Brexit – What It Means to the Recruitment Industry

BY THE TALENTDASH TEAM | April 17, 2017

Now that the UK Government has triggered Article 50, we take a look at how the recruitment industry has coped in the aftermath of the Brexit referendum and what we can expect in the near future.

While we all understood the consequences of the result of the Brexit referendum on June 23rd last year, the triggering of Article 50 drives home the point that this really is happening. And now that the wheels are officially in motion for an exit by March 29th, 2019, it will be interesting to see how large corporations, in particular, handle their search for new talent.

The effects of Brexit on recruitment so far
The UK government will take a tough stance on their immigration policy in the exit negotiations over the next two years, and this will undoubtedly have a detrimental effect on their access to the single market; no freedom to travel means no access to the market.

What this means to the recruitment industry in the future is pretty clear, but we’ll get to that a bit later. For the time being it has resulted in a fear among professionals that they will face stiffer competition in the job market as the country heads into an economic nosedive.

Of course, the purpose of this article is not to discuss the potential economic ramifications, but this fear of the effects on the economy is something that is very difficult to ignore. Could this mean an exodus of much of the best talent before the finalization of the exit?

Recruiters and companies alike are already starting to feel the pinch with regards to talent and even manual labor. A perfect example of such is the farming industry which employs tens of thousands of seasonal workers each year. Although there are no immigration restrictions as of yet, farms are struggling to attract the foreign labor that they so desperately need for this summer’s coming harvest.

Likewise, recruiters of professional talent have noted that they are receiving fewer applications from overseas candidates who are reluctant to apply for a job they may have to leave in less than two years’ time. This means that quite often they are working from a smaller talent pool and face an uphill struggle to fill the position.

What Brexit means for the future of recruitment
March 29th, 2019 will bring a raft of changes to employment laws and regulations within the UK, but these are the key areas that are most likely to affect the recruitment industry.

Retention of EU nationals
It’s not quite clear exactly how this will pan out in the exit negotiations, but the general opinion is that companies will struggle to retain even their best talent if they do not hold a British passport. According to a survey by The Chartered Institute of Personnel and Development (CIPD) employers of EU nationals said that almost a third of their EU employees looked to leave their positions in 2016 and that roughly the same number are considering doing so in 2017.

What this means is that by the official exit date, many companies could have a serious issue with the recruitment of skilled professionals on their hands and a considerably smaller talent pool.

Companies may move abroad
According to the same survey by CIPD, 13% of companies say they are highly likely to move either some or all of their business abroad due to the effects of Brexit. In fact, Lloyds of London has already decided to move 100 of their 600-strong London workforce to a new location in Brussels. As the world’s oldest Insurance market and a name that is synonymous with UK business, their decision may lead others to follow suit.

Independent recruitment agencies will feel the worst of this effect as not only will they work from the smaller talent pool we mentioned earlier, but they will also have fewer corporate clients.

Skilled workers will be tougher to find
At the moment employers and recruiters in the UK find it difficult to locate British candidates to fill skilled or semi-skilled positions. With national unemployment figures quite low in this section of the working population, recruiters are often forced to look to the EU to fill these roles. Interestingly, though, 17% of employers surveyed by CIPD claimed that their EU employees had a better work ethic than locals.

So once EU passport holders are no longer allowed access to these jobs, recruiters will once again have their talent pool drastically reduced without much hope of finding suitable local replacements.

Immigration laws will change
And finally, we come to the one change that has the potential to put smaller recruitment agencies out of business; immigration or more accurately, the lack of immigration. Since boats could sail, the UK has attracted immigrants from all over the world, and in recent times the single European market has played its role in allowing the most talented professionals to settle on British soil.

But as we all know, (and hate to admit) all good things must come to an end. The UK government will soon take back control of its borders and impose its own requirements on obtaining work visas. This means that professionals seeking a new challenge are unlikely to consider UK positions, leaving recruiters to search for UK candidates only.

Such a change in policy may, of course, have a positive effect on local employment as businesses and professionals alike will seek to invest more time and money into improving skills. According to CIPD, 21% of employers will consider hiring more local apprentices while 20% will look to retain older employees.

While Brexit may, in fact, turn out to be a boon for local professionals and semi-skilled workers, it will offer a mixed bag of challenges and benefits to recruiters. No longer will they have the incredibly diverse talent pool that is the EU at their disposal but in time they could have a highly skilled local workforce from which to pluck their candidates.

Before the UK leaves the EU, you’ll want to make sure that you know exactly where your potential candidates of the future are hiding out. So today, and TalentDash will make sure that you have first dibs on the very best local talent.

 


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