Three Brexit trends to hit the UK labour market

24 September 2019 4 min. read
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As uncertainty still surrounds the outcome of Brexit, with a potential No Deal scenario still on the cards as the clock ticks down, businesses face three key HR challenges in the coming months. According to Libra Europe Consulting expert Sean Pickering, firms must contend with the UK being hit by a brain-drain, difficulties in recruiting new staff, and an increased cost of hiring new talent due to a smaller workforce.

As a No Deal scenario once again looms in October, the country is said to be on the brink of a recession. Earlier in the Summer, a survey found this had led to a major downturn in the number of job vacancies, as well as a slowdown in weekly earnings growth. It declined by 2.29 points from January to 112.82 points for June. However, while it is understandable that firms might try to tighten their belts in the run-up to what may well be sustained economic turbulence in the UK, now may be the last opportunity companies get to make pro-active preparations for the coming storm.

According to Sean Pickering, a Business Analyst at Libra Europe Consulting (LEC), firms should draw up a short-term action plan as soon as possible to support their current staff, in order to minimise the loss of talent post-Brexit. Pickering explained that organisations should make sure current staff are engaged and aware of what Brexit means for them, and ensuring that EU, EEA and Swiss citizens in the company have received settled status to enable them to stay and work in the UK beyond October 31st.

Three Brexit trends to hit the UK labour market

Beyond that, firms should commit to a long-term people and recruitment strategy. Pickering pointed to the Chartered Institute of Personnel and Development’s recommendations that “workforce planning and development should become a priority” as skills and labour will become more scarce in the UK after it exits the EU. If organisations do not act now to combat this, Pickering anticipates that they will be hit hard by three key HR trends post-Brexit.

Losing current staff

The British Pound has lost 21% of its value since the referendum results, making it less attractive for EU nationals to work here, while an increasingly hostile environment for immigrants is seeing many weigh up more tolerant nations to continue their careers and make their home. Regardless of what kind of Brexit occurs, large swathes of skilled labour are already looking to relocate, and this could well be exacerbated by further reductions post-Brexit if free movement comes to an end.

Pickering expanded, “The number of hate crimes reported to the police in the month after the referendum results in 2016 increased by 44% against the previous year. This has created a feeling amongst foreign immigrants that they are less welcome than was previously perceived. The lack of engagement that staff have with their employers, added to this trend has led some firms to already lose some of their skilled labour and need to hire and train new members of staff.”

Difficulties recruiting

The UK’s unemployment rate currently stands at its lowest since records began, at over 76%, while unemployment is under 4%. Combined with an ageing population, falling levels of migration from the mainland, and heightened competition, it is suddenly more difficult than ever for firms to fill vacant jobs. The number of current job vacancies is estimated at 820,000 across the UK.

“As a result, it is becoming increasingly difficult to find staff with the skills that match your requirements,” Pickering elaborated. “Add in reduced EU migration further decreasing the labour pool thus leads us to a major supply issue when it comes to staffing, thus creating the third risk.”

Increased cost

“Predictably, as the supply of labour goes down the costs increase. Whilst this may be good news for many employees it will have an impact on business profitability, even to the point of making some businesses unviable,” Pickering warned.

The Business Analyst explained that these increased costs will be seen in both increases in salary expectations as well as recruitment. In industries that spend a lot of their budget on staff or where there is competition from other businesses, this is likely to be a major threat in the coming era, particularly in the event of a Hard Brexit. If this occurs, if companies are to continue to source skilled labour from the continent, they will need to cover the additional costs and paperwork for Tier 2 Visa’s that can cost up to £10,000.