How is Brexit shaping the recruitment landscape?

Brexit uncertainty

The great unknown of Brexit and what this will look like is on everyone’s minds as we approach the deadline of 29^th March. Employers we work closely with have said that one of the greatest impacts of Brexit on the HR landscape will be the effect on the supply of labour available to organisations. In light of reports that EU citizens will require proof of residence for the last five years, we examine the wider ramifications of ongoing Brexit negotiations for workforce planning.

Labour shortage

The primary impact of Brexit on HR is anticipated to be its effect on resourcing. HR professionals are concerned by the potential impact on the supply of labour following Brexit, given that free movement of people is a key cornerstone of leaving the European Union. Even now, some sectors are reporting anecdotally that those businesses employing multi-nationals are losing employees returning to countries across the EU. Construction, healthcare and residential sectors are all reporting some levels of a reduced pool of talent to draw from.

Research by The British Chambers of Commerce (BCC) reports that more companies than ever before are finding it hard to recruit staff. More than 81 per cent of British employers in the manufacturing sector struggled to hire the right staff in 2018 and 70 per cent of the services sector (which accounts for four-fifths of the economy) reported difficulties with finding staff with the right qualifications and experience. The BCC cites Brexit as a key contributor to these recruitment difficulties and said the government must recognize the urgency of addressing recruitment difficulties as increasing restrictions are placed on EU workers.

Skills shortage

Concerns around how to retain employees in the current political turbulence is compounded by the wider skills shortage being reported across the UK. The Open University’s Business Barometer report last year highlighted the cost to business, with the staggering amount of £6.3 billion being spent on temporary workers, recruitment fees, inflated salaries and training. Brexit threatens to exacerbate this shortage and the pool of talent available for businesses. Combined with the uncertainty for the economy that Brexit is generating, recruitment and retention is a key concern for businesses going into 2019.

The best measures to address the skills shortage include developing staff internally, using technology to plan and manage workforces more strategically and tapping into under-utilised talent pools. There is an urgent focus on innovative and creative ways to tackle the gap between current and future skills within organisations.

Bolstering business confidence

Employee engagement is pivotal in the renewed war for talent. Whilst some organisations are being credited with thinking outside the box when it comes to their recruitment strategies, concrete proposals on future migration requirements is something that employers will need to factor in to future-proof their businesses. The prime minister is proposing a ‘skills based’ regime being introduced in the two-year transition period to a new system of visas.

The Migration Advisory Committee has recommended certain salary and skills thresholds, but as the services sector is the one struggling the most with recruitment, some feel that the proposed £30,000 threshold will be prohibitive. Similarly, there is little recognition of the self-employed within the skills-based system. This means that sectors such as Construction and Technology with a prevalence of contractors may struggle to retain these employment models and the flexibility these roles offer.

The latest Labour Market Outlook Report from the CIPD found that only 19 per cent of employers had contingency plans in place. Now is the time to examine your turnover figures, identify who is at risk of leaving and work with employees to consider their status and offer support. A proactive strategy will pay off in the long-run as employers consider how best to protect their workforce through this period.

Ongoing Brexit analysis

Next week, considering the uncertainty around Brexit and the volatile labour market, we will be taking a look at the complexities involved in tracking pay increases and the importance of communicating the value of the reward package to employees to maintain engagement.