Wednesday 13 December 2017

To Brexit and beyond

Researcher and supply chain risk expert David Hogarth discusses the challenges fleet operators could face after Brexit in recruiting and retaining drivers from the EU

The government has no agreed post-Brexit EU driver recruitment strategy. But EU drivers aren’t waiting for politicians to decide their fate; they’re leaving now. This shouldn’t be allowed to happen. The UK must retain sufficient qualified EU drivers to keep existing services running after Brexit and beyond.

Once home, migrant drivers won’t be at the beck and call of the UK transport industry like they were. The tables have turned. It’s not what migrants can do for us – it’s what we’re prepared to do for them so they’ll remain.

At home, EU migrants are unlikely to drive for domestic employers, as the pay is markedly poorer compared to the UK. Former Bloc employers also prefer international transport, which is unlikely to attract ex-UK shift work drivers.

The flipside is that their licences will lapse and they’ll be unable to replace any EU drivers that later leave UK employment.

The exodus of anywhere between 35,000 and 60,000 drivers – depending on who you believe – will certainly increase the driver shortage, so the industry associations are lobbying for them to return.

The government obviously needs to know the true figure before effective policies are rolled out. There are two fundamental questions to answer regarding EU drivers seeking post-Brexit employment: who will employ them, and on what terms will they be signed up?

The answer isn’t as straightforward as it seems, because Brexit policy is unlikely to preserve the current free-for-all regarding employment options.

The government should therefore evaluate the suitability of the four main contenders: recruitment agencies, third-party logistics (3PL) services, family-run firms, and direct employment with the grocery and retail sector. With more drivers than ever being advised how to avoid tax by going self-employed, the payment of future tax and national insurance contributions are of primary importance.

Of immediate concern is the road transport industry’s lack of recruitment expertise. Most UK employers still rely on word of mouth to fill vacancies. The Home Office learnt a great deal from the fake university fiasco. Road transport is no different. The industry has its fair share of unscrupulous employers waiting to game the system.

What the industry and its associations haven’t done over the years is raise the status of drivers. 3PL drivers might wear nice uniforms but they’re unlikely to have a standardised grading or promotion scheme to aim for. This would’ve aided recruitment.

3PLs also often don’t do much due diligence on agencies they work with. There are instances where together they monopolise the local job market, and their manipulation of the workforce is every bit as intimidating as the unions ever were.

It’s become common knowledge now that agencies can punish uncooperative workers by not offering them future work. At the end of the day their drivers are merely pawns to play with.

Current EU agency workers often struggle to progress from temporary to permanent because agencies use the law to prevent it. To top it all, the recruitment industry is accountable for encouraging tax avoidance schemes and self-employment under dubious umbrella companies.

On the plus side, 3PLs have the infrastructure to recruit EU drivers from within their own continental organisations. But despite this, they’ve demonstrated that they can’t be fully trusted to assure job security.

What will happen to EU drivers when contracts with clients are lost or suddenly change hands? A further uncertainty will be whether redundant EU drivers can seek alternative employment.

Family-run haulage firms would take them on. They’re veterans at employing migrant workers on full-time contracts. The positive aspects of full-time employment with family firms can’t be understated. The only negative aspect is that smaller family-run firms may not have the resources to deal with any immigration bureaucracy.

For most family firms, employing post-Brexit EU drivers will mean business as usual. The most obvious risk they face arises from drivers being tempted by better paid positions appearing elsewhere.

The government has indicated that established EU workers with five years’ UK residency can remain without conditions and claim existing benefits. This is a key point but it’s here where the divisions start. Crucially, EU migrant workers can work for agencies. They don’t need a contract of employment to remain in the UK.

Agencies don’t ‘employ’ drivers in the legal sense. There’s no mutuality of obligation and therefore no guarantee of work. Basically, an agency doesn’t have to offer work to a temporary worker they’ve signed up, and if offered work, the temporary worker isn’t obliged to accept it. Consequently, there’s no contract of employment.

The real benefit of agency work is holidays. EU drivers could ‘go home’ for extended peak time breaks and still have a job to come back to.

Today, agencies are the main providers of EU drivers. Agencies don’t need operator licences or transport manager CPCs. They’re free to join and influence road transport industry associations, but agencies won’t be signing up new EU drivers post-Brexit because they don’t meet the expected EU worker employment criteria.

Before implementing Article 50, the government hinted at several barriers to employment that would exclude agency work. The promise of a tougher work permit system, tighter resident labour market tests and PAYE contracts of employment are a familiar set of immigration employment criteria adopted by countries worldwide.

But how will the UK legally enforce contracts? For example, will an EU driver be in breach of contract if they refuse to renew their DQC card citing lack of facilities and persistently ignored health and safety breaches like ‘self-tipping’ at a customer’s premises? What legal rights will EU drivers have and can they join a union?

EU drivers arriving post-Brexit will have to demonstrate a higher commitment to work. However, established EU drivers with five years’ residency will be able to continue working on zero-hour agency contracts. They’ve earned the right to do so and offer flexibility to the industry.

Many grocers and retailers currently refuse to employ drivers directly. They only allow their vehicles to be driven by 3PL or agency drivers. Established EU drivers are therefore high contenders for being kept on flexible agency work serving 3PL companies.

EU drivers arriving after Brexit won’t be able to arrive and sign on with agencies because they’ll be employed under tighter terms.

If businesses that currently don’t employ drivers directly were prepared to adapt and employ EU drivers then it would bypass any ambiguity, and provide integrity and security for all parties.

