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How Will Brexit Affect the Job Market?

It’s a question that’s been asked on numerous occasions, but as we edge closer to the Brexit deadline with a new Prime Minister in tow, dynamics begin to change.

Newly ushered into Downing Street, Boris Johnson now takes the helm of the UK as we prepare for yet more Brexit negotiations. Johnson has made it clear from the off that he is prepared to leave the European Union without a deal, which inevitably throws the future of Britain into further disarray.

In an interview with Conservative Home, Mr Johnson said every member of his cabinet would have to be ‘reconciled’ with the decision to leave on the 31st October- with or without a deal.

Yet within moments of his new appointment, the EU have already expressed their distaste with Johnson; European Union commissioner Vytenis Andriukaitis stated that politicians such as Johnson were responsible for undermining democracy with ‘cheap promises, simplified visions, and blatantly evident incorrect statements’.

It’s safe to say that this isn’t the most of encouraging starts for Johnson. With the livelihoods of so many citizens resting upon his shoulders, the lack of positive negotiations or solid exit strategies are causing grave concern for businesses, employees, and the economy as a whole.

So with our current political climate in (yet further) turmoil, what can we now expect the future to hold for the UK and its job market, and which changes in legislation will prove the most disruptive to business?

Immigration and skills shortages

Brexit promises significant upheaval to current immigration policies, which brings relief to many who voted in favour of Brexit in 2016.

However, the impact of this change in legislation promises to hit corporations hard. Freedom of Movement allows British citizens to visit and work in other EU countries by simply presenting their passport on arrival, and also allows EU nationals into the UK with ease. But when Brexit comes into play in October, this right will be revoked. Business leaders are therefore urging the Government to relax immigration policies to protect organisations from potential staffing shortages, which have already been on the rise since the initial vote to leave.

Transport, IT and construction sectors have long been reliant on non-UK workers to fill job vacancies, and the lack of applicants for roles in the health industry has already prompted the NHS to warn that a decrease of EU workers could begin to put patient safety at risk.

At this stage, the Government are yet to unveil solid plans as to how EU nationals will apply for work or residency in a post- Brexit Britain, which has raised concerns regarding the plight of the EU workers that the UK ultimately depends upon.

Research conducted by the CIPD found that 44% of employers experienced increased difficulty in recruiting candidates during 2018, and another 34% faced a similar challenge in retaining staff. Through a combination of strong labour demand, low unemployment and a dramatic 95% fall in EU nationals joining the UK workforce between 2018 and 2016, recruitment firms are facing significant pressure.

As such, The Confederation of British Industry (CBI) have been asking the Government to reconsider their migration targets and continue to allow visa-free entry into the UK for EU citizens who can make a positive contribution to the economy. Time will tell if this will be an option considered by Johnson and co further down the line.

Big businesses are leaving Britain

The Institute of Directors (IoD) has warned that 29% of firms in a survey of 1,200 members believed that Brexit presented a significant risk to their operations in the UK, and had either moved part of their businesses abroad already or were planning to do so in the future.

Businesses including Honda, Barclays, Aviva and Nissan have already started this process, leaving thousands out of work.

Even home-grown companies such as Dyson announced earlier this year that they will be moving their headquarters overseas; the company have stated that they will be relocating to Singapore to ensure that the business is ‘future proof’. This comes after Sir James Dyson, inventor and outspoken Brexiteer, called on the Government to leave the EU without a deal.

While some organisations have not explicitly stated that the relocation is down to Brexit, the weakening of the pound and the disarray surrounding Britain’s future is clearly a concern for businesses. This will more than likely be the tip of the iceberg for the UK- once Brexit (finally) kicks in, there could well be more, smaller companies that decide to move elsewhere.

Edwin Morgan, the IoD’s interim director general, stated ‘While the actions of big companies have been making headlines, figures suggest that smaller enterprises are increasingly considering taking the serious step of moving some operations abroad. For these firms, typically with tighter resources, to be thinking about such a costly course of action makes clear the precarious position they are in’.

Tariffs

A potential no-deal Brexit will also cause dramatic change to our current tariffs. Earlier this year, the Government published details of the UK’s temporary tariff regime for a no deal, which has been designed to ‘minimise costs to business and consumers while protecting vulnerable industries’.

The World Trade Organisation (WTO) impose certain constraints upon tariffs- members of the WTO have ‘schedules’ which mainly consist of lists of tariffs that they promise not to exceed. Generally they must apply the same tariffs to goods from all members, subject to certain exceptions. And most significantly, they can also reduce or eliminate tariffs on goods from countries which they have a free-trade agreement with.

Johnson has argued that when the UK leaves the European Union, businesses will still be able to continue tariff-free trade with Europe under an obscure trading law known as Gatt 24. This law in theory would allow tariff-free trade for up to ten years while a permanent trade deal is negotiated.

However, the WTO have dismissed Johnson’s Brexit plan for business, stating that he was wrong to suggest that the UK is free to hold a tariff-free trade deal with the EU following a no-deal Brexit.

WTO director general Roberto Azevedo stated that if the UK left the European Union without a deal, ‘you could expect to see the application of tariffs between the UK and EU where currently there are none’.

In essence, standard WTO tariffs will therefore cost businesses far more than their current rates, which will pose as a particular problem for imported and exported goods. Not only will costings go up for goods, but the time it takes to import and export could take longer if checks and regulations are imposed by the European Union, which they are well within their rights to do.

 

Currently, Britain’s economic landscape looks bleak at best. Given the complete lack of direction of the Government, it’s hard to say for certain how badly the job market will be affected. Many businesses are approaching Brexit with a steely optimism, but with legislation set to change for immigration and skills shortages already becoming an issue pre- Brexit, the next few months are going to be a testing time for employers.

However, not all is lost. If Johnson and co pull their fingers out, the Government can create a deal that ensures immigration policies and tariffs are effectively tailored to minimise disruption, and continue to attract both high and low skilled migrant workers to the UK.

So essentially, it comes down to this. Do you trust Boris Johnson to deliver Brexit? We’ll refrain from answering that ourselves- feel free to share your views by popping a comment below.

By |2019-08-08T16:34:45+00:00July 25th, 2019|Business, Business News, Employment News, News, Politics, The Economy|0 Comments

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