What would Brexit mean for recruiters and the jobs market?

Nick Martindale

The result of the upcoming EU referendum is likely to have a significant impact on the UK. The problem is no one quite knows what that will be, and particularly what the ramifications of a Leave decision are.

One concern of those seeking to remain in the EU is the impact it will have on the UK economy as a whole, with obvious implications for jobs should there be a negative impact. This is certainly a concern for recruiters; a survey by reed.co.uk found more than half of employers felt a Brexit would put UK jobs at risk, while 62% said they would be voting to stay in.

Ed Vernon OBE, chairman of Macildowie, warns of the risks. “The uncertainty surrounding a Brexit would mean a slowing of investment, which would particularly impact UK regional economies,” he says. “London’s position as one of the world’s largest financial services hubs would be at risk, which is why the City has a preference for remaining in the EU. On the face of the evidence, remaining in the EU is the safest choice for UK jobs and investment, and attaches the least risk to economic growth, incomes and careers.”

Aside from immediate concerns around job creation, there are also worries around skills, and particularly whether leaving the EU would make it harder to access talent from overseas. Siân Goodson, MD and founder of Cardiff and London-based executive search business Goodson Thomas, believes this is the key issue for recruiters. “For me, whether in or out, it’s about ensuring that businesses can easily attract and secure the specialist talent of overseas candidates with few bureaucratic and legal hurdles,” she says.

Reciprocity

Many sectors, including nursing, are particularly reliant on EU labour, says Gerwyn Davies, a labour market analyst at the CIPD, although he stresses that a Leave vote does not necessarily mean employers would be unable to continue recruiting such people. 

“A UK government outside the EU could choose to retain unregulated or regulated entry of EU migrants, although there would be no guarantee of reciprocity for UK citizens,” he says. “Alternatively it could choose to adopt a managed system of migration covering both EU and non-EU nationals. The impact on employers would depend on choices made about the number of migrants to admit, the criteria used to determine who was admitted, and the way such processes are regulated and enforced.”

Recruiters working in some sectors may have more cause for concern than others, warns Lee Biggins, founder and managing director of CV-Library. “There’s no escaping the fact that many of the country’s key industries such as construction and hospitality, which often rely heavily on sourcing European talent to fill their roles, are likely to suffer if their access to skilled foreign workers is revoked,” he says.

It is this free movement of labour which particularly concerns Keith Lewis, managing director of engineering recruiter Matchtech. “In a skills-short industry like engineering, free movement of workers provides UK employers with access to international labour and equally offers UK workers the chance to work abroad,” he says. “UK employers need a solution where they can make the best use of local talent and look for resources elsewhere in the EU to fill the gaps.” 

Organisations placing contractors could also find it more difficult to be able to respond quickly to demands from overseas clients. “One of the main benefits for organisations using contractors is that they can provide almost immediate expertise and generally be on site within a matter of days, regardless of where the organisation they’re working for is based,” says Michelle Reilly, managing director of CXC Global. “However, some commentators have suggested that this speed could be affected by the UK potentially leaving the EU, as employers and the firms placing the professionals may have to become more involved in the process of ensuring they’re eligible to work and have the correct documentation.”

There are also concerns some home-grown talent may look to leave the country to further their own careers. A poll by Officebroker.com suggests some 15% of younger Brits would consider leaving, which it claims could see as many as two million people heading overseas. “If skilled staff leave the UK, that causes recruitment issues because we’d see a shrinkage of available talent,” says Chris Meredith, CEO of Officebroker.com. “Combine that with it potentially being harder to recruit staff from overseas, and we could have a very serious problem.” 

IT is an area which could suffer here, says Georgette Stewart, managing director of NSK Consultants, particularly through overseas staff deciding to head back home. “Driving away further potential talent could have an increasingly negative effect on the growth of IT here in the UK,” he says. “There is no telling if workers will be turned away by a Britain outside of the EU, but we may have to be prepared.” This could, however, lead to a greater emphasis by recruiters and employers on developing homegrown skills, he adds.

Legal implications

Another area of debate is just what impact a Leave decision could have on regulations employers and recruiters are currently affected by, including the Agency Workers Directive. “The reality is that we do not know,” says Michelle Last, a consultant solicitor on the employment team at Keystone Law. “We could see a full re-write of all European-derived employment laws, including the repeal of the much-bemoaned 12-week rights of agency workers. At the other, we could see an independent UK being compelled to abide by core EU employment legislation such as the Acquired Rights Directive and the Agency Workers Directive, in return for more favourable trade relationships with Europe.”

The problem for many recruiters and employers is that there are still a great many unknowns as to how things would work out, should the UK vote to leave the EU. “Our industry is speculating about the repeal of employment legislation, which could be very popular with margin-squeezed recruiters, but at the same time we’re being told that compliance with EU directives could be the price of negotiating new beneficial trading terms,” says Marcus Green, director or Nova Contracting. “We need some clear, factual information from both the stay and leave camps, so that recruitment agencies and contractors can assess the pros and cons. Some informed guidance on the European debate would be very welcome.”