Britain and the EU – Impact on workers following the referendum

18 Jul 2016

Recruitment Industry News

This week saw one of the biggest political contests come to, for some, a very unexpected head.

Britain’s decision to leave the EU, the first of its kind since Greenland left the European Economic Community in 1985 (Indeed), shocked many. However Brexit is now upon us and positive or negative, the impact upon businesses, individual industries and the economy as a whole, is yet to be seen.

There was much speculation prior to the result about how the UK and industries would react or be affected by the change if Brexit came to pass.  As predicted the pound dropped overnight by 10% plus, reaching a 30 year low (Guardian), (this however has marginally improved again), millions will potentially be wiped off shares, and our PM resigned the very next day.  But businesses and individuals, potentially face an uncertain future; what is now to be expected for workers from Britain and the EU?

On 23th of June 2016, 51.9% of the British population voted to leave the European Union.  Needless to say, one group this will affect greatly is the foreign EU workers, in the UK.  Although, throughout the leave campaign, there were promises that the EU workers already in the UK would have their rights ‘unaffected’ (Financial Times), the result has naturally and undoubtedly been cause for concern from these workers’ point of view.  There is not only the question of whether or not jobs will be openly available and accessible to those coming from the EU, but also whether those already working in the UK now wish to stay.  It is argued by some that the UK skills shortage benefits from the flow of migrants into our economy, however whether this is true or not, the UK economy and jobs market is much less appealing to EU workers now than it was this time only two weeks ago.

Certain areas of industry will be feeling the effects of the referendum more than others, but overall it has left both industries and companies with an uncertain future. The younger workers in the UK are likely to be amongst those who feel most negative effects from the result.  With uncertainty in our current economic status, many employers froze employment in the months preceding the vote.  When surveyed by PathMotion, before Brexit was announced, 49% of employers said that they were less likely to employ as many graduates should we vote ‘leave’.  A reduced rate of migrant graduate workers has indicated in the same study, however, that employers would then be 25% more likely to increase the amount of UK graduates hired to fill roles.

There has been discussion of a possible points based entry system into the UK, similar to that currently enforced by the Australian Government; a system largely based on value of skill as a worker.  If this was to happen however, many of the EU workers currently employed in the UK would likely not meet these requirements (Financial Times).  The 3 million EU Citizens currently in the UK make up 6.8% of the UK workforce.  The jobs held by these workers include largely the hotel and hospitality sector,  8% of workers in this industry are EU workers and 94% of these would likely not meet the potential new requirements according to the Financial Times.

Considering that 53.1% of British car manufacturers export their products to EU countries, and 78.2% (in 2014) exported overall worldwide (SMMT), this industry will likely now encounter increased charges and tariffs for exporting, without access to the single market.   The automotive industry employs over 770,000 people over the UK, presenting a potentially negative result for a lot of employees (SMMT).  However, industry leaders appear confident that there are no major plans to move manufacturing anytime soon; Jaguar Land Rover promising ‘business as usual’ (Washington Post) and ‘BMW, Ford and Honda all said they would not change their day-to-day operations in Britain’ (BBC).

With London being a substantial core to the financial industry, and the British Pound now worth significantly less, the UK financial sector may face some tough decisions and a difficult period ahead.

Certain members of the financial industry are already looking at moving  operations overseas in the wake of the vote to leave.  Now, being based in Britain may create more barriers when trading with both EU and non-EU countries.  This in turn creates job uncertainty for those working in UK based banks and financial sector roles, potentially an estimated 100,000 job roles (Guardian).

The UK is already experiencing a loss of interest in its jobs market.  In the forty-eight hours following the Brexit result, according to the online job site Indeed, the amount of jobs searched for in the UK from all other EU countries dropped as they move their searches elsewhere.

The search from UK-based job seekers looking to work in the EU peaked post-Brexit, showing that it is not only EU citizens who are more reluctant to search for jobs here, but also current UK citizens. Indeed witnessed job searches both in and outside of the EU rise after the 23rd, with UK jobseekers looking to explore other avenues.  Ireland stand to benefit from the UK’s loss here, as the job search in Ireland from the UK rose 2.5 times its average and searches from the EU to Ireland rose 2.2 times. With Ireland being able to offer that which Britain soon may not, access to the free market, and as a country which speaks English as a first language, they become a very attractive choice.  Not only are more UK job seekers looking to the EU for job opportunities now,  they are also looking further afield to any other English speaking countries, for example, Canada or Australia.

Overall the outlook is at the very least uncertain, largely hinging on whether the UK enters a recession, as is feared.  Employers across the board appear not to be taking any drastic or sudden decisions in the aftermath, however the reactions from employees and in job search behaviour may well be where we see most changes, as has already begun.

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