The capital has a population larger than that of Austria or Switzerland, and an economic output larger than Belgium, Sweden or Norway. In a UK context, London’s economy is twice the size of the Scottish and Welsh economies combined.
This economic success has been increasingly driven by London’s connected and global economy specialising in financial, professional and technical services. This in turn has created strong demand for highly skilled, highly productive labour. A skilled workforce is vital if London’s economy is to continue to grow.
London faces significant challenges in the coming decades, with high levels of youth unemployment, a rapidly growing population and a number of key sectors heavily reliant on migrant labour. To meet these challenges, London needs an efficient skills system that is responsive to business need and supports learner progression.
With demand for intermediate and higher-level skills rising, London’s businesses have increasingly met a large share of their labour needs through immigration. EU nationals play an important role in many of the capital’s key sectors, including life sciences, construction, the National Health Service, hospitality, social care and financial services.
Nearly one in three of London’s workforce is non-UK born and 90 per cent of London businesses recruit EU citizens (69 per cent also recruit non-EU workers). London employs a higher proportion of EU nationals than the UK as a whole across all sectors. This is particularly acute in some of the sectors that drive London’s economy:
- London’s construction sector has an ageing workforce that is heavily reliant on migrant labour. EU nationals make up 30 per cent of the 300,000-strong workforce, while just half are UK-born. Of the UK-born workers in the capital, 38,500 (12 per cent) are set to retire in the next 5-10 years. Yet it is estimated that 60,000 more construction workers are needed in London and the South East in 2017 to keep up with demand;
- In the financial services sector, 15 per cent of the 300,000-strong workforce are EU nationals, a figure that has stayed relatively static over the last decade;
- In the tech sector around a third of those working in London are EU nationals;
- 10 per cent of the total workforce in London’s NHS are EU nationals (around 60,000)7 rising to 13 per cent of doctors;
- In hospitality, which accounts for £11bn of London’s GVA, around 75,000 of the 250,000-strong workforce are EU nationals (30 per cent);
- In wholesale and retail, 12 per cent of workers are EU-born and the workforce in this sector is growing by an average of 9,000 workers per year.
UK-wide, among small businesses, a fifth (21 per cent) have at least one EU-born employee. Almost half (47 per cent) of these small businesses hire EU nationals in mid-skilled roles with almost a third (32 per cent) in high skilled roles. According to a recent FSB report, ‘finding individuals with the right skills’ is a struggle for one in five (23 per cent) small firms that rely on high-skilled employees from the EU.