“Many Australian firms have accessed the EU via Britain. With the uncertainty surrounding what a post-Brexit Britain will look like, I believe Australian firms will look to Ireland to fulfil that role.
Ireland is superbly positioned to attract that kind of engagement from Australian business. I see this as a great opportunity of how we, Australia & Ireland, can take advantage of what has occurred in Brexit.”
Following from my previous entry on the disastrous consequences of Brexit to the UK labour market, I wanted to take a look at the flip side of this and explore some of the positives. Unfortunately for those who might be seeking some good news for the UK on Brexit – there is precious little, at least as far as the UK labour market is concerned. Brexit is simply bad for employment in the UK except in certain niche areas such as government departments or regulators. For example if you are highly skilled in legal drafting or trade negotiations you may be able to charge a pretty penny for your services as the UK is going to need to hire thousands of new civil servants to replace the regulatory bodies, diplomatic departments and missions, and customs officers it will lose when it leaves the EU.
But over the other side of the English channel and across the Irish sea organisations and businesses are seeing some positives to Brexit, particularly in the service industries. A lot of businesses are moving some or all of their operations into EU states to keep a foot inside the single market. At this point a brief explanation of the single market is in order. Most people, even journalists and politicians, see the single market as an international framework intended to reduce trade tariffs to zero and allow frictionless trade, but it is far more than that. It is a set of regulations, rules, and standards which are overlooked by a judicial body, the European Court of Justice, which allows the free deployment and activity of goods, capital, labour, and services throughout a continent of several hundred million people. The single market is thusly something of a misnomer, it should really be called the single economy.
The UK is set to leave this single economy, which creates serious problems for the businesses that are based in the UK but operate across other EU nations. The natural consequence of this is that those businesses are going to move some or all of their operations out of the UK and back into single market territory. So, what does that mean for the world of HR and work in the EU?
In the simplest terms much of the manpower, knowledge and expertise present in the UK workforce is now up for grabs. While not all skilled workers are going to be looking to relocate from the UK there will be many that will. Whether for the higher standards of employment rights in the EU, better access to healthcare some EU nations have, better work/life balance, or simply for better weather there is now a pretty steady stream of skilled workers heading out of the UK. Let’s look at the reasons for this, and how this is set to create a wealth of opportunity for those who can exploit it.
Starting right with the referendum on EU membership itself, one immediate effect was the rather spectacular decline in the value of the pound. The impact of this devaluation depends which side of the fence you are on, but let’s focus here on the relevance to employment. For employees in the UK the pound devaluation essentially means that after your week of toiling away at work you’ve got less cash in your wage packet to show for it. The drop in the pound combined with inflation increases and increased cost of imported goods means you have less to spend on those little luxuries that get us through these cold winter nights. This is a prime chance for recruiters from within the EU to swoop in and poach the talent from the UK. Money is definitely not the key driver for most employees, especially with more and more people considering their work/life balance and seeking more flexible ways of working. But given the current trajectory of the UK both politically and economically, employees working in some sectors face years of uncertainty with potential restructures and relocations, along with increasing unpredictability about the security of their role. Whilst this is an awful situation for those in the UK it is also something EU recruiters can use to their advantage as not only will they be able to offer a competitive remuneration package but also can use the stability of the EU to sell roles to prospective recruits.
From a company perspective, the pound devaluation means that, relative to other countries, UK labour costs are now cheaper. While this might make the UK seem a good place to set up manufacturing (should the UK manage to negotiate low tariff access to other markets) it also makes the UK a less competitive place to actually work. This presents a problem if your company needs workers who have skill-sets in high demand in other, nearby countries and markets which can offer much more in terms of not only pay, but also benefits and job security.
Speaking of job security, this is apparently something that weighing a lot on peoples minds, and their fears are well founded. Most of the UK economy are service based industries. Unfortunately for the UK and its workforce, these are about the easiest sorts of businesses to move to greener pastures should they find things become unfavourable or difficult where they currently are. In the UK many of the financial companies are moving operations to Dublin, Frankfurt, or Brussels, and some companies are planning to move their entire operations out of the UK. Frankfurt is already preparing for the influx of financial services and is currently investing heavily to accommodate them. A report from Frankfurt Main Finance indicates that the increase in financial services sector will create not only 10,000 finance jobs, but also over 35,000 non-finance jobs within the city.
