Brexit and freedom of movement: What it looks like from a hiring perspective
With the European Referendum less than a month away, Britain is closely divided into three camps; the innies, the outies, and the not-sure-what-it’s-all-abouties. For businesses, the main issue is how it will affect the bottom line. And one thing that is inextricable from the bottom line is talent. In many areas of the British economy, the talent pool is already not as buoyant as we might like it to be. In the tech industry, for example, the skills gap is having a real impact. These fast-growth companies need to access and recruit the best talent to keep Britain’s digital economy competitive and there are fears that Brexit will make this harder. Much of the uncertainty is focussed around potential changes with regards to freedom of movement, such as how to manage immigration and work permits for the millions of people from EU member states who are already living here, and how feasible recruitment from EU countries will be in the future.
How do other countries manage?
Some possible models for a post-Brexit Britain can be garnered from looking at how other non-EU European states interact with the EU. For example, Norway still has access to the single market and has signed up to freedom of movement, meaning that if the UK was to sign up to this option, little would change with regards to sourcing talent. Switzerland is also sometimes held up as a model that the UK may follow. It has a series of bilateral agreements and accord with the EU, covering many issues including freedom of movement. If the UK were to emulate its Swiss neighbours then, again, little would change. However the EU is already unhappy with what it sees as Switzerland enjoying the benefits of the EU in a piecemeal fashion, while taking on none of the responsibilities of full membership. It seems, therefore, unlikely that the EU will be particularly enthusiastic about supporting Britain in establishing a Swiss-style model. If the UK does choose to plunge into the great unknown and does not exchange allowances around freedom of movement in return for access to the single market, then it is possible that the EU nationals currently living and working in the UK will be in precisely the same position as non-EU nationals. That is, subject to immigration law and needing to negotiate visas.
The talent pool could widen… or shrink beyond recognition
If EU talent could no longer automatically work in the UK, this could have many different impacts. Optimistically, we could assume that hiring exclusively from the EU would no longer confer any real practical benefit, meaning casting the net wider could be a real possibility. In this scenario, we might see a net increase in talent coming into the UK. The world will be our talent pool, and as long as they meet requirements and can get the necessary visa, the best and the brightest, from anywhere can come in. In theory. A more likely scenario is that employers will go down the path of least resistance and hire from the UK only. I talk to SME employers all the time and there simply isn’t the appetite – or the capacity – to negotiate the often labyrinthine visa system. In practice, this will mean businesses having to settle for employees who may be perfectly serviceable but are never going to set the world alight. In fast-moving technology and communications businesses, this can’t be expected to do anything but stymie growth. It could also lead to a de-skilling of the workforce in the UK. Hot competition for the best jobs helps invigorate workers to keep on building their knowledge and skills - will this be the case when it is so much easier to be a big fish in a little pond?
The singular old man of Europe?
At the moment, the UK is the natural home for international businesses – especially those from the US – who need a base in Europe. If we leave the EU, this may change. A base in the UK will no longer offer the advantage of being able to tap into talent across the continent and it may make better business sense to set up shop in Paris, Dublin or Amsterdam – meaning Britain loses out on jobs and tax receipts. Another not often mentioned, but significant worry is how Brexit will affect the day-to-day lives of working parents, especially in London where an unsung army of au pairs and other childcare professionals from the EU helps to facilitate the careers of the people powering the economy. In the case of Brexit, it’s reasonable to assume that many of these workers will be unable to work in the UK. Indeed, for many people calling for the UK to leave the EU, the native population driving up wages by taking on these jobs is sort of the point. Whatever the economic arguments, even an issue as ostensibly small as this will have consequences, and possibly far-reaching unintended consequences. Many parents could find themselves on the wrong side of the already delicate childcare-offset-against-wages equilibrium. In the short term, at least, this could push working parents – in practice mothers – out of work and back into the home, with all the long term economic disadvantages that brings. If remedial action is not taken against this, we could see the talent pool contract even further as a whole subsection of the population finds working outside the home just that little bit less feasible. What will this mean for the economy? In reality, all these worries may come to nothing. The figures suggest that Britain will need to maintain a working relationship with the EU and that this will mean allowing freedom of movement. So it is probable that neither an in, nor an out vote will have a dramatic effect on our economy in the long-term, but that does make one wonder if we might, for now at least, be better sticking with the status quo. —
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