How will Brexit affect recruitment industry?

20 July 2016

In the immediate aftermath of the result, employers will need to concentrate on reviewing the implications for their workforce and then communicating with their employees.

Employers are used to EU employees currently having the right to live and work across the EU without restrictions and applying EU regulations on social security coverage and benefits to EU mobile workers.

Talent

Immigration laws are almost certainly going to be affected, given that one of the major debates as to whether the UK remains within the EU was based on immigration or the lack of control on immigration. It is likely the UK will no longer be subject to EU free movement principles and so thousands of employees, like EU nationals or even UK expatriates and their families, who work in various industries across the whole of Europe will be affected. These changes may result in many of them having to leave the UK and vice versa, thereby creating an employment nightmare.

While the impact may not be immediate because EU nationals already working in the UK should still be permitted to stay in the UK, employers should probably begin to prepare for some major changes to their staff and their recruitment as soon as possible.

Businesses will need to consider their ability to attract/retain the best talent from within the EU. Some commentators believe that thousands of existing EU workers may no longer qualify to work in the UK if they fail to qualify under the points-based system we currently use for workers from outside the EU. Employers already face big challenges and costs when hiring non-EU workers under UK immigration laws, which makes it hard to find the skills they need.

Remuneration

If EU workers are forced to leave the UK as a result of Brexit, this could herald a shift in the balance of power in the job market towards employees, with the battle between businesses for the best talent intensifying. The result would be an increase in wages, particularly for those people with skills that are in high demand in the industries that have traditionally depended on migrant workers (healthcare, education, hospitality, construction and manufacturing).

If the influx of cheaper labour from Eastern Europe is reduced, the lower end of the job market could also see a pay boost. This is not such good news for British businesses that may have to pay more to fill positions and retain staff. If businesses struggle to find the people that they need they may need to turn to outsourcing recruitment, resulting in a further increase in costs.

What can you do now?

  • Be ready to address specific employee queries on their position throughout the exit negotiations.
  • Consider how you will choose to approach communication (to the workforce as a whole or just to key individuals that may be affected) and the medium (email, intranet, video or face-to-face contact).
  • Assess staffing requirements over the next 2-5 years.
  • Set up an in-house Brexit team that includes HR; liaise with HR counterparts in other jurisdictions.
  • Conduct a workforce audit to assess what proportion of staff originates from the EU and determine their skill set.
  • Identify options available if this staff base was to be lost.
  • Consider costs of having to train new staff.
  • Assess to what extent staffing costs may increase in the future and whether those costs can be met or if down-sizing may be required.

What we can do to help?

MHA MacIntyre Hudson wants to reassure clients that while there may be some challenges ahead, our specialists are monitoring developments and we are able to provide advice and guidance on all areas of your business. If this report highlights any concerns, please get in touch.

Brexit: Business planning guide

To find out more about Brexit's impact on your business in the long term and how you can implement plans to mitigate the effects now download our 'Brexit: Business planning guide'

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