Brexit & The Recruitment Industry

Should we stay or should we go?

The key word in a possible UK exit from the EU after Britain goes to referendum is 'uncertainty', which is what the government and businesses have been trying to drive home to voters, or scare them - depending on which side of the fence you're on.

An indication of this uncertainty appears to be already evident with businesses drawing up contingency plans and delaying new hires even in the months leading up to the referendum itself.

The government said on February 29 in its first official analysis, that the UK could be looking at as much as a decade of uncertainty as the negotiation for withdrawal would probably go well beyond that.

According to an article posted by a popular jobs site on February 29th 2016, advertised vacancies fell by more than 7% in January, translating 165,000 fewer jobs on offer amid announcements of big cuts in manufacturing and finance.

Though it would be almost impossible to predict the outcome of a resulting exit deal with the EU due to the complexities, or how it could impact the jobs market in the short, medium or long-term, it is possible to outline what could come under the scope for fear-reaching changes.

In the 'stay' camp, the greatest concern for employers and recruiters is what changes would be made in terms of freedom of movement; over two million EU citizens live and work in Britain who alleviate many of the existing skills shortages.

Business opponents of a Brexit worry both about how they would fill skilled positions if EU workers are forced to leave, plus the cost of hiring and training an indigenous workforce.

In the event that a post-Brexit government would eventually put in place a system for hiring the foreign workers needed to close the skills gap, this would inevitably result in another hike in hiring costs and a plethora of red tape in terms of organising work visas, time taken to deal with immigration officials, and probably security and financial guarantees.

According to Recruitment Grapevine a new study revealed that 43.2% of UK recruiters believe a Brexit will cause further skill shortages.

In addition, as well as fears that bigger foreign companies would move, there is the added worry that a Brexit could kick off a British brain-drain creating even more hiring problems.

EU directives are the source of many of Britain's employment rights, which is part of the bone of contention for pro-Brexit businesses, who believe an exit from Europe would allow the UK to repeal or redesign its employment legislation.

These organisations in particular see EU laws as restrictive, particularly the Working Time Regulations directive that sets the maximum 48-hour week, and the agency workers directive which provides agency workers with the same rights as full-time workers after 12 weeks of employment.

As far as other employee rights are concerned such as maternity and paternity leave, UK law in some cases goes beyond what is demanded by EU law, and these are gains likely to be kept in place given that such benefits are seen as a recruitment and retention tool.

The bottom line however is that the 'leave' campaign has much more to do with politics, sovereignty and migration than it has to do with economics. So while the disadvantages can be clearly set out and are measurable, the advantages appear far off in the distance, and unclear in terms of predicting whether they could in fact outweigh the former.

Despite the difficulty of forecasting the impact of Brexit, some themes do emerge. On the one hand, the complexity and lack of precedent bring significant legal, financial, commercial uncertainties. On the other, a vote to leave would not result in overnight change. Instead, a negotiation of the UK’s relationship outside the EU would commence, possibly lasting years. During that negotiation, the more the UK pushed for continuing access to the EU’s Single Market, the more the EU would require, in return, for the UK to abide by EU regulation.