Potential implications for rural Scotland of the UK leaving the EU

Labour & Skills

Scotland has specific labour market and broader immigration needs with rural areas more reliant on European Economic Area ( EEA) workers than non-rural areas. Many rural businesses are unviable without EEA workers, in particular those Small and Medium Enterprises ( SMEs) operating from within the agricultural, food & drink, hospitality and tourism sectors. Leaving the EU will simply exacerbate the existing situation for businesses which already face real challenges in recruiting enough workers to meet their needs. The irony for the tourism sector in Scotland is that the current weak Sterling has resulted in a boom in tourists from abroad, however there is a real possibility that the labour may not be there to enhance the visitor experience and meet their needs without action.

Such workers are not necessarily seasonal. In the red meat sector for example, around 50% of staff and 95% of official vets in the processing plants are non UK nationals. These are skilled and, in the case of the vets, highly qualified permanent staff whose continued presence coupled with the availability of their replacements is essential to economic growth.

Shifts in the wider labour market as a result of Brexit may also impact on rural businesses in other ways. A smaller labour pool will increase competition and result in increased costs to business as wages rise. Micro/family owned businesses that are so dominant in more remote, rural areas could find it difficult to compete with their larger counterparts. All sectors from agriculture to service provision in areas such as health, education, research may also be potentially impacted by loss of free movement of people.

Local authorities are also concerned about their ability to secure key workers such as teachers, community support workers, care workers, particularly in areas where there is a smaller labour market and/or they are already experiencing depopulation. It is the most rural and peripheral parts of Scotland that could be worst affected by the shortage of workers.

In our view, a significant number of rural businesses and public services need to be prepared now for change post Spring 2019. We do not believe that this is currently the case.

Post Brexit we should:

• Consider how we can attract and retain home grown talent with the necessary mix of skills to meet the needs of rural businesses.

• Promote rural areas as centres of excellence for 'non-traditional' rural sectors such as; advanced manufacturing, digital technologies, e-commerce as part of wider Economic Strategy.

• Overcome connectivity barriers (public transport, roads, broadband, mobile internet and even mobile signal in many instances) to attract labour into (and retain young people) rural areas.

• Promote opportunities for people to work remotely and base more businesses in rural areas, for example through the use of shared space.

• Introduce greater flexibility in immigration rules to recognise that self- employed businesses in rural areas operated by non- UK nationals provide essential services to rural communities that are key to the local economy.

• Consider how we can build on talent attraction work to ensure that rural areas attract, retain and value a pool of skilled labour for career progression in their key industries, including the transition from free movement of labour in sectors historically reliant on EU workforce, particularly in areas such as agriculture, food & drink, hospitality and tourism.