Brexit is set to have an enormous impact on the recruitment sector, with many companies left uncertain over how leaving the EU will affect their day-to-day business.
Now that prime minister Theresa May has officially signed Article 50 and outlined her vision for Brexit, it looks like any chance of turning back on Brexit has gone and the UK will need to focus on adjusting its economy in the coming years.
Ms May has spoken of her determination to agree trade deals with countries outside of the bloc, recently vowing that the country must significantly increase its trade with “the fastest growing export markets in the world”.
However, it appears she does not want to turn her back on the European Union completely, explaining: “There should be no reason why we should not agree a new deep and special partnership between the UK and the EU that works for us all.”
The mixed nature of Ms May’s messages have only added to the confusion among some companies, but let’s take a look at some of the major challenges Brexit will create in the recruitment sector.
1. Attracting top quality talent
Many businesses rely on specialised workers from within the EU, but their status has been put into question by Brexit.
As part of the trade bloc, employees were entitled to freedom of movement between all of its member states. Now, the picture is less clear as the UK would need to negotiate a deal to enable this rule to continue.
Uncertainty surrounding the decision will continue to have a substantial short-term effect on recruitment companies until negotiations are completed. With many European candidates left unsure of their rights outside of the EU, recruitment businesses can expect to see lower interest from overseas applicants.
Recruitment and Employment Confederation (REC) chief executive Kevin Green said: “In sectors such as healthcare, education, hospitality, construction and manufacturing, workers from the EU are vital and any change to our immigration system needs to recognise that.”
As the UK waits to see whether free movement will continue, recruitment companies are likely to remain concerned about whether it will affect their access to the continent’s most talented professionals.
2. Cost cutting measures
Prior to Brexit, research from PwC found that the total UK GDP in 2020 could be somewhere between 3 per cent and 5.5 per cent lower than if the country stayed in the EU.
This kind of economic uncertainty is sure to have a domino-effect on businesses. Following the vote to leave, the value of the pound dropped significantly, falling to 1.21 against the dollar in recent months after reaching higher than 1.5 prior to the announcement of a referendum.
As a result, companies have taken a substantial hit, with imports costing more money and exports bringing in less. Research from the Office for National Statistics (ONS) found that 53 per cent of the UK’s imports came from the EU last year and replacing this with a lower value pound is sure to cost companies more money.
In order to adapt to these circumstances, recruitment businesses may need to cut their costs significantly as they adjust to the economic changes and a drop in applicants from EU nationals.
Perhaps the biggest challenge facing companies at the moment is the prolonged uncertainty surrounding Brexit.
No state has ever left the EU before and there is no template for how to successfully transition out of such an enormous trading bloc, making it crucial that the government and companies properly consider their choices in the coming years.
Many global companies will be left unsure about whether they should invest in the UK if the free movement law is removed, as they may not be able to find the skilled workers they require.
This uncertainty will influence decision-making for years to come, as businesses will need to consider moves such as expansion plans in case big mistakes are made when transitioning out of the EU.