April 12th, 2017 / Insight posted in Articles

How is Brexit affecting the talent pool?

Over the next couple of years, Brexit will generate a lot of uncertainty. This comes on top of rising employment costs and low levels of unemployment across much of the economy. While we have been assured that no current laws are likely to be affected in the short term, we are already seeing a sense of anxiety among workforces in our clients and this will directly impact on recruitment and future work planning.

The competition for skilled workers is already high. Key sectors including manufacturing, leisure, care and retail are struggling right now to recruit and retain entry level employees. Brexit poses a risk that businesses may find it even more difficult to retain their non-UK employees. Would your existing employees choose to return to their native country or even another EU country if the opportunity arose, rather than wait it out here in the UK? For many, the UK will have become home, they will have friends and family here and are looking to stay in the UK indefinitely. Our clients are already anecdotally reporting a drift of EU nationals from the UK. With other employers out there with visa sponsorship licences and current employees naturally keen to provide themselves with security, you might not just be losing talent overseas, but to your competitors! With more than 2.1 million EU citizens currently working in the UK, we could see a dramatic loss of talent.

Most businesses need to think now about future workforce planning. They need to start identifying the gaps that may appear in the staffing of the business and planning how these will be addressed. The proposed change in free movement is not only going to affect those employees currently in the UK, but also those looking to relocate here. EU citizens who may have been considering moving to the UK may now be hesitant to do so until the terms of Brexit are clearer. Once the UK has exited from the EU, and given that the Government’s view that net migration is currently too high, the option of coming to the UK for work may no longer be so freely open or as attractive to EU citizens. With approximately 250,000 EU citizens currently migrating to the UK each year, it will greatly impact the talent pool as this figure starts to reduce.

Current employees may need extra reassurance about the uncertainty we find ourselves in. Employer branding can be key in making the business an attractive place to be; what does it mean to be an employee of your company at this time? At this stage, being inclusive could be just what is needed to instil reassurance and confidence among your workforce. Forward-thinking businesses will want to take action to reinforce the value the business sees in having a diverse workforce and celebrate that from time to time.

The last few years has seen a trend to greater flexible working patterns. With the increased adoption of zero hours working, the continued growth in freelancers and the growth of the gig economy, we are moving away from a traditional employment approach in much of the service sector and moving towards flexible hours and more flexible employment costs. This has worked well mainly for the service sector up until now. When we no longer have free movement from the EU, this will make attracting new talent more complex. It has been argued that businesses will be able to recruit talented people from the whole world post Brexit. Of course, those opportunities will exist, but we have already seen legislation passed last year where non-EU migrants must earn a minimum of £35,000 per year to settle in the UK. If this measure were to be extended to future EU citizens seeking work here, the flexible gig economy will be more difficult to sustain.

There is no denying that there could be a significant loss in skills, knowledge and experience to draw from in the UK as a result of leaving the EU. Employers need to think now about how they grow talent in-house and to what extent they need to increase this activity in the next few years. The Government also appears keen to close the skills gap and increase youth employment and productivity. The introduction of the Apprenticeship Levy is designed to provide an increase of home-grown, skilled, knowledgeable and experienced workers. It will be worth investigating how apprenticeships might support the attraction, retention and growth talent to safeguard the capability and success of your business in the future.