An Analysis of Brexit – Part 2: How should the HR Industry Respond to the Changing Labor Market

With the impending and proposed changes to the UK labor market due to Brexit, there are a variety of ways that HR departments will need to prepare themselves. The first, and most prominent, issue will be the potential loss of many low-skilled migrant workers. Many jobs that require fewer skills – and hence get paid less – are not seen as an attractive option for native-born British workers.

This is especially true when years of habits have set in and people perceive stigmas associated with jobs requiring fewer skills. It is also safe to assume that many people who have been born and raised in the UK would not be pleased with the pay rates for these kind of jobs, whereas workers originally from less developed economies may be happy with even a low paying job, if it provides them with an opportunity to relocate to the UK. The UK will need to develop a new system for bringing in foreign workers for these lower skilled jobs to ensure their organizations can afford the necessary labor and still have the same pre-Brexit production levels. With other EU countries still operating on an open-border basis, it will be interesting to see how this constraint affects the number of migrant workers still interested in working in Britain, despite the fact that their marketability would now be restricted to just one country.

Additionally, we are also going to see the war for skilled talent grow given fewer workers will be available for higher skilled jobs. HR departments are going to need to create new training programs to raise the skill levels of their current employees at a faster rate than previously seen. If jobs with higher skill levels become available in an organization, the only options are to either promote from within or recruit a new employee from outside of the organization. However, if there are no individuals ready to promote, and now there are also even fewer external recruits available, employees are going to need to train a current employee rapidly to ensure that productivity doesn’t dramatically change. With free movement of employees across the EU no longer available post-Brexit, the UK is going to see a dramatic decrease in job applications from EU countries that will probably be more similar in magnitude to applications seen from non-EU countries.

HR teams will undoubtedly be busy in the coming years, performing organizational audits to try to predict whether their post-Brexit workforce will be able to support their organizations. If they find that their organization will be deficient, they will have to join the frantic race for talent, along with all their competitors, to find new employees.

Regardless of Brexit, the European Convention of Human Rights (ECHR) will still govern the UK and the EU and we will not see many changes to the terms of basic employment and human rights at this time. This also ensures that all policies already in place that don’t affect EU employees will still remain in place. However, for the next few years, as no one really knows what all the prospective changes will bring, HR Directors and Managers will need to pay special attention to labor laws and employee rights to ensure they are consistently kept up to date and informing their organizations immediately of any changes that will affect them or their employees.

One way that many HR teams are already planning on counteracting and preparing for any drastic changes within their organizations is by prepping a variety of scenarios. It may prove useful for HR team members in the UK to have multiple brainstorming sessions where they can prepare for a variety of different possible and probable situations. By constantly asking “what if”, teams can start to strengthen their critical thinking skills and prepare for the worst-case scenarios. It is also important at this stage to have a clear understanding of who your EU and UK employees are, and how long they have been living and working in the UK.

Overall, the UK as a whole, and the Human Resources teams of its many organizations, are more than capable of handling these proposed organizational changes. There will be a natural period of transition for organizations that currently have EU employees that will require some risk mitigation and critical thinking. Whether this transition period will be completed by 2021 as proposed, or take 5-10 years is a question that will only be answered with time.

Generally, it will be important for HR Directors to pay attention to all of the changes with the UK labor laws and immigration process, but as long as the organizations are prepared for increased training and decreased prospective employee applicant pools, the organizations should be able to come through this process fairly unscathed.

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