Brexit has many businesses in the UK on edge as politicians struggle over a possible final deal.
But what does it mean for the recruitment industry? We spoke with John Nurthen, executive director, global research, at Staffing Industry Analysts, for his take on what Brexit means for the recruitment industry. Nurthen is a recruitment industry veteran based in London.
Staffing Industry Review: What is Brexit’s impact on recruitment firms; what challenges are you seeing?
Nurthen: It’s certainly having some impact, but perhaps not as much impact as some people may have feared. The UK, as you will no doubt have noticed, is in a sort of a holding pattern at the moment and many things are still undecided. And, actually, for many staffing firms, uncertainty is not such a bad thing. Certainly, it might mean that there’s more demand for temporary workers although the downside, of course, is that there may be hiring decisions that are deferred.
You will see when any of the publicly listed UK staffing firms publish their results, there is normally a comment that there is an impact in the UK and that demand is not as good as it has been, but it’s not been terrible. Many UK staffing firms have still managed to find growth in the market. It’s not the best staffing market in the world at the moment, but it’s actually not the worst, either.
How might Brexit affect temporary workers themselves?
If anything, British temporary workers may find that in the short term, there’s stronger demand for their services while we actually try to determine what sort of Brexit we get. If we end up with a Brexit that seriously damages the economy, well, then everybody is going to suffer, including temporary workers. But I think the biggest impact is going to be on those temporary workers that have been sourced from outside the UK because there’s still some uncertainty about the status of those workers.
So, there will be many highly skilled technology workers, people working in the finance sector that come from continental Europe. Even though there have been some suggestions that there are guarantees for those sorts of workers, as I said, everything is still pretty much uncertain and nobody is absolutely sure what might happen.
What should recruitment firms do while politicians try to hash out a Brexit deal?
Stay away from watching the news, I would say, because it’s normally quite depressing. Every outcome that was possible about two years ago is still possible, even though we’re rushing toward the deadline where we are likely to leave. So, all that recruitment firms can do is to expect more uncertainty, and to plan for any eventuality. The range of outcomes are a hard Brexit where we leave with no relationship with the European Union and have to renegotiate all our customs treaties. Then there are softer forms of Brexit and the government, obviously, has its preferred form and there are a number of other variations which other people prefer that could still come to pass.
Over the coming weeks, it is likely the government could face more confidence votes. Theresa May’s position isn’t secure, so we may end up with a general election. Or there could be a second referendum There are, certainly, a lot of people lobbying for that although if there is a second referendum, it is unclear what the options would be. Are you still going to have “remain” as an option, or will the referendum just be about the various forms of leaving and what is the preferred option there? No Brexit is still a possibility as well even though it might be a narrow one! With all those outcomes it’s very difficult for any staffing firm to know for sure what to do. Although, if we were to assume it’s the hard Brexit scenario, the worst possible outcome according to most serious economists and the government’s own data, demand within the staffing industry is clearly going to be poor in the face of a deep recession.
It doesn’t seem likely that there’ll be much change in terms of legislation. Even though the UK has inherited some legislation from continental Europe, I think the government will have other priorities. So, I don’t see, for example, the Agency Workers Regulations being chopped out overnight, if chopped out at all. I don’t think there’ll be such a big legislative impact no matter what the outcome is.
How likely is a second referendum?
I don’t know. It’s difficult to say. There is some logic to it in that it could help to break the parliamentary deadlock but it’s difficult to imagine that, having had the referendum vote once already, politicians would actually turn around and say, “Thank you for your vote, we’re going to have another one.” There are a number of senior politicians lobbying for it, but it seems that it won’t get majority support. Only 10% of conservative MPs might vote in favor of a second referendum based on their previous comments and around 75% of Labor MPs — so unless opinions change radically, that’s not enough. Even though there’s a lot of people pushing for a second referendum inside and outside of parliament, it may just end up being a distraction — among all the other distractions!
Some people are looking at the second Brexit referendum as being the solution to the problem while others think it undermines democracy. In truth, the country is so divided that it’s just likely to lead to more serious dissent and dissatisfaction.
Any parting words of advice for the UK recruitment industry?
Stay flexible, I would say. As I mentioned before, be prepared for any eventuality. And, obviously, we’ll be putting out research to help you understand what’s happening in the UK market beyond Brexit. You know, there are obviously many other issues in the UK market, many other opportunities, many other threats as well. So, stay close to Staffing Industry Analysts as well. That’s my best advice.