As voting day draws near, we recap the employment ramifications for choosing to leave or remain in the EU
From immigration to employment law and pensions, the European Union referendum has barely left the national headlines over the last few months. With just four days to go until the UK decides whether to ‘Leave’ or ‘Remain’ in the EU, People Management rounds up some of the facts and fictions that have given HR professionals pause for thought during the campaign.
1. Uncertainty is harming the labour market
With the long build-up to this week’s vote, April’s introduction of the national living wage and the forthcoming apprenticeship levy, the labour market has taken some big hits in the past few months. Research from recruitment firm Manpower revealed that one third of UK retailers plan to limit their intake of new staff as they mitigate increased wage bills.
The Recruitment & Employment Confederation (REC) also reported in May that the use of temporary staff had grown sharply, with their seasonally adjusted index reading 59.1 in April, up from 56.4 in the previous month – the fastest growth in more than a year.
“Our members are telling us that employers are concerned about the referendum,” said REC’s chief executive, Kevin Green. “That is leading to a slowdown in the decision-making process for permanent hires and a significant switch to the use of contractors, temps and freelancers.
“We expect to see a pick-up in temporary and permanent jobs in July and August if the UK remains in the EU. If we leave I think there will be a lot of waiting and seeing. Employers may look to use more flexible resources until things become clearer.”
Read more: National living wage blamed for five-year low in hiring intentions among retailers; Employers opt for temps during Brexit uncertainty
2. An ‘out’ decision could have significant ramifications for skills
Industry leaders in sectors ranging from nursing and construction to video-game design and estate agents have all warned that a vote to leave the EU could leave Britain at risk of significant skills shortages, because of restrictions on immigration.
And they may have a point: research from the University of Oxford’s Migration Observatory unit has revealed that employers in certain industries would face real difficulties recruiting the right number of skilled workers through their usual channels if the UK left the EU. More than one in five EU migrants working in the UK last year were in the ‘distribution, hotels and restaurants’ sector – yet just 6 per cent of all employees in that sector earn enough to qualify for the Tier 2 visa that is required for non-EU labour migrants to move to the UK.
“It is clear that there are scenarios in which admission requirements for EU nationals could represent a substantial departure from the status quo, particularly if work-visa rules similar to the current ones for non-EU citizens were put in place,” said the report.
“There are currently 2.2 million people from the EU working in the UK, but not all of them will stay here in the long term and we need the opportunity to replace the skills they bring,” added James Hick, managing director of ManpowerGroup Solutions. “Britain today is a magnet for international talent, from finance to tech to the NHS. Leaving the EU will make it much more difficult to attract the brightest and best. To compete on the world stage, British businesses need the flexibility and free movement that EU membership brings.”
But the former director general of the British Chamber of Commerce, John Longworth, warned that the UK risks becoming a “low-wage, low-skilled, low-productivity economy” thanks to the EU’s free movement rules. He said that a number of large organisations had “given up” on training their staff, because of the “unlimited supply of cheap labour from the EU”. The UK’s current immigration policy, Longworth said, was “the worst of all possible worlds… we can’t get access to the skills we need because we can’t get access to the rest of the world and because the overall migration figure is too high”.
Read more: Four-fifths of EU migrants ‘would fail post-Brexit visa tests’
3. Leaving the EU may have a ‘limited’ effect on employment law
Campaigners on both sides of the debate have raised questions over the impact of the public’s decision on employment law, particularly in areas such as weekly working time limits, agency workers’ rights and some aspects of TUPE.
But, said Anthony Fincham, a partner and head of employment at law firm CMS Cameron McKenna, “there is a whole swathe of national employment legislation that incorporates EU rights and principles that will remain unaffected by Brexit unless, and until, those laws are repealed. A UK government would be unlikely to remove protections in the workplace against discrimination, or scrap the principle of equal pay, as its own legislation pre-dates its joining the EU.”
Read more: Brexit’s effect on national employment law may be limited
4. HR’s role in advising employees is still hotly contested
A number of UK organisations such as Siemens and JCB have publicly stated their intentions to recommend that their employees vote either to remain or leave on 23 June, but still more employers have been uncertain about whether or not to take an official stance. With 61 per cent of Europeans living in the UK feeling uninformed by HR about the potential changes to work policies resulting from a Brexit, perhaps it’s time for more open communication.
Geoffrey Mead, partner at law firm Eversheds, said there is no reason an organisation cannot tell its employees how senior leaders view the referendum, and can urge them to vote the same way. “A director has an overriding duty to act in the best interests of the company,” said Mead. “If he or she reasonably considers that the best interests of the company are advanced by, for example, the UK remaining in the EU, it is entirely permissible to publicly express that view, and to encourage staff to vote in agreement.”
Read more: EU employees ‘troubled’ by potential Brexit
5. There will be ‘economic consequences’ whether we’re in or out
The nation’s finances have been called into debate by both sides of the argument, with the remain camp warning that trade, GDP and pensions will be hit ‘hard’ if Britain chooses to exit the EU, while ‘leavers’ talk of ‘taking back control’ of how and where the country’s money is spent.
According to analysis from the Treasury, the average 50-year-old could be £335 a year worse off when they retire if Britain leaves the EU.
Pensions minister Ros Altmann said: “If there is economic uncertainty, markets don’t do well; if there is economic weakness, companies can’t do well – and that means the amount of money that can be put into pensions is going to fall.”
Meanwhile, chancellor George Osborne has warned of an “emergency budget” post-Brexit, which would include further public spending cuts and increased taxes to tackle a £30bn "black hole".
But, said Matthew Elliott, chief executive of Vote Leave, “if we vote leave, we can create 300,000 jobs by doing trade deals with fast-growing economies across the globe. We can stop sending £350 million to Brussels every week.”
Whether the UK will be able to use the money saved from this net contribution to pay for “such desirable items of expenditure as the health service” will ultimately depend on the performance of the economy, said John Fender, professor of macroeconomics at the University of Birmingham. One thing that’s clear, however, is that there will be “important economic consequences” for Britain whatever the outcome on 23 June, he added.
Read more: Government warns pensions could be hit hard by EU decision
6. The future of post-Brexit UK employment is near-on ‘impossible to predict’
Like so many areas of a post-Brexit scenario, “it is impossible to predict with any degree of certainty how UK employment may change”, said Chris Rowley, professor of HR at Cass Business School. “The most likely scenario is business-as-usual in the short term, as rules are unlikely to change dramatically in a sudden radical departure from the status quo. Even in the long term – and irrespective of the employment rights consequences of any new UK-EU relationship – so much employment regulation is now established as good practice that any attempt at unravelling it will not only be complex and slow, but be seen as regressive and counter-productive, and so undesirable not only for employees but also employers and politicians."
Read more: People Management’s no-nonsense, no-bias guide to the EU referendum