With Brexit right around the corner and no deal yet in sight, many UK businesses are still worried about the impact leaving the EU will have on their sector. Here, Chris Stappard, Managing Director at Edward Reed Recruitment, outlines how Brexit might impact the recruitment industry.
Businesses in the UK have been facing significant levels of uncertainty over the last couple of years, and now, with less than two months to go until we leave the European Union, that uncertainty shows no signs of abating. The impact of Brexit will be profound, and it will affect every region of the UK and every sector of business in one way or another. In this article, I’m going to explain some ways in which Brexit might affect the recruitment industry and what we can do to try and combat any potential problems.
Skills shortage
Though we still don’t know what our exact future relationship with the EU will look like, it seems reasonably clear that — short of a big change to the current deal — free movement between the UK and European Union’s 27 member states will end. This has been incredibly advantageous for recruiters over the last few decades, vastly increasing the number of skilled workers that can be easily brought over to work in the UK. There has long been a skills gap in STEM fields and advanced manufacturing in the UK and having access to EU workers has allowed us to at least somewhat fill that gap over the last few years.
The other side of this coin is that the UK may now be seen as a less attractive place to come and work, at least in the short term, which will put further strain on bringing in European talent. Big firms of all stripes are already looking to circumvent this problem by turning to other highly skilled workforce markets such as the United States, but the immigration process adds another hurdle that we don’t currently have. This won’t be possible for many smaller businesses that lack the capability to make movements in such markets, and they will be the ones that bear the brunt of a lack of access to European talent.
Businesses cutting costs
The economic climate that we are left with post-Brexit will determine just how much cash businesses have to spend, and where they will spend it. Some worst-case scenarios — such as if the pound were to plummet or high import tariffs were placed on EU goods — could wreak havoc on certain sectors that rely on EU supply chains. These firms will be unwilling to raise the cost of their goods as they’ll want to remain competitive, so many will look to cut costs.
A lack of money to spend, combined with a lack of extra talent from Europe, could lead to a very illiquid jobs market, and the squeeze will be felt by recruiters. If businesses prioritise cutting costs over expansion and hiring new talent, it’s entirely possible that recruitment firms could start to lose big accounts. To combat this, it’s important for us to put an extra focus on retention and remind our clients about the benefits we can bring them.
Continued uncertainty
The biggest challenge for recruiters over the last couple of years has been the prolonged uncertainty surrounding exactly what Brexit will mean. And, with the extension of Article 50 a real possibility should talks over a deal break down, this uncertainty could continue beyond March 29th. Not being able to predict what will happen in the future is dangerous for businesses of all stripes, preventing them from being able to prepare in any meaningful way.
Even now, the myriad of possible outcomes, from a second referendum to a customs union to a no deal Brexit, hamstrings firms from properly planning for the future. Will businesses need more staff, or less? Will we be able to strike free trade agreements with other countries, and when? Will foreign companies continue to invest in the UK at the same rates? The answer to each question right now can only be ‘we don’t know’, and it is this uncertainty that will determine the trajectory of the recruitment industry in the short term.
Whether Brexit ends up being positive for the recruitment industry, or damages it, firms must play a vital role in helping their clients navigate the unfamiliar waters of post-Brexit Britain and prove themselves to be key strategic partners going forward. Our job, at least for the time being, must be to help businesses adjust to Brexit, whatever that may end up being.
By Chris Stappard, Managing Director at Edward Reed Recruitment
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