How could Brexit impact the UK Technology Industry?

Control of immigration into the UK was one of the most high-profile issues in the referendum campaign to leave the EU. However, even the most fervent Brexit supporters would still recognise the value of being able to attract skilled people to the country. This is especially true when those people offer skills not typically available in the UK – and play a key role in boosting economic growth and competitiveness. As such, one of the critical questions remains: Can the UK reduce the flow of people from the EU without losing vital skills in the process?

Those studying the UK economy know that these questions particularly apply to the IT sector. This is an area of the economy with great importance to the UK’s productivity – both as a growing industry in its own right, and as a driver of innovation and competitiveness in other sectors. It’s also an area of the economy with a particularly mobile and highly skilled workforce.

Mapping the impact of immigration on industries – how LinkedIn can help

Understanding how Brexit could affect the IT sector requires robust, timely, comparable data that is traditionally hard to come by. National census surveys and OECD data often take years to publish – and provide only topline information on the sectors that people work in and the skill levels that they have. Such data is not often easily comparable from country to country, making it hard to identify the flow of talented people from one region to another.

LinkedIn has been working with the Centre for European Policy Studies (CEPS) to fill the gap. We used time-stamped anonymized LinkedIn profile data to identify IT professionals in the UK and EU-27 who changed location during 2014. This allowed us to create a detailed snapshot of IT talent flows between the UK and the EU before Brexit campaigning began in earnest. This established a natural baseline for the role of immigration in the IT sector – before it could be impacted by the EU debate.

The real risks of Brexit for the UK Tech sector

The picture that emerges is a sector of the UK economy that is highly dependent on skilled workers from the EU-27. It shows how any decrease in the UK’s ability to attract talented EU professionals could seriously undermine its competitiveness. It’s not just that the IT sector is more dependent on skilled EU workers than any other industry. What should really concern policymakers is that other sources of these high-quality workers aren’t readily available.

Here are the five key findings that jump out at me from the analysis of the data by CEPS and LinkedIn – five reasons why the management of IT talent should be a priority for policymakers where Brexit is concerned:

Finding 1: Half of all EU migration by IT professionals involves the UK

We tracked 70,000 occasions during 2014 when an IT professional in the EU moved to take up a role in a new country. Roughly half of those occasions (33,000) involved the UK. In a naturally mobile industry (where common programming languages often break down traditional language barriers), the UK is the most important player. Every tenth IT professional hired in the UK comes from another country.

Finding 2: The UK is a net importer of IT talent

The flow of IT talent between the UK and the EU is not evenly balanced: far more IT professionals arrive in the UK than leave for other EU countries. In fact, the UK gained a net 6,300 IT professionals during 2014. That’s more than any other country in the EU.

Finding 3: The highest quality IT workers come to the UK from the EU

The depth of LinkedIn data meant that we could analyse more than just the number of IT professionals arriving in the UK from different Member States – we could also look at their skill levels, experience and value to industry. The results showed that IT professionals arriving from the EU were roughly twice as likely to hold a Masters and twice as likely to have a PhD than those in the UK. This increases the importance of those 6,300 extra IT professionals to both the IT industry specifically and the UK economy as a whole.

Finding 4: Without the EU, the UK would be losing IT talent

The EU is not the only source of IT talent arriving in the UK – but it is by far the most significant. Of foreign IT workers arriving in the UK, 43% come from the EU – and this rises to 50% amongst students and recent graduates. In fact, if the UK didn’t have access to the EU’s IT talent pool, it would be losing IT talent overall. Whereas the EU sent a net 6,300 IT professionals to the UK during 2014, the UK exported a net 3,800 professionals to non-EU countries.

Finding 5: Even an immigration policy that protects skilled workers can have an impact

The IT industry’s dependence on EU talent begs an obvious question: can it be protected from the effects of Brexit on immigration? It seems likely that highly skilled workers will still have access to the UK following Brexit – but that doesn’t necessarily mean they will have the same appetite for coming to the country. Burdensome applications involving earning thresholds or points systems could complicate the process of hiring from the EU and increase the costs involved. They might also undermine EU professionals’ motivation for moving to the UK in the first place.

A report from the Financial Times earlier this year found that uncertainty over future immigration rules was already making it difficult for some UK employers to fill roles. If a Brexit settlement meant that EU co-ordination of social security no longer applied to the UK, then high-earning IT workers could effectively pay a financial penalty for working in the UK. For people who have plenty of choices available when it comes to where they work, this could tip the balance in favour of other destinations.

In times of uncertainty, robust data is vital

The IT industry is crucial to the future of the UK economy. At a time of disruption and uncertainty, protecting its ability to drive that economy forward must be a priority. The UK has more opportunity to do this if it understands where its most important sources of IT talent are – and what they bring to the industry that homegrown talent might not. We’re proud of the role LinkedIn is playing in providing such data. We hope that it enables a more informed approach to navigating the post-Brexit world.