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Cutting through the uncertainty: Recruitment after Brexit

Derek May, CEO of Brightwork, shares his views on the aftermath of the UK’s historic EU referendum vote.

The country has spoken, and the UK will be leaving the European Union. Behind the headline stories of buyer’s regret and constant political reshuffles, British businesses are looking to make the best of the situation and to get back to some form of stability.

The pound has settled, significantly weaker against the Dollar, Euro and Yuan. With our exports being cheaper for the nations we trade with, and our imports from them costing more, this should inspire more to buy British, and result in increased demand for British producers and businesses, but, as ever, time will tell whether it can be that simple.

The media is awash with commentary that manages to hedge its bets as comprehensively as Sir Humphrey Appleby, so let’s delve into what this uncertain future holds for businesses looking to recruit, and candidates looking for employment.

The economy on recruitment

The first thing to examine is the economic outlook and is Brightwork’s best guess.

The 2008 downturn did not immediately impact upon temporary recruitment. Those looking to weather the storm turned from permanent hires to temporary recruitment as a flexible workforce alternative. It probably took until 2010 for the temporary sector to be affected.

Our belts were tightened along with the rest of the country. Reacting to the downturn gave opportunities, however. We moved to electronic timesheets which saved us £40k per annum on stamps and paper alone notwithstanding staff and printing costs. Necessity is the mother of invention and innovation has brought British business through previous challenging times.

After Brexit, I can already see transformational specialists repositioning themselves from we are the permanent recruitment specialists to we are the temporary labour specialists as companies move to spread the risks on investing in human capital.

With the outlook for the economy uncertain, the Government will use all the economic levers it has and some they will develop to stimulate the economy, in the hope of shortening any downturn. There may be a migration from permanent to temporary over this period and that will require the recruitment industry to be extremely responsive.

Migration on the economy

Migration was a key issue in the campaign, for both sides, and now the emotions have subsided, we need to look at how migration changes will potentially affect the supply of labour.

I was in London at the weekend, stayed in a different hotel to normal, went to different events and used UBER for the first time. I met Plamen and Krasen who were very pleasant UBER drivers and both from Bulgaria. They appeared to be good people bringing up good families in the right way. This experience was mirrored by the hotel and restaurant staff, most of them being European, working hard, paying taxes, and contributing to UK economy.

With the possibility of no longer being able to rely exclusively on the steady influx of enthusiastic EU nationals, employers who count on DIY recruitment will increasingly find unfilled vacancies, and may call on recruitment specialists.  That’s good news for responsive and flexible recruitment companies.

Migration on recruitment

Reduced migration will put pressure on the UK population 'available' to work. We have around 1.8m people unemployed so the pool of 'available' labour would appear large enough.

Net migration from the EU to the UK was estimated to be around 185,000 EU nationals in 2015. 73% of those either had a job waiting or were coming to look for a job which equates to around 135,000 filling UK jobs. A full stop on European migration will remove 135,000 from the workforce per annum, and we still have a pool of 1.8m unemployed.

Facing the bald facts of the numbers, one might expect the Prime Minister to take a hard line on migration negotiations with the EU. But the negotiations are certain to be more complicated, and a spirit of compromise is expected by most. My money is on a small reduction in migration, and a UK focus on reaching the hard-to -help unemployed.

A significant investment in time, effort and money is required to get those groups back into productive employment. Regardless of rhetoric, there are complex reasons behind long-term unemployment and the alluring idea of an underutilised 1.8m workforce does not tell the whole story.

What will all of this mean for the recruitment industry?  We feel that this will help those in the industry who are willing and able to evolve to meet the challenges, but it will be a struggle for the more traditional recruiters.

In conclusion; the opportunity to develop into an industry that adds value at every step of the recruitment process is not one to be ignored lightly. It may be one of the biggest we have seen in years.

Picture courtesy of Pixabay 

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