EU Referendum – The Impact on Recruitment
In recent weeks the world’s media has been rife with discussion around the EU referendum and potential ‘Brexit’ – the UK leaving the EU. With the date set – 23rd June 2016 – for votes to be cast, what are the potential implications for the recruitment industry?
Originally started after World War II with a view to help economic co-operation and trade, many companies are now reviewing the impact leaving the EU may have on their business. Within the recruitment industry there could be a wide range of implications and we have provided a run-down of some of the potential areas of impact, including geographic mobility, skills shortages and compliance.
Between April 2014 and March 2015, the UK’s 20,700 yearly cap of skilled migrant applications was reached almost every month according to research. Geographic mobility plays an important part within the recruitment industry, with EU residents currently being able to freely move throughout EU countries to use their skills in roles irrespective of location. This in turn, opens up more candidates for recruiters looking to fill roles – particularly within the service sector.
Moody’s credit ratings agency commented; “Service companies frequently refer to the ability to attract and retain workers as a key business risk and those with a high proportion of EU nationals among the workforce would be most affected by a Brexit.”
The possible additional restraints on geographic mobility for candidate sourcing will need to be addressed by recruiters if voters choose ‘no’ in the EU referendum vote. Should Brexit occur, recruiters will need better understanding of the laws and regulations regarding migrant workers and there will likely be an increase in ‘red tape’ management.
It has been well documented that the UK is facing skills shortages – with the technology, teaching and nursing sectors being the most affected recently. As recruiters are working to effectively search and source the perfect candidate for roles, to the ideal skillset outlined by clients, the EU referendum ‘no’ vote could add additional pressures.
The upcoming referendum seemed to have deterred companies from hiring, with eight in ten employers (79 per cent) believing that economic conditions are improving according to research from the Recruitment and Employment Confederation (REC). That said, some companies are approaching the run-up to the vote in summer 2016 with caution, as Kevin Green, Chief Executive, REC, comments; “It’s encouraging to see positive data around business confidence and hiring intentions, but the survey also suggests weakening demand for staff from SMEs – this might be a reaction to the incoming National Living Wage or uncertainty caused by the impending EU referendum.”
The current skills shortage could be further impacted by a ‘no’ vote due to the decrease in global mobility. The potential of fewer incoming candidates from the EU – due to the changes in law and regulations – could make the already shrinking pool of candidates even smaller, making the task of searching and sourcing talent more time intensive and less fruitful for recruiters.
The recruitment industry has its own set of laws and regulations to help protect clients, candidates and recruiters. One of which, the Agency Workers Regulation (AWR) is under scrutiny as it originates as an EU directive. If the UK were to leave the EU, this could mean changes to the AWR and agency workers could lose rights such as full-time worker’s pay, holiday leave and other benefits.
Whilst there could be a two-year notice period of changes – leaving time for companies to adjust and recruiters to ensure their workflows in technology systems are compliant to any changes – AWR will continue to have a spotlight focused on it for the foreseeable future.
Over the next few months in the run-up to the EU referendum vote there will no doubt be a continued discussion on the wider business impacts of a ‘yes’ or ‘no’ vote. Discussing topics, taking in different perspectives and considering various implications is a natural process when considering a referendum vote. That said, only time will tell as to whether the potential implications will come into play for the recruitment industry or not.