Bad news for businesses affected by Brexit uncertainty

With just months to go until the UK leaves the European Union, and no deal yet in place, many employers continue to worry about the possible impact of Brexit on UK businesses and the labour market.

Although 25% of UK businesses currently employ staff from the EU, an August 2018 survey reveals that over 50% of UK business leaders would be put off employing someone from the EU after Brexit changes the UK’s immigration laws. For some industries, this need to import talent to meet their growing demands is felt even more so. Remaining both innovative and competitive is intrinsically linked with their ability to hire the right people at the right time regardless of where they are in the world. In those sectors, businesses affected by Brexit uncertainty are feeling it much more than others.

In July, the Home Office published the new mandatory registration scheme for EU nationals. After Brexit occurs in March 2019, all 3.8 million EU nationals currently living in the UK and EU nationals wanting to enter the UK in the future will need to register for “settled status” to continue to work and live in the UK. The implications are far-reaching and go further than some had previously expected – for example, you will need to apply even if you’re an EU citizen married to a British citizen. The cost of application has been set at £65 for those 16 and over, or £32.50 if they’re under. Though these are fairly small amounts, they may prove to be non-trivial for an employer meeting additional costs when relocating a new employee and their family. Furthermore, adding to the uncertainty, the rights of citizens of Norway, Iceland, Liechtenstein and Switzerland residing in the UK are still being negotiated.

“Settled status” and “pre-settled status”, with all supporting processes and technology, are still in the testing phase. The aim is to protect the rights and jobs of EU nationals currently working in the UK, but what about recruiting EU nationals after Brexit?

From 1st July 2021, EU citizens and their family members who are living with them must hold or have applied for UK immigration status to legally work in the UK. This new status will present a challenge for hiring managers and recruiters, who may have to alter their current attraction and selection processes to comply with changes in immigration law that will happen over the next three years. The new status will require UK businesses to adopt a longer-term talent attraction strategy that either focuses on existing UK-based talent pools, perhaps even taking the time to create training programs to cultivate their own talent, or alter their expectations of the recruitment process accommodating the required time and resources to bring EU nationals to work in the UK for the first time. This is bad news for businesses affected by Brexit lack of clarity, and this may mean some stark choices around how they are structured, where they chose to locate new satellite offices and how their products and services are brought to market.

If the recruiting pundits are to be believed, we are already in a “War for Talent” and have been since the late 1990s. The effects of Brexit could further exacerbate this talent shortage across multiple industries. Which companies will be most affected by Brexit? For example, in Aviation and Engineering, 22% of UK engineering business leaders and 42% of UK aviation industry leaders identified a labour shortage as the most urgent challenge they will face in the next five years. Global demand for aviation skills alone is set to overtake supply by 2027, and with skilled candidates already under-represented amongst a rapidly reducing workforce, skills shortages will become an increasingly dominant UK business issue.

By May of 2018, LinkedIn reported that 96% of hiring strategies had already felt the impact of Brexit. The same study found that 44% of recruiters believed that working in the UK is becoming a less attractive prospect to EU citizens, with 39% seeing international candidates now reluctant to move to the UK.

Whatever the political opinion of an individual about Brexit and business and the UK’s place within the EU, it’s clear that the uncertainty of the present for EU nationals already working here and those that might have come, is having a wide-reaching impact. For recruiters working to fill a growing number of vacancies with a diminished talent pool, the job will become harder. Despite the assurances of people like London Mayor Sadiq Khan that “London is open and no matter where you’re from, you will always belong here,” for some, the uncertainty has led to doubt and those doubts have led them to look elsewhere when considering a new role. This also means a huge impact on businesses affected by Brexit being in constant flux, and it’s long and far-reaching.