The UK video games industry grapples with Brexit
The UK game development industry is suffering from a labor shortage. Partly driven by the pandemic and a surge in demand for games, this shortage – and the resulting wage inflation – has been exacerbated by the implementation of Brexit, which has added significant expense and time investment. to hire talent from Britain’s neighbors in the European Union.
“We currently have over 300 jobs advertised live on our website, with another 300 on hold,” says Simon Hope, recruitment manager at employment agency Aardvark Swift. “It’s crazy, really crazy. At the end of the day, there are only a limited number of people to go around.”
Hope says that before Brexit, around 20% of its UK investments came directly from the UK. This number has now fallen to 5%, mainly due to the reluctance of EU nationals to move to a country that is now outside the UK. Over the past two years, around 200,000 EU nationals have left Britain to return to the continent.
Most of Aardvark Swift’s customers are UK-based game studios and publishers. Before Brexit, hiring an EU employee required minimal paperwork. Now companies have to sponsor every potential EU employee, apply for visas and pay expensive health care supplements (“high four figures, and that’s before family members,” Hope says) that don’t previously existed only at a nominal level. Employers must prove that they have made a valid attempt to seek applications from British citizens.
Hope estimates that the whole process can now take three to four months. It is not surprising that potential candidates prefer to accept jobs inside the EU.
Jon Holmes, founder and studio manager of Liverpool-based Milky Tea, says hiring new talent is a major headache, threatening the company’s bottom line. “Before Brexit, three-quarters of our applications came from the EU,” he explains. “Here we go. British companies are all looking for the same talent, and it’s driven wages up by at least 20%, which makes a big difference, especially if you’re hiring a lot.”
Holmes says that while there are short-term workarounds, like hiring contractors and emphasizing a commitment to remote work, they all have their costs and practical downsides. In the longer term, he says, Britain could become a far less attractive destination for international development talent than in pre-Brexit times.
“We had offers on the table and then we were turned down because someone else came up with a ridiculous offer,” he says. “It created a volatile environment. Five years ago a producer’s salary was pretty well understood. Now I couldn’t say for sure.”
“The future is about attracting young talent, but first you have to invest in years of training…And there just aren’t enough universities to meet the demand.”
Jon Holmes, milk tea
John Clark, CEO of Curve, says, “If you look at countries like Poland, Serbia, Spain and other EU countries, you see those regions supporting their studios with investment. Nationals returning home to these countries, either because of the pandemic, or Brexit, or both, find good places to work in their home countries. They are made to feel safe at a time when Brexit makes them uncertain about the UK.
Curve’s chairman, Stuart Dinsey, is a former chairman of the Association for UK Interactive Entertainment. He points out that many other countries and other industries are grappling with COVID-related labor shortages and wage inflation. Under such circumstances, the high competition for talent and visa delays are understandable.
“Skilled workers can get a Tier 2 visa and the salary thresholds are low enough that it’s not an issue for this industry,” he says. “I think it’s more of a sentimental issue. There has been a reduction in the number of EU nationals living in the UK as a result of Brexit. There’s not a shadow of a Doubt it had an impact. But UK companies are still hiring people from the EU.”
The UK, says Clark, remains an attractive destination for talent, with a host of potential employers ranging from ambitious start-ups to international giants. “We have the largest footprint of gaming industry professionals in Europe, and a host of companies where people from all over the world want to work,” he says.
Still, the current climate calls for practical solutions as these same companies compete to meet their release date and innovation goals. Since COVID, Milky Tea has committed to working remotely for all employees, using central offices as social hubs and secure locations for servers and equipment. This gives the company the freedom to work with contractors and freelancers in the EU, offering them long-term contracts, without counting them as full-time employees.
“We’ve been able to attract some really good senior recruits who might not have come to us a few years ago,” says Holmes, pointing out the various benefits of remote working. “A lot of people have decided they’re never going to do that two-hour drive again. They want to spend more time with their families.”
However, this solution presents its own problems. “Even something like computing can become a problem,” says Holmes. “We ship equipment to them, we pay taxes on it, and then when the equipment needs to be fixed, everything has to be sent back.”
There are also human difficulties. Entrepreneurs are ineligible for benefits such as pensions, and many feel exposed by the lack of a full-time employment contract. Companies are forced to invest in remote onboarding protocols and help freelancers with tasks such as filing taxes.
Payroll companies are springing up and taking care of many of these issues. They understand local tax and employment laws. But they represent an additional cost, and a risk, especially at a time when demand is high and new operators are flooding the sector.
Remote work presents a host of challenges that gaming companies are currently struggling to address. At the same time, some employers (and employees) prefer the in-office option and want to return to pre-pandemic work patterns.
Another option is for UK-based companies to buy their place on the continent, by opening or acquiring studios.
“If a company needs to hire 200 people, it might make sense to buy a studio with maybe 20 or 50 people,” Hope says. “It gives them a legal entity from which they can grow. If they hire EU nationals within the EU, the process becomes much easier.”
“If a company needs to hire 200 people, it might make sense to buy a studio with maybe 20 or 50 people. If they’re hiring EU nationals within the EU, the process becomes much simpler”
Simon Hope, Aardvark Swift
Clark adds: “As a company, we are looking to increase our own portfolio and acquire studios. And we will certainly look at where the talent is, and if it takes us to an overseas region, where it there might be skills we can add, that’s something we would support.”
It’s an expensive option, and it’s only available to large employers. Internationally, it also strengthens the abilities of other countries to create talent hubs, such as the recent growth of studios in Barcelona. At Milky Tea, Holmes fears this will diminish the power of the UK gambling industry, especially in the eyes of the UK government.
“A place like Barcelona can offer lifestyle benefits, like sunshine and all that,” he says. “But they also benefit from hugely generous tax breaks which are fueling this growth, well ahead of that in the UK. And the more opportunities a city can offer, the greater the benefits of working there.”
He says representatives from various countries are in the UK, urging employers to open offices in their area. And while some EU countries appear to be committed to spending money on attracting talent, the UK might be hesitant.
“I fear the UK government is looking at the games industry and starting to rethink the benefits of VGTR [Video Games Tax Relief]. I can see them looking for ways to save money, especially after the expenses of the last few years and the overall cost of Brexit.”
He says that while it’s not something that’s expected to happen soon, it would have a disastrous effect on business in the UK. Many companies use their tax savings to invest in prototypes and training, all of which lead to growth.
In the longer term, UK employers are starting to work more closely with universities to create a talent pool that can address the current shortage. Holmes praises institutions like the University of Teesside and the University of Central Lancashire, with which he has cooperated on training and workplace initiatives. But he warns that it takes a long time to take a promising graduate to the next level.
“The future is about attracting junior talent, but you have to invest in years of training first, even some of the basics of workplace engagement, so there will always be a need for experiences, hiring seniors. And there just aren’t enough universities like those to keep up with the demand.”
Dinsey adds that universities will not succeed in closing the talent gap as it currently stands: “Courses should be more professional and geared towards useful skills. We need to look at whether universities are engaging enough with key employers in this country to ensure their courses are oriented towards employability.”
So while there are short-term solutions and long-term opportunities to fill the talent gap, they all have their costs and risks. What is certainly true is that this is a problem that is not going away anytime soon. And that employers in the UK gambling industry are struggling to navigate Brexit restrictions.
“In the games industry, we’re probably stronger as a country than anywhere else in Europe,” Clark says. “It makes us attractive as a country. But the freedom of movement means that if I’m an employer in Sweden, France or elsewhere, I have better access to developers all over the continent. And that gives them an advantage over we.”
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