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UK HR Pros Must Act To Avert Brexit Labour Crunch

26th Sep 2018
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Ever since the fateful Brexit referendum in June of 2016 that triggered the UK's inexorable march towards a non-EU future, businesses throughout the UK have been struggling to determine how the fallout from the divorce is going to affect their operations. At the beginning of the process, many business leaders remained optimistic that negotiators from both sides would find a way to strike a deal that would restore some certainty to the economic picture in the region, and allow for some more precise business planning for the eventual split.

Two years on from the referendum, however, the two sides remain at loggerheads over a wide range of issues and do not appear close to any deal whatsoever. At the same time, Prime Minister Theresa May is vowing not to compromise in the interest of forging an agreement, raising the real possibility of a so-called hard Brexit – where no deal is struck and the two sides unceremoniously part – which would leave economic turmoil in its wake.

For UK businesses, a hard Brexit could be a disaster, creating a raft of challenges that experts are only beginning to grapple with. There has been plenty of coverage about the potential disruption of trade (including a possible shortage of needed medications in the UK), as well as the possibility that cross-border currency and investment flows may grind to a halt, but for UK businesses, there's another issue that may trump them all – a looming labour shortage. For HR and hiring managers in the UK, the time is now to staff up for what could turn out to be the toughest hiring environment in history. Here's what's happening.

The state of UK labour

Within the UK, there are already a number of industries where skilled labour is already in extraordinary demand. They're emblematic of the broader labour picture in the UK, where the most recent data reveals an unemployment rate of just 4%. That's a figure not seen since 1975, and it may only be a harbinger of what's to come. According to the Office of National Statistics, net migration into the UK from the EU member states has been declining ever since the referendum, as uncertainty over residency rights has caused many EU citizens to rethink moving to the UK.

While some immediately point to the immigration decline as the primary reason for the tightening of the labour market, the data reveals that although still in decline, net migration from the EU is still positive. That means that there could be a whole lot more tightening in the British labour market in the wake of a hard Brexit. In fact, there are already some specific industries that HR professionals can look to for an idea of what they could soon be facing.

A looming crisis

For a glimpse of what may be in store for the broader labour market in the event of a hard Brexit, HR professionals need only look to the National Health Service. Already, the government-run medical system is facing a severe shortage of doctors and other medical staff as the number of European immigrants to the UK declines. Their efforts to recruit from outside the EU have been stymied by existing immigration quotas and a systemic denial of visas for qualified applicants. The same situation is happening in the fintech and hospitality sectors, with no clear solution in sight.

Also, for those tempted to assume that the British government will act to ease immigration restrictions to ease the looming post-Brexit labour crunch – don't count on it. Polling data indicates that the majority of British voters – the ones who backed the leave campaign in the Brexit referendum – overwhelmingly cite anti-immigration sentiment as a major reason they voted to leave the EU. There's no evidence of any real change in the prevailing sentiment, which will make any changes to the currently restrictive immigration quotas a political non-starter, barring some kind of major shift in public opinion.

The bottom line

For now, there's every reason to believe that in the absence of a Brexit agreement, HR professionals and hiring managers all over the UK may soon face unprecedented labour shortages that could cripple their businesses. Even if a deal is eventually reached, the chilling effect the uncertainty is having on immigration from the EU won't go away anytime soon. That means that UK businesses and the HR professionals that serve them need to project and fill their staffing needs over a much longer term than normal, so they can try to preempt any future fallout, regardless of the outcome of the current Brexit negotiations. Those that don't act now may end up short of business-critical talent, and facing an environment that makes it impossible to remedy the situation.

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