The key word that has emerged from the UK leaving the EU is 'uncertainty'.
The fear is that Brexit will bring with it unprecedented long-term changes in the labour market. While the terms of an exit under EU law will take at least two years, the Government said on February 29 that the UK could be looking at as much as a decade of uncertainty as the negotiation for withdrawal, which will be triggered by Article 50 of the Lisbon Treaty – the piece of legislation allowing a country to exit the EU – is played out.
“The only thing at the moment which is certain is uncertainty,” says Pete Feldman, Managing Director of Grafton Recruitment, a leading employment solutions provider operating throughout Northern Ireland, Republic of Ireland and Europe.
“Before we even know what the post-Brexit labour market will look like, there are many outstanding questions that need answering. Should Article 50 be triggered by Royal Prerogative or Parliament? Do the regional parliaments / assemblies have to firstly ratify Brexit? How will our border with Ireland be managed? What sort of access to the Single Market will we get? Will we still have to abide by EU legislation, like Norway and Switzerland? Will a second referendum or general election be called to ratify the final Brexit deal? Brexit may not quite mean Brexit.”
Now that we are on a Brexit trajectory, the greatest concern for employers and recruiters is what changes will be made to the freedom of movement of labour. Over three million EU citizens live and work in the UK and alleviate many of the existing skill and labour shortages, particularly in the IT, Construction, Engineering, Food, Healthcare, Manufacturing, Hospitality and Retail sectors.
Pete says employers are concerned about the impact that Brexit will have on their access to talent pools and how they will fill professional, skilled and unskilled positions, if EU workers are forced to leave. This may cause a major shift in the labour market and see businesses competing even harder for critical talent, pushing up wages, a phenomenon that could penetrate all sectors in efforts to attract and retain talent.
“The key concern for me involves the freedom of movement of people and the potential withdrawal or limitation of access to the Single Market; particularly when I think about the percentage of EU nationals who contribute to the workforce in Northern Ireland. If we don’t have access to the 500 million people in the EU Single Market, organisations may face even greater challenges in sourcing the right talent fits for their jobs and cultures in the post-Brexit world.”
“If we need to move to a points-based immigration system, it needs to be open, well-resourced and set up correctly from the outset. We should address upfront the solutions needed for recognised skills shortages but crucially, we also have to have a solution for unskilled labour e.g. the re-introduction of a clear tier three visa system.
“In addition, any post-Brexit settlement has to look at the mobility of professional workers. Since the UK’s accession to the European Community in 1973, many Companies have thrived and expanded within the trading certainty of a pan-European environment. Their professional workers and managers constantly travel the EU freely so a settlement must allow this pan-European freedom of movement to continue with minimal disruption to trade. We know categorically from the financial crisis that the world is interlinked – you can’t sit as a little island anymore – metaphorically or physically!
“We have millions of professional, skilled and unskilled EU migrants in the NI who have made a life-changing decision to come and settle here and who are currently adding value to our economy. They are an integral part of our labour market and are crucial to the success of our economy. If we are already benefitting economically from these people being in NI, I believe we should make a unilateral decision now to guarantee their rights and alleviate some uncertainly during this transition period. Resident EU Nationals must not be used as bargaining chips during these negotiations. Ethically, economically and professionally this is wrong.”
In July a ‘Report on Jobs’ survey from the Recruitment and Employment Confederation, which collects data from 400 UK Recruitment and Employment firms, revealed that the number of people securing a permanent job had fallen for two months in a row. The data suggested permanent placements in July fell at the sharpest rate since May 2009, with participants citing uncertainty caused by Brexit as the main reason. The results also indicated that some clients of recruitment firms had shifted towards using short-term staff.
However, Pete says Grafton was not necessarily experiencing such a dramatic drop off in perm recruitment:
“It is too early to make a call on how the permanent market is going and this report only accounts for the two months immediately after the referendum. Some of our clients are operating a ‘wait and see’ policy and delaying hiring decisions – but they are not cancelling them.”
“We are still finding that permanent hiring is taking place because businesses have to run on a day-to-day basis. However, organisations can be creative about the employment method that they are going to engage somebody on, still operate business-as-usual activity and retain flexibility for future uncertainty. Outside of permanent hiring, they can engage hourly temps, fixed-term contracts or self-employed contractors. Our teams continue to advise and support our clients in making those decisions and to facilitate business growth.”
EU directives are the source of many of the UK’s employment rights and for many pro-Brexit businesses, the exit from Europe presents an opportunity for the UK to reshape its employment legislative framework.
In particular, the Working Time Directive, Agency Workers Directive, Equality Directive and the Transfer of Undertakings (TUPE) Directive are perceived by some businesses as stifling flexibility and adding cost to an organisation's payroll bill.
“We have been obliged to implement a multitude of EU directives as a Member State particularly over the last 20 years” says Pete. “But we are in a position now where we have the freedom to frame the post-Brexit employment law framework, especially as employment law is devolved in NI. It frees us up now to truly create a labour market which is attractive to investors, balances business flexibility with social protection, and focuses on growth and job creation.
“However, we have to seriously consider our approach and tread carefully. I believe our labour market has benefitted hugely from EU reform so too much ‘unpicking’ of EU legislation could negatively impact worker morale, productivity and therefore the overall economy. Certainly the Chartered Institute of Personnel and Development (CIPD) believes that the current employment law framework should be preserved. All stakeholders in the NI economy need to be consulted from the outset. We also need to think about delaying certain employment initiatives that will have a negative cost impact on businesses, no matter the positive intention. Examples include the Apprenticeship Levy, higher Auto-enrolment Contribution Levels and an increase to the National Living Wage.
“Finally it seems obvious but whether one voted leave or remain, we are all leavers now so we need to stay calm, operate a business-as-usual policy, support the EU nationals in our business who may be feeling vulnerable at this time and make our post-Brexit deal with the EU as beneficial for Northern Ireland as possible.”
Access to the Single Market and some form of freedom of movement is paramount.
”As Business Leaders, it is our responsibility to continue to influence and lobby government throughout the transition period and secure the best platform for growth we can, confident in the flexibility and adaptability of our teams and the Northern Ireland workforce and industry.”