3 ways Brexit is impacting the labour market and 2 steps Businesses should take to mitigate the risks

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EU Net migration in the UK has significantly decreased since the EU referendum. Naturally this is attributable to a variety of causes but a strong factor for people is the uncertainty as per what their rights will be in the future (1).

This creates a risk for UK employers, some of whom have previously used this freedom of movement within the EU as a cornerstone to their business viability and success.

UK employers now face risks in the 3 following areas:


1: Losing current staff as they relocate to other parts of the world

The British Pound has lost 21% of its value since the referendum results, making it less valuable for foreign EU nationals to work here and send remittances back home.

The number of hate crimes reported to the police in the month after the referendum results in 2016 increased by 44% against the previous year. This has created a feeling amongst foreign immigrants that they are less welcome than was previously perceived (5).

The lack of engagement that staff have with their employers, added to this trend has led some firms to already lose some of their skilled labour and need to hire and train new members of staff.

2: Difficulties to recruit new skilled members of staff

The latest employment numbers for the Office for National Statistics show that employment is currently very strong. Employment is at its highest level since records began at over 76%, unemployment is below 4%, reaching levels not seen since the 1970s, inactivity is reaching 20.8%, trending lower than the last 50 years and the number of job vacancies is estimated at 820,000, a significant increase post referendum (2)(3)(4).

As a result, it is becoming increasingly difficult to find staff with the skills that match your requirements. Add in reduced EU migration further decreasing the labour pool thus leads us to a major supply issue when it comes to staffing, thus creating the third risk.

3: Increased cost of recruiting due to the lack of staff available

Predictably, as the supply of labour goes down the costs increase. Whilst this may be good news for many employees it will have an impact on business profitability, even to the point of making some businesses unviable.

These increased costs will be seen in both increases in salary expectations as well as recruitment.

In the case of a hard Brexit, these costs will increase in line with the additional costs and paperwork for Tier 2 Visa’s that can cost up to £10,000 for a skilled position (7).

In industries that spend a lot of their budget on staff or where there is competition from other businesses, this can be a strong threat..

What are the next steps to take with my current and future staff?

There are 2 clear next steps that all impacted businesses should be taking right now:

1: A short-term action plan to support current staff

The short-term action plan includes making sure that your current staff are engaged and aware of what Brexit means for them. The first step it to make sure that the EU, EEA and Swiss citizens have received their settled status, application here:


To reduce the uncertainty for their staff, employers need to be open about their plans for the future, they need to make sure that staff is aware that they can keep their job if they stay after the Brexit deadline and that they will not lose any of their benefits. Companies will need to be an intermediate between the political situation, the media and their staff and communicate using facts and not rumours.

2: A longer-term people and recruitment strategy

In the medium term, the Chartered Institute of Personnel and Development (CIPD) recommends that

“workforce planning and development should become a priority due to the scarcity of available skills and labour, potentially exacerbated by further reductions post-Brexit once free movement comes to an end” (6).

Next week we will review some of our work to mitigate these risks with our clients.

Contact us today for a confidential chat about your business:



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