What impact will Brexit have on the recruitment sector?
With six per cent of the UK’s total workforce – or 1.6 million employees – coming from countries in the European Economic Area, the Brexit vote was bound to send a wave of uncertainty through the recruitment sector.
Although some of the more outlandish claims made by newspapers – such as Manchester City being forced to deport some of its most successful players – probably won’t come true, there’s no doubt that some sectors in particular are concerned about being able to recruit adequate numbers of workers.
Sir Vince Cable, the former Secretary of State for Business, Innovation and Skills, speaking at an event organised by Adecco Group UK&I, said: “Where is this pool of domestic labour that we are going to draw upon, left by gaps by no longer bringing people in from overseas?”
The flames of the debate were fanned earlier this month, by Home Secretary Amber Rudd’s controversial proposal to name and shame companies who employ large numbers of foreign workers – a plan that was branded a “recipe for division and disaster” by recruitment industry experts.
However, they may be able to take some comfort from Defence Secretary Sir Michael Fallon, who appeared to backtrack when he told the BBC this week it wasn’t going to happen – though he did admit that some firms could be asked to “simply report their numbers”.
Whatever the outcome of this particular debate, it seems obvious that employers will be obliged to know more about the people they are taking on.
Ryan Jones-Ralph, Operations Director at Vetting Solutions, said: “There are simple and inexpensive tests to establish identity, residency history and right to work and, with the penalty for employing illegal workers up to £20,000, doing these checks at an early stage could save a lot of grief further down the line.”
The effect so far
Experts in recruitment for the financial services industry reported a hiring slowdown immediately post-Brexit with firms adopting a “batten down the hatches” approach, according to Kirsten Macleod of the Green Park Financial Services practice.
Just a few days after the vote, Alex Fleming, Managing Director at Adecco Retail said: “The referendum is already affecting the UK recruitment market, with a number of employers choosing to delay hiring decisions.”
Typically, in periods of economic and political uncertainty, the temporary and contract markets perform better, usually at the expense of the permanent market, and we are already seeing employers increase their temporary hiring activities and reduce permanent appointments.
Despite the obvious uncertainty, it’s not all doom and gloom in the sector. In fact, experts believe that changes in the way we trade with countries like China could become a major boost for the recruitment industry, with the creation of new managerial structures and the need for professionals with language skills.
Similarly, if EU citizens decide to return to their home countries over the coming years there will be skills gaps to plug which will create a surge of demand for the recruitment industry.
Ed Vernon OBE, Chairman of the Midlands’ recruitment consultancy Macildowie, claims that Brexit should be seen as an opportunity to try a new approach to business: “I am optimistic about the determination and commitment of business leaders across the UK to succeed.”
Matthew Gostelow, Founder at RV – Recruitment to Recruitment, agrees: “We can cut red-tape, lower tax and become a business focused, rich country, a global trading power, with talent attracted to our shores as they always have been.”
Top tips for recruiters and employers from Vetting Solutions
- Stay calm – Article 50 won’t be invoked until early next year and that’s just the start of the process that will take up to two years
- Be prepared – You might want to think about carrying out an audit to determine what proportion of your staff or clients originate from the EU and what skills they have
- Get into good habits now – Know who you’re taking on by doing simple, inexpensive and effective checks. Doing so will save you a lot of stress later on
The truth is, no one knows how much disruption Brexit will bring to the recruitment sector until the process begins. Following the three points above, though, is a good way to prepare.