Post-Brexit: UK labor market uncertainties

According to the latest Labor Market Outlook (Summer 2016), conducted by the Chartered Institute of Personnel and Development (CIPD) in collaboration with Adecco, British employers are being more cautious regarding recruitment and the retention of employees. Indeed, the report stressed on the uncertainties of employers faced to the possible leave of the United Kingdom from the European Union.

Due to speculations, as discussions around Article 50 have not yet been triggered, foreign professionals in the UK are worried about their job security. Many of them also have queries regarding their right to work in the country. One of the objectives of this survey was identify the concerns of British employers and determine the future of the labor market, especially for EU nationals.

Results thus suggest a possible labor market downturn regarding forthcoming recruitment in 2017, which can also lead to a rise in the unemployment rate. According to official figures, the unemployment rate is estimated at 5.7% in 2017 against 4.9% before the referendum. Growth rate, meanwhile, is expected to fall to 0.5% against 2.1% in early 2016.

On the other hand, some employers feel that foreign professionals could leave the UK following the Brexit. However, they claim not to be certain about possible effects. According to the report, one in three employers expect an increase in post-Brexit costs while others have already started cutting off investment in training and skills, thus reducing their ability to improve in terms of productivity. Note that to date some 1.6 million EU nationals working in the UK constitute 6% of the British labor market.

British employers were also asked about their relocation intentions in case the UK leaves the EU. While 74% of them say they have no intention of doing so for now, others already indicated their preference, namely, France, Germany and Ireland. However, one company out of six is currently considering either relocation or reducing its expansion overseas.

The CIPD and Adecco believe that British employers must understand the composition of their workforce and how the restrictions on foreign skills can affect their productivity in the future. For Adecco, foreign skills remain a prerequisite for the UK to remain open and competitive.