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The potential Brexit effect on UK workforce

The potential Brexit effect on UK workforce

With the upcoming referendum later this month, which will decide whether Britain should leave or remain in the European Union, UK businesses – employing EU workers – will need to contemplate how “Bexit” might potentially influence their future hiring, talent management and overall workforce management best practices. Currently, millions of highly skilled EU immigrants work in the UK.

The following article examines a few possible scenarios and outcomes of Brexit and its potential impact to the UK – and increasingly global workforce. I will also review how human capital management technology can help businesses comply with the current and future new world of work.

Brexit’s potential impact on recruitment & workforce management policies & procedures

If the UK decides to exit the EU, it is highly likely that all European workers would require immigration permission to work in the UK. For UK businesses, this would increase the time, cost and effort required to recruit non-UK nationals. Even now, UK businesses are legislatively required to collect Right to Work information. Any exit from the EU would mean this process would become more complex and time consuming to track. Given the fact that European immigrants in the UK make up a substantial amount of the skilled and unskilled job market; if the UK exits the EU businesses could have trouble recruiting UK workers to fill vacant positions.

This scenario may prove to be highly unlikely. If the UK exits the EU, the expectation will be that the UK will negotiate for the free movement of employees in return for a reciprocal agreement on the free movement of goods. This would mirror the agreements taken by Iceland, Norway, Switzerland and Lichtenstein. These non-EU countries form the European Free Trade Association – part of the European Economic Area – and gives its citizens the same rights as other EU citizens to live and work in the UK. If this assumption does prove correct as many think it will, then voting to leave the EU would have little impact on UK recruitment and workforce management practices.

How businesses can prepare for Brexit

The UK is currently running at the highest level of employment seen in the last few decades. This has already led to a substantial skills gap in many industries. Depending on the nature of the post Brexit model, we could see this skills gap widen even further as it becomes more difficult to recruit and retain skilled employees from the EU. Latest figures show that there are over 2.1 million EU immigrants working in the UK. A substantial portion of this workforce make up the UK skills shortage in areas such as Engineering and IT.

That said, some UK businesses may look to utilise natural staff turnover to decrease the number of highly skilled immigrant workers employed. If this happens, UK businesses will need to examine their own talent strategies to ensure they manage top talent within their businesses – that is those who may look to move should market demand for skilled workers heat up even further.

Current economic factors paired with Brexit should put talent management strategies at the top of the agenda for most UK businesses.

Brexit’s effect on existing UK workforce from within the EU

Employment in the UK is currently at a record high, and as a result, many industries are experiencing significant skills-shortages. If companies were to lose their foreign employees, many businesses would struggle in the short term to maintain productivity and service levels.

Unfortunately, it is not just a case of replacing European employees with UK residents. A reduction in the number of skilled workers from Europe would force UK businesses to invest more in education to replace those employees that left. UK businesses would also need to increase the importance they place on talent management to attract and retain skilled workers.

How human capital management technology can help businesses prepare for Brexit

If the UK leaves the EU, many of the positive and negative impacts are unknown and at this point; we can only speculate. However, it is clear that any exit will have a significant impact on costs for the employer. This is where technology can help.

Cloud-based HR and Workforce Management solutions can ensure that companies comply with employment legislation such as right to work while also managing costs through efficient Scheduling and Rostering.

In addition, cloud-based solutions are designed to engage employees and empower them with tools designed to improve work-life balance – for example, availability management, shift trading, holiday requests, flexible benefits, etc. These tools can help businesses to engage and retain their best talent in an increasingly competitive UK market.

Find out more about our human capital management technology

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About the author

Rick Norgate
Head of Solutions

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