With less than a year to go before the March 2019 deadline for finalizing a deal for the UK’s withdrawal from the European Union, three separate reports have come out in the past week highlighting continued anxiety among employers in key sectors about their ability to meet their labor needs in a post-Brexit environment.
First, Tech Nation 2018, the UK’s annual government report on the country’s tech sector, identified access to talent, cost of living, and Brexit as the main challenges cited by the tech community in the country’s key tech hubs of London and Cambridge. Mike Butcher at TechCrunch criticizes what he sees as the government’s attempt to downplay the elephant in the room, arguing that the report “has been heavily spun to de-emphasise the effects of Brexit on the UK tech industry”—which he says will be severe when considering the impact Brexit will have on British tech companies’ other major concerns:
In the rest of the country, access to talent was cited as the most common challenge – affecting 83% of the UK’s regional tech clusters. Access a funding was a top 3 challenge in 49% of clusters and bad transport links were also cited. Funding is clearly also Brexit-related, given that funding from the European Investment Fund has collapsed since the Brexit vote. The European Investment Bank has slashed deals with UK VCs and private equity groups by more than two-thirds, with no equivalent funding from the UK government in sight. …
However, you probably won’t get that impression from the way the report is being pitched to the media … Instead, the report is filled with heady statistics about the UK’s booming tech industry. The report also makes absolutely no mention of the effect of the UK leaving the EU’s Digital Single Market.
Another report, released on Monday by TheCityUK, an organization that promotes the UK as a global financial center, warns that losing access to European talent will have a harsh impact on the finance industry. That report, prepared in partnership with EY, urges the government to reform immigration policies to allow the sector to maintain access to a pan-European talent pool, arguing that hiring European talent after Brexit through the existing mechanisms for non-European immigrants will increase the City’s costs for hiring international staff by 300 percent. “Simply applying the current immigration system for non-European citizens to European citizens after Brexit will not work,” TheCityUK’s Chief Executive Miles Celic said in a statement carried by Reuters. In response to uncertainty over the future of UK immigration law, banks have already begun preparing to shift staff from London to other European financial centers like Frankfurt to handle their continental business.
Finally, Jo Faragher at Personnel Today highlights yet another study, this one of manufacturers, prepared by the national manufacturing association EEF and law firm Squire Patton Boggs. In that report, 47 percent of UK manufacturers say they are worried about access to talent after Brexit:
Nearly a fifth (17%) of companies surveyed saw a drop in applications from European citizens, and 13% experienced an increase in EU workers leaving their business. Manufacturers were confused as to how they could support their existing EU workforce – four in 10 felt they needed greater clarity on how they could help employees gain residency or settled status, and 68% wanted more guidance on what post-Brexit changes would mean for employers.
Navigating Brexit: The Migration Minefield looks at ways employers are dealing with these recruitment challenges. Almost half (47%) are increasing the amount of training they provide to existing employees, 20% are improving pay and benefits for all employees, and 16% are introducing policies or schemes to retain older workers with specialist skills.
Recent reports looking at the broader labor market situation have warned of a shrinking workforce and widespread labor shortages in the coming years as the UK’s native population ages and immigration inflows decline. Europeans have been looking for jobs in the UK at sharply reduced rates since the Brexit referendum in 2016, yet a CIPD report last year found that it would be very difficult, if not impossible, for the UK to meet its needs of both skilled and unskilled labor without the access to foreign talent provided by the EU’s open borders.
Europeans already living in the UK will retain the right to remain in the country after Brexit, according to a preliminary deal reached between UK and EU negotiators in December—but how many they will choose to do so remains an open question. An exodus of European talent already living and working in the UK could lead to massive shortfalls in industries that depend heavily on European workers, such as hospitality, construction, and agriculture.