Businesses struggling to recruit because of Brexit
The UK jobs market remains strong but Brexit spells trouble ahead. As well as making the UK’s labour shortage worse, Brexit is also making businesses more hesitant.
There’s good news and bad news In the latest jobs market report commissioned by the Recruitment & Employment Federation (REC). First the good: the data for July shows permanent placements at a 27-month high and temporary placements at a two-and-a-half year high. This is certainly supported by recent employment figures from the Office for National Statistics, which shows the employment rate in the UK remains at a record high.
Now for the not-so-good news from the report: the availability of both permanent and temporary workers continued to fall sharply last month. In a statement about the report, REC chief executive Kevin Green said “it’s clear that employers are having to work even harder to fill jobs as vacancies rise and candidate availability shrinks.” Green added the labour shortage was apparent across different sectors and varying levels of skill requirements.
Industries across the UK have long called on the government to secure the status of EU citizens already in the UK. Uncertainty about future status and anti-immigration sentiment has been reported as key factors in workers considering leaving. Both are also factors reported in making Britain less appealing to workers considering migrating to the UK.
Brexit uncertainty also making businesses hesitant
There was worse news in REC’s report for London, where the pace of hiring, although growing, was at a slower rate compared to the rest of the UK. Green attributed this to the “Brexit effect”. In similar comments to those made recently by Bank of England governor Mark Carney, Green noted that Brexit uncertainty was making businesses more hesitant. This was particularly apparent in the financial services sector, which he noted is “a crucial part of the London labour market”. Green said businesses “are not hiring in their usual quantity as the uncertainty caused by Brexit makes them hesitant”. He further highlighted the importance of the UK’s relationship with the EU to employers saying we needed to “make it easier, not harder, for employers to access the people they need”.
We can’t ignore the importance of our relationship with the EU to employers.
If we want to keep our jobs market successful and vibrant, we must make it easier, not harder, for employers to access the people they need.
Kevin Green, REC chief executive
You can see more from REC’s report at rec.uk.com.
In the Bank of England’s inflation report published last week, it said Brexit is weighing on business decisions with firms delaying investment plans and also considering relocating activity or refocusing investment outside the UK.
But this isn’t just about uncertainty over what the future trading relationship will be between the UK and the EU. As we reported in a previous article, a growing labour shortage also threatens investment in the UK. The danger is that if businesses don’t believe they can access suitable workers in the UK, they could choose to invest somewhere they can.
Indeed, UK farmers are already considering moving some of their operations to the EU if they can’t secure a supply of labour in the UK. Speaking to Reuters, fruit farmer Tim Chambers said “if we don’t get a secure supply of labour, we will have to adjust the size of our business and restructure to make us more efficient in the new economic situation and look to produce product abroad”. However for some smaller farms, relocating may not even be an option. Reuters reports British Summer Fruits chairman Laurence Olins saying “if there is no labour, most of the businesses will close”. And the news agency also quotes farmer Nick Ottewell who said “the worst-case scenario is that we don’t have enough people, and then we don’t have a business”.
So whilst the UK jobs market remains strong, Brexit spells trouble ahead. Already a factor in the country’s growing labour shortage, this in turn could lead to businesses moving out of the UK or closing altogether.