How the U.K.’s Withdrawal from the European Union’s Could Affect Workforce Management
By Rick Norgate
Editor’s note: This article was published before the Brexit on June 23.
The referendum will decide whether Britain should leave or remain in the European Union. Thus, U.K. businesses that employ EU workers will need to contemplate the potential influence of the British Exit ( or “Brexit”) on their future hiring, talent management, and overall workforce management best practices.
Currently, millions of highly skilled EU immigrants work in the U.K. Below are a few possible scenarios and outcomes of the Brexit, details on its potential impact on the U.K., as well as its impact on the increasingly global workforce. We will also review how human capital management technology can help businesses comply with the current and future world of work.
Recruitment and Workforce Management Could be Affected
If the U.K. exits the EU, it is likely that all European workers will need immigration permission to work in the U.K. For U.K. businesses, this would increase the time, cost, and effort required to recruit non-U.K. nationals. U.K. businesses are already legislatively required to collect right-to-work information, and an exit from the EU would make this process even more complex and difficult to track. Given the fact that European immigrants in the U.K. make up a substantial portion of the skilled and unskilled job market, businesses could have trouble recruiting U.K. workers if the UK exits the EU.
However, this scenario is unlikely. If the Brexit occurs, the UK will be expected to negotiate for the free movement of employees in return for a reciprocal agreement on the free movement of goods. This would mirror the agreements taken by Iceland, Norway, Switzerland, and Lichtenstein. These non-EU countries form the European Free Trade Association, which is part of the European Economic Area and gives its citizens the same rights to live and work in the U.K. Assuming the U.K. followed through with these negotiations,, as many think it will, then voting to leave the EU would have little impact on U.K. recruitment and workforce management practices.
How Businesses Can Prepare for the Brexit
The U.K. is running at the highest level of employment seen in last few decades. This has already created a substantial skills gap in many industries. Depending on the nature of the post-Brexit model, this skills gap could widen even further as it becomes more difficult to recruit and retain skilled employees from the EU. Latest figures show that there are over 2.1 million EU immigrants working in the U.K.—a substantial portion of this workforce make up the U.K. skills shortage in areas such as engineering and IT.
That being said, some U.K. businesses may utilise natural staff turnover to decrease the number of highly skilled immigrant workers they employ. If this happens, U.K. businesses will need to examine their own talent strategies to ensure they manage top talent within their businesses—top talent that may move if the market demand for skilled workers heats up even more.
Current economic factors paired with the potential Brexit should put talent management strategies at the top of the agendas for U.K. businesses.
The Brexit’s Effect on the Existing U.K. Workforce Within the EU
Employment in the U.K. is currently at a record high, and as a result, many industries are experiencing significant skills-shortages. If companies lost their foreign employees, many businesses would struggle in the short term to maintain productivity and service levels.
Unfortunately, replacing European employees with U.K. residents isn’t the only possible dilemma. A reduction in the number of skilled workers from Europe would also force U.K. businesses to invest more in education to replace those employees that left. U.K. businesses would also need to place more importance on talent management to attract and retain skilled workers.
How Human Capital Management Technology Can Help Businesses Prepare
If the U.K. does leave the EU, many of the potential impacts are unknown; at this point, experts can only speculate. However, it is clear that an exit would significantly impact employer costs—this is where technology can help.
Cloud-based HR and workforce management solutions can help companies comply with employment legislation such as right-to-work law while also managing costs through efficient scheduling and rostering.
In addition, cloud-based solutions are designed to engage employees and empower them with tools that improve work-life balance—availability management, shift trading, holiday requests, flexible benefits, etc. These tools can help businesses engage and retain their best talent in an increasingly competitive U.K. market.
Rick Norgate is director of HR solutions at Ceridian UK. He is responsible for leading the product team in the development of Ceridian’s cloud-based HCM products. As the driving force behind Ceridian UK’s move into the true cloud space, he was responsible for the launch of Dayforce HCM in the U.K. He also provides leadership and strategic direction for Ceridian’s commercial and implementation approach.