots to help collect and pack eggs.

“When you jump off a cliff and you find out the parachute works half way down, that's not the way to do it,” Brass, who also was at the NFU conference, said of the EU withdrawal process. “We don't have a clue.”

Online grocer Ocado Group Plc is struggling to find enough drivers to transport produce to customers, causing sales growth to slow last quarter. With EU nationals making up two-thirds of the permanent workforce in the U.K.'s food and drink supply chains, according to the British Retail Consortium, that squeeze could intensify all the way up to consumers.

For Bill Quan, who farms 800 acres of land in southwest Herefordshire, the gap in labor supply is already costing him money because he has to pay workers more to keep them.

“Previously for our potato farming we never had a problem of people not turning up at our farms for work,” he said at the conference. “People just kept coming, but now that's not the case.”

--With assistance from Manisha Jha and Sam Chambers

To contact the authors of this story: Lucy Meakin in London at lmeakin1@bloomberg.net, Agnieszka De Sousa in London at atroszkiewic@bloomberg.net.

To contact the editor responsible for this story: Rodney Jefferson at r.jefferson@bloomberg.net.

©2018 Bloomberg L.P.