Brexit: How it affects the business and candidates you work with.
As the official date for Brexit passed in March 2019, we are still very uncertain of what the future holds for both the recruitment industry and the varying sectors that we serve.
We are currently wondering whether the movement of workers in the industrial, construction, driving, engineering and commercial markets will remain free or become more constricted.
We are also pondering whether the new landscape will encourage businesses to proactively hire or quite simply slow down their recruitment activity until we have more answers.
As the negotiations continue, it is likely that some areas will remain unclear. In the meantime, we take the time to explore how Brexit could impact the recruitment industry, as well as its clients and candidates, and what can be done to mitigate any associated risks.
A reduced talent pool
With the UK numbered as one of the EU’s 28 members, candidates have enjoyed the right to freely move across all of them. This single market meant that we have been able to bring skilled workers to the UK and easily fill vacancies as a result. Across the STEM sectors in particular, we have long had skills gaps that overseas workers have successfully been able to close.
The implementation of Brexit means that freedom of movement is unlikely to continue in its current form and that vast swathes of workers will be unsure about their rights outside of the EU.
With some recruitment firms already reporting a reduction in hiring from key European markets such as France and Germany, other businesses are considering their options among new territories, such as the US. While this approach could help to bridge the shortfall, some recruitment agencies will inevitably lack the funds and connections to succeed in these new markets.
Prior to the referendum, it was predicted by PwC that UK GDP would be three to 5.5 per cent lower than if the UK voted to remain. If this does in fact happen, recruitment firms may be forced to cut costs to adjust to the new economic climate.
We are already feeling the effects of a sea change in conditions. Immediately after the referendum, the pound fell from 1.5 to 1.21 against the dollar with imports costing more on the whole and exports having brought in less. ONS data suggests that 53 per cent of UK imports come from the EU, meaning that if the pound’s value continues to nosedive, cost cutting measures would need to be placed at the top of the agenda.
This is because, if there is less willingness to hire there will be less money to pay recruiter’s fees, which could lead to account losses. This is why it is crucial to place an emphasis on client retention, reminding loyal customers of your values and overall contribution to business growth.
An uncertain future
Arguably the biggest challenge that recruiters face is Brexit’s extended uncertainty. Not knowing what the outcome will bring means that firms cannot properly prepare for it. This is because the range of potential outcomes vary so massively from a deal that negotiates single market access, a Brexit that retains freedom of movement for hiring, right down to a no deal Brexit in which all existing trading arrangements are wiped out. A no deal Brexit would without doubt result in a vastly shrunken talent pool that places serious negative ramifications on the recruitment industry.
At this point, we have no idea whether hiring needs will rise or fall, if businesses abroad will be happy to invest in a UK that no longer is a part of the EU or even if there will be second referendum to ascertain the final deal. Whether Brexit has a largely positive or negative effect on the UK, as it reaches the final stages, all recruiters can do is focus on honing their own singular strategies.
It may be that you want to think about changing or diversifying the market sectors that you deal with, depending on which industries look set to flourish under Brexit, while others flounder.
You might also want to change your own approach to doing business. You could think about going above and beyond the role of candidate finder and vacancy filler. This could involve adopting a consultative approach and advising on company and department structure, contingency plans and unconventional new roles. While technology has automated many recruitment processes, providing a more human touch could prove invaluable when it comes to staying ahead of the game.
If the Brexit outcome is less than favourable, recruitment firms can offer strategic advice to businesses that find themselves in a frustrating period of transition. To this end, recruiters could find that they are instrumental in helping others adjust to Brexit, whatever the result, which is what will ultimately lead to their ongoing survival.