With the triggering of Article 50 on March 29 one of the biggest concerns for HR leaders is the fate of EU citizens already working in the UK, of which there are about 2.2 million.
Amendments to the Brexit bill that guaranteed their right to remain in the UK were rejected as it passed through parliament and the House of Lords last month, meaning their long-term status remains unknown. With this overhanging uncertainty, how many people will vote with their feet and leave the UK for good, exacerbating skills shortages?
Quantitative and anecdotal data suggests this is already happening. Record numbers of foreign nurses have quit the NHS since the referendum and polls suggest around 60% of European doctors are considering doing the same. Industries employing high numbers of EU nationals, such as hospitality, food manufacturing and construction, are also particularly concerned. David Frost, OD director at Total Produce, says he knows “from first-hand experience” that many who have built a life in the UK are considering other opportunities. “They are starting to put themselves out there and it is a risk,” he adds.
Kevin Green, chief executive of the REC, says he is “getting emails from members every week”, concerned about filling positions without EU workers. “We found when people went home for holidays a percentage didn’t come back,” he says, adding that the devaluation of the pound has not helped. “The longer we leave it without clarification the worse it will get,” he adds.
Data from LinkedIn suggests talent gaps connected with Brexit will soon begin to bite: the number of EU professionals looking at UK jobs has dropped by nearly 20% since June.
Marcin Czyza, a Polish national living in Amsterdam, is taking advantage of the increased appetite from EU citizens to consider leaving the UK. In the months after the referendum he set up Expat Exit, a website that connects European workers with jobs elsewhere on the continent. He has more than 1,200 candidates signed up and several European companies (including Hungarian oil and gas firm MOL), which see the opportunity in potentially poaching talented people from the UK. Czyza predicts once Article 50 is triggered “there will be a brain drain in the UK”. “I don’t think it will be a huge trend at the beginning, but it will be continuous,” he adds.
Polish Expat Exit user Michal runs an energy trading start-up in the UK but is considering moving back to mainland Europe. “Most people are waiting to see what happens but my friends are asking themselves questions and considering options,” he says. “It is already becoming more difficult to find job opportunities in the UK and there are more attractive places where the exchange rate is stronger.”
Arguably all this uncertainty means the role of HR becomes even more important, with a critical focus on retention and workforce planning. “It’s all about how you treat people. If they feel valued they can live with uncertainty,” says Nada Kakabadse, professor of policy, governance and ethics at Henley Business School.
“The immediate issue is how companies are looking at their talent mapping,” says Jon Addison, head of talent solutions at LinkedIn. “Where is your talent coming from? Where is there shortfall and where could you look? See this as a catalyst to think differently.”
Jon Dawson, HR director at hotel Mandarin Oriental, employs mainly EU nationals, with Brits making up only 20% of his workforce. He says the main focus for HRDs should be retention. “Hospitality is known for having high turnover and Brexit could mean talent becomes even harder to come by,” he adds. “But Brexit may actually make hospitality organisations work even harder to retain and better engage talent, reducing turnover rates.”
He also believes HR has a role to play in supporting EU employees become British citizens.
“We have seen a large increase in colleagues asking for support in ensuring they have the appropriate documentation to secure their working status in the UK,” he says. Jonathan Beech of specialist law firm Migrate UK advises HR leaders to get ahead of any changes to immigration laws. But he warns applications are now taking an average of six months to process because of rising demand.
Beech adds we will “undoubtedly” see changes to immigration laws, predicting the potential introduction of a work permit-style scheme to limit EU migrants entering the UK for the long term without a job offer. “Employers may have to abide by the Resident Labour Market Test rules, currently used for non-EU citizens, when recruiting EU workers, and also they may have to apply for an extension or separate Sponsor Licence, which could come with additional costs,” he says, adding that April’s Immigration Skills Charge will increase costs.
Byron Hamburgers people director Mike Williams recalls the time before freedom of movement when hospitality and similar industries were mainly staffed by Australians and South Africans on working holiday permits. “You’d get someone brilliant for a year or two and then they’d leave,” he says.
“It was a much more transient workforce. When EU nationals started coming over there was a cultural adaptation for the service sector. We’ve worked hard to move those people up the career ladder and invested a lot in training.”
A more “austere” immigration approach from government will mean his industry, and many others, will need to focus on attracting UK workers. But this is not easy: Pret a Manger people director Andrea Wareham told the House of Lords Economic Affairs Committee recently that only one in 50 applications it receives are from British nationals.
Green is concerned that the government’s “number one priority is immigration”. “The government is only interested in getting control of the border,” he says. “If there’s a visa or work permit scheme,who is going to pay for it? The onus will be on employers.”
He adds that responses to talent shortages will include automation, outsourcing, rising wages, increased poaching and more outreach to the unemployed. “That will be part of the solution, but it will never be enough to solve the problem,” he adds. “And it won’t resolve the fundamental problem of not having the people to do the jobs.”
As Green says: “It’s going to be an interesting two or three years. For HR the challenge will be huge. There may be nothing to react to right now, but there are lots of things HRDs could be doing to get ahead.”