We can’t look in the future or know exactly what will come the moment Brexit will happen, but we can look back and analyse what has happened in the job market so far in finding and securing the right candidates for available positions in the UK.
How many EU citizens are there in the UK? The UK has a population of 63.7 million. 5.3 million are non-British and around 2.9 million (5%) of the UK population are citizens from the EU.
A new study published in August shows that the number of people available for new jobs is decreasing. The threat of Brexit has caused a “market decline” in staff for British businesses, forcing salary increases in several sectors. The business community – which has long feared the impact Brexit would have on its access to the EU’s workforce – warned Britain would suffer as a result. Business leaders are raising concerns about their access to the EU’s best talent once there will no longer be free movement of people.
The availability of workers suffered its biggest fall in a year and a half in July. It’s therefore important to find a way for the economy to flourish while the population growth will be reduced due to the ending of free movement.
According to the Recruitment and Employment Confederation the availability of both permanent and temporary staff fell sharply in July. The number of available candidates dropped while the overall demand for staff soared. As a result of this salaries for permanent jobs rose as well as a sharp increase in hourly pay rates.
The strongest improvement in permanent placements was seen in the Midlands, closely followed by The North of England. The weakest increase was seen in London. There are many EU citizens working and living in London and the capital of the UK is feeling the effect of Brexit the most. According to the report London is hiring for permanent roles at a slower rate compared to other parts of the UK.
In 2016 London had a population of 8,778,500. The 2011 census recorded that 2,998,264 people or 36.7% of London’s population are foreign-born (including 24.5% born in a non-European country).
There were sharp increases for permanent staff across all sectors. The biggest increase was seen in the Engineering sector closely followed by accounting/financial sectors and IT & Computing.
It’s quite clear that Brexit makes filling jobs harder as vacancies rise and candidate availability decreases. Of course, it doesn’t come as a surprise that the parts of the economy that rely the most on European workers are under even more pressure since the leave vote happened. Mainly because of the uncertainty if EU citizens are allowed to stay and what their rights will be when the UK officially leaves the EU. Many EU workers return home because of this.
It’s important to keep a good relationship with the EU. If the UK wants to keep their jobs market successful and vibrant it should be made easier, not harder, for employers to access the people they need.
UK Unemployment rate
Today (16-08-2017) it was announced that UK unemployment is at a 42-year low. Unemployment in the UK fell by 57,000 in the three months to June, bringing the jobless rate down to 4.4% which is the lowest since 1975.
The average weekly earnings have increased by 2.1% compared to last year. But with inflation continuing to run at 2.6%, real earnings fell by 0.5%. Despite unemployment being at a 42-year low real earnings continue to decline said Office for National Statistics senior labour market statistician Matt Hughes.
In the last months, many new jobs have been created in the construction, accommodation, food services industry and transport and storage industries.
Interesting is that the number of workers born in the EU still increases. But the annual rate has significantly slowed down.
The Brexit effect on the technology sector
At Hamilton Barnes we recruit in the technology sector, specifically focusing on the Networking industry. Therefore, we have analysed what has been said so far about the effect that Brexit might have on the tech industry.
The Technology sector, with its international focus, was a vocal advocate for the UK staying in the EU. But in defiance of the concerns, the industry has been thriving since the decision to leave the EU was made. Although Several leaders in the tech industry are raising their concerns about what Brexit could cause for the tech industry.
Russ Shaw, founder of Tech London Advocates and Global Tech Advocates, said: “The government’s confused messaging on immigration is increasing uncertainty and damaging the UK’s reputation as a destination for fast-growth businesses. Investors fear uncertainty, and we will not be able to continue attracting Europe’s brightest minds if we cannot guarantee that they will be welcome, and that their legal status will remain secure after March 2019 and beyond.”
One of the biggest concerns after the referendum from several experts was that they were worried that investors would rather invest in countries in the EU, leaving UK companies behind on investments. So far the prospects on that front haven’t been as extreme as the forecasts predicted.
In Fact, tech deals hit a record high in 2016. Separate research from London and Partners shows that more than £6.7 billion was invested in UK tech companies last year. However, after the referendum in June 2016 investments did slow down.
Attracting talent to the tech industry
The tech industry relies on talent from the UK, EU and the rest of the world. According to TechUK, one in six hires between 2009 and 2015 in the tech sector were EU citizens. Companies worry that Brexit would lead to a shortage of talent, with visas either being revoked or becoming more difficult to get. It’s important that the Government comes with a clear plan what a new visa system and the new immigration criteria will look like. This gives businesses the opportunity to better plan and continue to attract and retain people with the right skill set.
There is a concern that once Brexit happens in 2019 the UK technology sector might struggle filling jobs. There is a current skill shortage and STEM related degrees are not as popular as business and management studies, law, social studies and art and design degrees. Despite the Government’s efforts to promote STEM subjects at university, the tech industry relies on EU citizens to fill about 180,000 jobs, according to data from the Recruitment and Employment Confederation. If companies can’t find the professionals they need, they might have to move tech departments to other countries.
Depending on how the negotiations with the EU go, regulatory hurdles could get in the way of tech companies. The EU has been working on an initiative called the Digital Single Market. Which will allow the free movement of people and capital in the tech sphere. If the UK leaves the single market, losing access to this could inhibit the ability of UK tech companies to work seamlessly across Europe.
Uncertainty for EU citizens
Since the Brexit vote the future for EU citizens working and living in the UK has become very unclear. The Government came with a proposal. Which stated that EU nationals who have been living in the UK for 5 years would get a residency permit. But the EU wasn’t fond of this proposal. The negotiations are going slowly and nothing has been clarified yet. This goes for both EU citizens in the UK or UK citizens in European countries. All this uncertainty scares away EU citizens from coming to the UK and makes EU citizens leave the country. Not because the UK isn’t appealing anymore but more because moving countries is a big step. There is not much point in coming now and then having to leave again after a year. Professionals rather go to other tech hubs (I.e. Paris and Berlin) where they can build a future more securely.
Research by career website Hired has revealed that EU candidates who accepted initial offers from UK-based companies has dropped by 50 per cent since the Brexit vote. This is a worrying trend for an industry where there already is a skills shortage. A home-grown skills shortage means many companies are reliant on hiring talent from outside the UK. According to Hired, British companies offer non-UK nationals an average of 28 per cent more to get the job filled. The research has also found that British employers are less confident to hire non-UK nationals. Sending offers to non-UK citizens fell from 25% at the beginning of 2016 to 18% a year later.
As mentioned at the beginning of this article we can’t look in the future and nobody knows how Brexit will turn out. But it can be said that Brexit has caused both employers and employees wanting to take less risks.
Sources:
BBC News: UK unemployment stays at 42-year low
ComputerWeekly: UK IT community rocked but keeping calm in face of Brexit
Financial Times: Sharp drop in EU job applicants to UK tech industry
Independent: Brexit: Number of foreign tech job applications down 50% since EU referendum vote
City AM: Business leaders slam freedom of movement commitment as “disaster”
Telegraph: What will Brexit mean for the Tech sector?
Independent: Employers struggle to recruit staff as applications drop due to Brexit
City AM: Brexit blamed as employers struggle to fill staff vacancies