UK’s Shocking Election Result Multiplies Brexit Uncertainty

UK’s Shocking Election Result Multiplies Brexit Uncertainty

When UK Prime Minister Theresa May called a general election for June 8, she had hoped to shore up her Conservative party’s majority in parliament and give her government a clear mandate to proceed with Brexit and its broader reform program. Unfortunately for May, Thursday’s polls did not go as planned: The Conservatives lost 12 seats while the opposition Labour party gained 31. While the Conservatives remain the largest party in Parliament, they no longer command a majority alone, so May must form a minority government in coalition with another party in order to hold her place in 10 Downing Street.

On Friday, the Guardian reports, May and Democratic Unionist Party leader Arlene Foster announced that they had agreed to form a government, though it remains unclear whether that will constitute a formal coalition or whether parliamentarians from the right-leaning Northern Irish party will merely agree to back Tory legislation. In exchange for their participation, the DUP is reportedly demanding “a promise that there will be no post-Brexit special status for Northern Ireland,” which the party fears would de-couple the region from the rest of the UK.

Indeed, far from ensuring May a clear path to Brexit on Britain’s terms, the election has thrown the fate of the UK’s withdrawal from the European Union into greater doubt. Negotiations with the EU over the terms of the divorce are scheduled to begin in June 19, and as the Guardian’s Brexit editor Dan Roberts explained on Twitter Friday morning, May must now walk into those talks with her position significantly weakened, as well as complicated by the DUP’s desires regarding Northern Ireland. Roberts also runs through the possible scenarios for how Brexit will proceed now that May has lost a commanding majority:

Theresa May’s stated strategy of walking into Brexit talks and threatening to walk out again if she does not like what she hears is in tatters. Though the economic costs of crashing out without a deal were always hard to contemplate, it is now clear there is no political support for such a high-stakes gamble. Whoever goes into the talks – which are due to start in 10 days’ time – will no longer be believed if they hold a gun to the country’s head and threaten to pull the trigger.

Instead, at the very least, Britain’s Brexit negotiators are likely to have to take a more consensual approach advocated by Labour and some Tory MPs. The UK government may still push for a comprehensive free trade deal and immigration control, but it is now likely to have concede from the outset that these are in tension and be prepared to bend accordingly. Whether this means perhaps accepting a higher divorce bill, or unilateral concessions on citizens’ rights, remains to be seen, but crashing out without any deal at all appears much less likely now.

Nor is it inconceivable, in his opinion, that Brexit will ultimately face a second referendum and perhaps a rejection from the UK public: “If British negotiators come back from Brussels without a comprehensive free trade deal, or a highly watered down Brexit, it is quite possible the new parliament would have to put this to the country.” On the other hand, the EU may not be willing at this point to let the UK walk back its desire to leave, and may exact a high price for Brexit. European negotiators are currently bracing for a delay in the talks, but were quick to remind London that they are on a strict timetable:

Donald Tusk, the European council president, reminded London that article 50 of the Lisbon treaty had already been triggered and talks would therefore have to be concluded by March 2019.

“We don’t know when Brexit talks start,” Tusk tweeted on Friday. “We know when they must end. Do your best to avoid a ‘no deal’ as result of ‘no negotiations.” In a letter congratulating May on being reappointed , Tusk later warned her there “was no time to lose” in starting the negotiations. Michel Barnier, the EU’s chief negotiator, also said the “timetable and EU positions are clear” and talks should start “when the UK is ready”, while European commission president Jean-Claude Juncker confirmed the bloc stood ready to “open negotiations tomorrow morning at half past nine”.

The UK economy reacted with trepidation to the news of a hung parliament, with the pound falling to a seven-month low against the euro on Friday before recovering some value after the Tory-DUP deal was announced. Several financial firms and economic analysts said the results of the election significantly ratcheted up the existing uncertainty about Brexit and the future policy direction of the UK.

So what does this election result mean for HR? In addition to Brexit, employment law emerged as a major focal point in the lead-up to the polls, with the Conservative manifesto pledging an unusual expansion of workers’ rights and to address the controversial issues of zero-hours contracts and the gig economy. Its platform included retaining the rights guaranteed under EU law for UK workers after Brexit, augmenting protections for gig economy workers, expanding access to parental leave and flexibility, extending pay gap and CEO-employee pay ratio reporting requirements, giving shareholders greater input on executive pay, and making more public support available for apprenticeships and other forms of training, among other pledges.

At the same time, in keeping with one of the core motivations of Brexit, the Tories have also pledged to take steps to sharply reduce net migration from a total of 273,000 last year to the tens of thousands, which Chris Cook described in detail at People Management before the election:

While students studying in the UK from abroad will remain the same in quantity, it is suggested that those students will be expected to leave the country at the end of their course unless they meet new ‘higher’ requirements which would permit them to stay; it is not stated what these requirements are. This differs from the current rules, where international students can remain in the UK providing they find a skilled job and a company to sponsor their employment.

The immigration skills charge, introduced in April 2017, charges businesses for hiring migrant workers under a Tier 2 (General) working visa at a rate of £1,000 per employee per year. This was introduced to create revenue for funding skills training for British workers. The Conservative manifesto suggests this charge will be doubled to £2,000 per employee per year to boost the funding in this area. This is despite the fact that the benefit of the initial introduction of the immigration skills charge remains to be seen given it only came in so recently.

Now, May’s weakened hand after the election casts doubt on her ability to deliver on her full policy agenda. Business Peter Cheese, chief executive of the CIPD, issued a statement stressing the need for the government to move ahead with efforts to strengthen the British labor market:

“Brexit negotiations are high on the agenda and how these now move forwards will be a critical area of discussion. However, there is of course a much wider agenda that we need the new government to deliver on as was clear through the public debates. A key focus must be on addressing workplace issues through a much more human lens. By focusing on improving transparency in business, protecting and raising awareness of rights for workers and boosting investment in skills, we can hope to ensure that work can be a force for good, regardless of how, when and where people work. We look forward to working with the new government once it has been officially formed, to address these issues and ensure the UK is in a strong position to be a high-skills, high-value economy.”

The Trades Union Congress, meanwhile, is calling on the government to adopt a greater focus on workers, both in terms of legislative priorities and when it comes to Brexit talks, Personnel Today’s Jo Faragher reports:

TUC general secretary Frances O’Grady said: “This election was about bread and butter issues – what needs to change for ordinary working people. And no wonder: if current trends continue, in five years’ time 3.5 million people will be in insecure work – and the average wage is still £1,200 less than it was in 2008.”

She added: “The next government must deliver a new deal for working people. They should implement popular policies from the campaign – like banning zero-hour contracts, pushing up the minimum wage and delivering a long overdue pay rise for nurses, midwives and all public servants.” O’Grady also said that any Brexit deal going forward should “go back to the drawing board” and “put UK jobs, decent wages and workers’ rights first.”

On the brighter side, the election was a win for inclusion in government, as the new parliament will include more openly LGBT members than any legislature in history: