As the day of the vote for the EU referendum regarding Britain’s membership approaches, opinion polls remain finely balanced with neither side appearing to hold a decisive lead. The possibility that Britons may vote to exit the union remains significant enough not only to warrant some discussion into what impact this would have on UK business as a whole, but more specifically what it would mean across the recruitment industry.
If the vote on the 23rd June returns a victory for the remain camp, it’s likely that there will be few far-reaching consequences and minimal tangible change for the trading environment that currently exists. It’s also entirely plausible that we’ll see a relief rally in the pound and UK stock market, but such effects should be relatively short-term. The more pertinent question at this point in time is what impact would a severance of our current membership have on UK business?
The European Union has existed in several different forms since the concept was first implemented shortly after the end of WWII, and a decision by Britons to leave could impact the recruitment industry in several ways. With little attempt so far from either camp to specifically outline the possible implications for this sector in the event of a Brexit, the best we can do at this point in time is examine the current market climate and attempt to balance the pros and cons for both campaigns.
Arguably, the core benefit of ending the terms of the existing relationship is the reduction of European-imposed red tape. In the event of leaving the EU a greater level of independence relating to employment laws would likely arise, in conjunction with the alleviation of the present substantial regulatory burden from Brussels. With the UK Government’s own regulatory Impact Assessments (IAs) showing the cost of the top 100 EU-derived regulations to the UK economy coming in at £33.3bn per year, this is seen by many as the strongest business-led argument for voting to leave.
Whilst a reduction in EU-derived employment laws would be gratefully received by recruitment companies, in all likelihood there would be little lasting change in the event of a Brexit as ultimately similar restrictions would likely be imposed by UK laws in due course. Another consideration that should be highlighted here – and one which is quite possibly the biggest threat surrounding the whole referendum – is the uncertainty that has arisen since a date for the vote was set, firstly due to the unknown outcome of the vote itself and secondly from the unknown business environment that would exist if the Britons vote to leave.
The uncertainty relating to employment laws if the UK does leave the EU is high, and it’s unrealistic to assume that anywhere close to the £33.3bn could be recouped outside the union as the UK may very well come under retaliatory EU trade pressure to maintain employment rights, especially if they are seen to be unfairly undercutting their continental counterparts for a competitive advantage.
Uncertainty is also prevalent in another key area that’s likely to be of even greater concern to recruitment companies. Whereas the uncertainty regarding employment law is with respect to how much improvement would be seen, the uncertainty relating to the new levels of geographic mobility in the event of a Brexit contains much more downside risk. For example, between April 2014 and March 2015 the UK’s 20,700 yearly cap of skilled migrant applications was reached almost every month. Within the recruitment industry, geographic mobility is of the utmost importance and herein lies the greatest risk to the sector should the leave campaign prevail. With EU residents currently being able to freely move through its members countries, skills required and job opportunities are presently matched far more seamlessly than would be the case if subjected to the skilled migration cap.