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How Hard-Brexit Could Affect Employers and Expat Employees in the UK

As Boris Johnson becomes the new prime minister of the United Kingdom (UK) on 24  July 2019, the UK's rhetoric and push for a no-deal Brexit increases.

With his election, an avowed Brexiteer is in charge of the UK government for the first time since the 2016 referendum that triggered the UK's exit from the European Union (EU). This event marks a sharp turn in the relationship between the UK and the EU. Mr. Johnson has pledged to secure a new Brexit divorce deal with the EU to deliver Brexit on the current agreed date of 31 October — even if the bloc's leaders are unwilling to renegotiate the deal. Therefore, Mr. Johnson's promise to deliver Brexit "do or die" could lead to a no-deal Brexit.

His hard-line poses an end to the era of uncertainty that has reigned throughout Theresa May's government. However, it also raises several questions for global employers and expat employees in the UK.

What Does Hard-Brexit Mean For Employers?

Immigration played a central role in the Brexit campaign and Boris Johnson has been vocal about his will to remake the UK’s immigration system. The skills-based proposals put forward by the former prime minister Theresa May in December 2018 have been largely rejected by Mr. Johnson. Instead, he suggests a stricter points-based system that is geared towards attracting skilled migrants with a firm job offer and a set level of English language, among other requirements.

This plan has generated worries among many companies in the UK that are already experiencing skill shortages, as unemployment in Great Britain is at its lowest level since the mid-1970s. Furthermore, figures released by the Office for National Statistics (ONS) in May 2019 show that long-term immigration to the UK for work has decreased since 2016, the year of the Brexit vote, mainly because of a decline in EU arrivals to the UK — a situation that could further deteriorate under a hard-Brexit scenario.

These figures add weight to fears of a potential skills drought. A group of business and education bodies called on the new prime minister with proposals to relax the suggested points-based scheme to help avoid “cliff-edge” drop off in recruitment looming after Brexit, highlighting that without the ability to access international talent, many of the UK's world-class sectors are at significant risk.

These concerns match the results of a recent poll that the Coleman Parkes research firm conducted for LinkedIn about the impact of Brexit on the Human Resources (HR) sector over the past 12 months, which shows that 65% of the recruiters and HR professionals have never found it so hard to find and hire qualified employees. About half of respondents said they were raising salary offers to recruit the right people inside the UK or boosting benefits.

The skills drought represents a concern for employers across different industries in the UK. However, employers from the financial industry, the biggest economic sector in the UK, could be among the most heavily affected by a no-deal Brexit. According to a study by TheCityUK, one in four staff in the finance sector are non-UK citizens.

While significant uncertainties remain, one thing is for certain — the results of the Brexit negotiations will have significant impacts on employers as they assess how best to access global talent, where to locate their businesses, and how to move people most efficiently throughout their global operations.

What Are the Implications Of Hard-Brexit On Expat Employees?

More than three million European citizens based in the UK and approximately one million British citizens living across the EU have been in limbo since the Brexit referendum in 2016.

Former prime minister Theresa May had consistently maintained that securing their status was a top priority for her government. However, concerns are likely to increase within these two groups, as a change of government might mean a change of stance.

Data show that Britain is increasingly losing its appeal as a place to work and live as a result of Brexit. According to a 2017 KPMG study, 35% of EU nationals living in Britain indicated that they were considering leaving the UK.

This downward trend is also reflected in the findings of the InterNations Expat Insider 2018 survey, which shows that the UK is now ranked in the bottom 10 expat destinations (down 5 places since 2017, and 26 places since 2016). Great Britain also slid in a global survey on fostering and attracting talent, falling to 23rd place out of 63 in IMD Business School’s annual World Talent Ranking report.

Furthermore, LinkedIn data and analysis of its members’ job views show a noticeable drop in the UK’s share of EU job searches since the Brexit vote, from 34.3% in the first quarter of 2016 down to 24.7% in 2019.

These statistics confirm that the international talent drain is already a reality in the UK. While the numbers of EU employees moving to the UK have already decreased, the UK might become a less-attractive destination for global talents, if a hard-Brexit rhetoric prevails.

More Disruption to Come?

As the final Brexit deadline is fast-approaching, it is crucial that the UK government puts in place measures to sustain employers in the UK to ensure companies can maintain access to international talent, which is an essential element to build a successful economy that is open and attractive.

With the global talent market destined to change in light of a hard-Brexit, HR and global mobility teams need to keep a close eye on the development of migration rules after Brexit and gain competitive advantage in dealing the complexities of a post-Brexit workforce.

 

References

Financial Times. 2019. A Brexit Storm Has Already Hit and Employers Are Paying.

The CityUK, EY. 2018. The UK's Future Immigration System and Access to Talent.

Office For National Statistics, 2019, Migration Statistics Quarterly Report: May 2019.

KPMG. 2017. The Brexit effect on EU nationals.

InterNations. 2018. Expat Insider 2018.

IMD. 2018. IMD Business School’s annual World Talent Ranking report.