December 2, 2016

Employers concerned about ability to recruit and retain EU workers following Brexit

The government does not have an overall plan regarding Brexit, according to a memo leaked to the press last month. Whether or not that is true – the government claims it isn’t – a lot of employers don’t have a coherent plan as yet about what to do post-Brexit, according to new research.

The CIPD/Adecco Group Labour Market Outlook’s autumn report asked a few probing questions of HR professionals with regards to Brexit, as well as its customary focus on employment prospects.

What did it find? It found, from its poll of just over 1,000 HR professionals, that only 15% of organisations have started to make plans for the impact of a restricted EU labour market. This is despite the fact that a significant number (42%) said that should their ability to recruit EU workers be reduced because of changes to government immigration rules, it would negatively impact on their UK operations.

Furthermore, employers are concerned about their ability to recruit and retain EU workers in the period of time before the UK even officially leaves the EU. Over a quarter (28%) of organisations polled in the report who employ migrant workers (62% of the overall sample) reported evidence that migrant workers are considering leaving the UK already.

More than half (54%) of the organisations that plan to recruit EU migrants in the coming 12 months believe it will be harder to do so because of the Brexit vote. Almost a third (32%) think it will also be harder to recruit non-EU migrants over the next 12 months because of the vote.

The survey asked participants what their organisation plans to do should the hiring of EU nationals become harder post Brexit. The results showed that only 15% of employers have started on an action plan. The most common plan is to undertake strategic workforce planning (43%), followed by resource strategy reviews (39%). Almost a quarter (22%) said they plan to start investing in or increasing their investment in apprenticeships, with a similar number saying they want to forge closer links with schools and colleges. A substantial number (30%) said they intend to continue recruiting EU nationals where possible and will absorb the extra costs involved.

What do employers want from Brexit, according to the CIPD/Adecco report? Only 6% said they favour a ‘hard Brexit’, one that would see the introduction of World Trade Organisation rules. More than four in ten employers said they would either like the government to adopt a European Economic Area (EEA) agreement, like Norway, or one that is not significantly different to current trading arrangements. Survey participants were asked what mattered most to their organisation – free access to the single market or continued easy access to EU migrants. A quarter said both were equally important, while 19% said free access to the single market and 19% to easy access to EU migrants. Less than a third (31%) said neither of them were important to their organisation.

What does the report say about general employment conditions? It suggests that in the short term, employment growth will remain strong, despite what it calls a ‘modest fall’ since the previous quarter’s report. Expectations for pay growth remains weak – the forward-looking pay data in the report indicates that there could be a downward pressure on pay in the coming year.

Gerwyn Davies, public policy adviser at the CIPD, has some advice for employers:
“Against this backdrop of uncertainty, now is the right time for organisations to review their strategic priorities and align investment in skills and physical capital to help them overcome a range of related challenges,” he says. “The recent cut in interest rates should offer employers a timely reminder that borrowing costs for business investment are historically very low, which can help offset the increased risk of skills shortages and lower productivity growth”.