Businesses can also develop tailor-made employment packages aimed at EU drivers that logistics companies and agencies can’t do because they’d have to be applied to the whole workforce.

The FTA points out that EU drivers are vital to the industry. They are, but it must be remembered that a significant proportion of current EU drivers work for agencies that only offer them a few shifts a week.

The industry is famed for offering ‘just in time’ deliveries. Logistics companies rely on agencies to supply them with ‘just in case’ drivers. For the average former Bloc agency driver, this means sitting on a plastic chair surrounded by overflowing bins in a colleagues’ room for eight hours every night.

It’s not much of a reward for five years’ loyal UK service. Employers will need to keep their full-time work positions to offer to EU drivers arriving post-Brexit who can’t work for agencies.

Will remaining established EU drivers settle for agency work in the future because it’s seen to be their place and convenient to keep them on zero-hour contracts? The experienced stalwart Polish, Hungarian, Czech and Slovak drivers may decide that, all things considered, it’s not worth remaining in the UK because responsible employers aren’t committed to employing them.

The conditions employers expect them to work in, and the discriminatory treatment some feel they receive, is also far from encouraging. Any amount of future EU drivers joining the ranks won’t improve this. In fact, some say it could make the whole situation worse.

It’s misguided to think, therefore, that the EU is the perfect post-Brexit recruiting ground because it’s not. The UK will have lost its lustre by then, largely due to the new terms and conditions EU drivers are set to be employed on. The same terms could create a resentful ‘them and us’ situation among ‘new and old’ EU drivers.

But resentments don’t stop there. Ever since the introduction of EU workers in 2004 there’s been very little domestic investment to develop a UK driver sector. Most UK drivers resent this.

Former Bloc drivers arrived and could work when they wanted, how they wanted and for who they wanted and often sent most of their earnings ‘back home’. Married migrants often came alone to work so they could earn enough to improve their family’s quality of life at home.

It was never the intention to integrate. Their families don’t want to come to the UK, as they’re perfectly happy in their home country. These drivers show little commitment to the UK but operators knowingly employed them.

Employers must now consider how wider post-Brexit society will impact on EU workers. Will they feel safe relocating their families to the UK?

The elephant in the room is that ever since 2004, former Bloc workers and their families settled in high employment areas paying discount migrant wages. The logistics sector became a prime candidate for pre-Brexit criticism. Many of these areas later voted heavily for Brexit.

Expecting future EU drivers to live happily in these areas is optimistic to say the least. Driving doesn’t offer much lateral social mobility. There’s no promotion. EU families will become long-term residents in potentially unwelcoming neighbourhoods.

EU drivers won’t be living in the leafy suburbs. They’re more likely to live in rented accommodation on housing developments.

Some locals will view post-Brexit EU drivers and their families with envy. EU drivers will be able to claim housing benefit, tax credits and child benefit payments. They will receive free schools and healthcare not to mention job opportunities for their spouse. But can the contribution of one lorry driver justify all this additional taxpayer expense?

The employment of foreign ‘professionals’ such as university lecturers, doctors and specialist IT programmers brings extra value to the UK industry they work in – usually for a short, specified term. The main difference is that these professionals often teach or pass on knowledge to help establish a new UK market.

EU drivers won’t do this. They’re not in the same ‘professional’ bracket. Individually professional yes, but they’re really top-up workers to pour into an industry that fails to attract domestic interest.

What the UK will effectively offer EU drivers is a version of the German post-war ‘Gastarbeiter’ (“guest worker”) programme. The programme is cited as an economic miracle. It allowed a person with temporary permission to work in Germany, although the same system was adopted in Scandinavia, Finland, Holland, Belgium and lately in Russia.

As time goes on, businesses – especially in the 24/7 world of grocery and retail that encounter increasingly more supply chain disruptions due to agency, 3PL and family firm driver failure – will switch to employing more in-house drivers.

These businesses are more than capable of taking on the responsibility for developing their own driver sector, and their EU drivers won’t be affected when outsourced logistics contracts change.

Full-time contracts would also ensure seamless long term stable employment that will guarantee tax contributes. If businesses won’t invest in EU drivers, then their shareholders will be exposed to increased future risk.

Transport is an unavoidable cost that adds no value to the shipped product. The UK economy is therefore heavily reliant on a dynamic low-cost road transport industry for the success of its highly competitive businesses.

This will undoubtedly mean employing more drivers in the future. But even if all the current migrant drivers decided to remain in the UK, it won’t solve the unsettling driver shortage.

Post-Brexit EU drivers will be at a premium. Regardless of the politics and social climate, they must feel welcome by the companies they work for and customers they serve. Work is key to them being in the UK.

Like it or not, their place of work will be a ‘community centre’. Employers should build on that and organise relationship and trust-building social events. Businesses should encourage drivers and their families to integrate by, for example, forming youth football teams, building supportive social media groups, offering trips away and inductions for new arrivals. They could even suggest a drivers’ wives choir.

Going too far, maybe? Not so. When it comes down to it the road transport industry has demonstrated that it has little collective regard for its drivers.

Last year a UK driver unfortunately died at work in Italy. His grieving family were left to crowdfund the cost of repatriating his body because his employer was not insured against such an event. The industry associations could’ve been more supportive. Will the families of EU drivers be left in a similar position?

EU drivers won’t come or remain if they’re just thrown a bunch of lorry keys and left to fend for themselves. The road transport industry and UK business must support EU drivers and their families far more than they do now.

The ongoing support and encouragement of employers and customers alike is essential for new arrivals to feel proud of the life-changing choice they’ve made – not just for themselves and their families, but for continued UK growth and prosperity too.

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