Businesses involved in manufacturing are also looking at closing factories and manufacturing operations in the UK and expanding operations they already have in EU states. Tata, the Indian company who own Jaguar Land Rover, have invested heavily in motor vehicle production in Nitra, Slovakia. If Brexit is handled poorly and the UK revert to World Trade Organisation rules JLR stand to lose a billion a year in revenue. Given that they’re already investing heavily in another EU nation, Slovakia, they might well decide to expand the production at that plant rather than maintain their UK workforce once the production run on current models of auto-mobiles expires, resulting in a lot of opportunities for engineers in Eastern Europe. Toyota and Nissan have also raised concerns over the lack of clarity within the UK economy.
For the EU this uncertainty in the UK market status represents a huge opportunity. Member states are already talking to businesses and offering incentives to them to set up in their country. The relocation of operations such as those of JLR and Toyota will not only provide the new host nation with fresh jobs within the respective industry itself, but it will also have a knock on effect on other industries such as construction and engineering as new facilities are designed and built. Businesses will also look to future proof their investment by creating central hubs of excellence which will increase the technological capabilities of the member state and attract more talent.
Another opportunity for the EU in is the relocation of the EU banking and medical agencies. The EMA alone brought 36,000 visitors to London per year, the majority of which were highly qualified professionals, EU civil servants, or representatives of large pharmaceutical companies who will be enjoying the benefits of a foreign cities hospitality. The decision has yet to be made on where these institutions will find themselves, but wherever it is will find an abundance of new business for local hoteliers, restaurants, taxis, and other such industries that profit from short term visits from wealthy individuals or professional officers of wealthy companies.
One very important part of the single market is the harmonization of recognised professional qualifications. The qualifications awarded by universities, colleges, and educational institutions in the European Union are recognized by all member states. This has always made HR’s job easier when selecting and recruiting candidates for roles, but it has also been a vital component of the education service sector for the UK, which was an attractive place to study due to English being the lingua franca of the EU. Post-Brexit this may not be the case. The obvious choice for prospective EU students who want to study abroad but in English is going to be Ireland, which is already considered one of the best places to study medicine due to its world class biochemistry and pharmaceutical sectors. Any expansion to study programs or increases in student intake will require new staff and potentially new buildings to designed and constructed. The increased student population will increase requirements of local infrastructure which includes everything from shops, libraries, letting agents to pubs, bars and nightclubs. In addition to the increased revenue brought in by the students themselves, this will expand the expertise available for various industries within the respective nations.
But all EU nations stand to gain from this. There are 30,000 EU researchers and scientists working in universities in the UK. As the current trajectory of UK politics seems set to make them feel less than welcome in their host nation, this represents opportunities for universities and research centres throughout the continent. We can expect many international companies and some of the more prestigious international universities to make a play for this talent, up to helping prospective medical, scientific, and engineering experts relocate to the country they’ll be working in.
In addition, the UK faces the potential loss of access to Horizon 2020. Horizon 2020 is an EU initiative which funds science and technology research. This initiative currently invests in a number of scientific projects in the UK. The Horizon 2020 project invests in scientific projects not only within the EU but also in other states, as long as they meet certain conditions. If, for whatever reason, this source of funding dries up for UK based scientific companies and it isn’t replaced by the UK government, they might well take their company and accompanying research elsewhere. Once again, the EU would be the natural destination for such companies.
So dragging this entry back to the world of human resources, what does it all mean? Well in practical terms this will not make much functional difference to how HR departments in EU states operate or the labour market of the EU. For a while now most EU nations have known about the benefits of immigration, and countries such as Germany and France have actively encouraged skilled migrants to relocate to their countries. What it does mean is that companies operating within the EU will have a wider talent pool from which to fish. Recruiters and HR departments may well be engaged in a feeding frenzy to take what talent they can from the influx of skilled labour leaving the UK. It also means that where continental EU companies previously had to compete with UK companies for talent they will find it becomes much less of an issue.
If you’re qualified in a STEM subject you’ll find your qualifications valued in the new opportunities that are already arising in the EU as a result of Brexit. And for those of you in HR who are looking to settle in another country or expand your horizons with a bit of travel, this represents a massive opportunity for you. Many of the organizations I’ve talked about here are going to be taking an influx of workers, EU or otherwise, who have been used to the UK employment model. If you know enough about the UK labour market as well as the labour market in your host nation you can be an asset in integrating and assisting newcomers to adjust to their new working environment.
So Brexit may actually present an opportunity for you, dear reader. Success, whether it is your individual success in your career, or the collective success in working to make your company great, depends upon the capability to exploit new opportunities as they arise. Some in the EU are already aware of this and are making their move now. Make no mistake, for people willing to look beyond the borders of the UK, Brexit presents such an opportunity.