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Brexit Update: How Talent Mobility May Be Impacted 08.19.2016 | Laura Levenson

More than seven weeks have passed since the Brexit vote, and as much uncertainty exists today as on 23 June. For this post, I wanted to provide an update on my initial Brexit thoughts, overview the current state of affairs and try to determine the potential impact on global mobility.

Although the more dire predictions haven’t come to pass, there have been some unexpected initial reactions:

  • Mortgage and other interest rates have fallen in response to Brexit. More than one million borrowers with “tracker” mortgages (a mortgage comprised of a mixture of fixed and variable components) have benefited, and many lenders have also passed the falls on to other borrowers on variable rates. Those who want to take out fixed-rate loans have also seen rates fall.
  • After an initial sharp fall, the stock market has rallied strongly to levels higher than those before the vote.
  • The pound has lost more than 10% of its value against the dollar, down to its lowest levels since 1985. It has also fallen in value against the euro and currency experts expect it to remain at least 10% below where it was on 23 June, in the long term.
  • If economists are correct, imported goods –food, clothing, homeware, etc — will consequently get more expensive. This will increase COLA payments made to assignees in the UK, and therefore cause an overall increase in cost for UK assignments in the long term.

Anticipate Delays

Once Article 50 has been triggered, the UK will have two years to negotiate its withdrawal. However, UK Prime Minister Theresa May has indicated that she would not trigger Article 50 this year and has said she would not formally start the process of leaving the bloc until there was a coherent “UK approach” to negotiations. Once the process is triggered, negotiations must be concluded within a two year period and a request for extending the agreement needs the ratification of the 27 other EU member states. According to a variety of internal government sources, the infrastructure is not yet in place to handle the Brexit negotiations.

PM May could push back the timetable because her new Brexit and international trade departments will not be ready, sources in the City of London have told The Sunday Times. Elections on the continent, including those in France and Germany, could also delay Article 50 of the Libson Treaty being triggered.

Future of Talent Mobility

Still unknown are questions related to free movement which greatly impacts the future of corporations and their ability to move talent globally to meet the dynamics of business change and shifts in growth.

The future of UK citizens working in the EU depends on the kind of deal the UK brokers with the EU. Conventional wisdom holds that if the UK remains within the single market, it would almost certainly retain free movement rights, allowing UK citizens to work in the EU and vice versa. If the government opted to impose work permit restrictions, then other countries could reciprocate, meaning Britons would have to apply for visas to work.

With regard to EU nationals in the UK, the UK government has declined to give a firm guarantee about the status of EU nationals currently living in the UK, saying this is not possible without a reciprocal pledge from other EU members about the millions of British nationals living on the continent. EU nationals with a right to permanent residence, which is granted after they have lived in the UK for five years, will be able to stay, the chief civil servant at the Home Office has said. The rights of other EU nationals would be subject to negotiations on Brexit and the “will of Parliament,” he added.

The impact of immigration will be more significant, and the consequence could be a reduction in the number of permanent transfers to the UK. May has said she remains committed to getting net migration — the difference between the numbers entering and leaving the country — down to a “sustainable” level, which she defines as below 100,000 a year. It is currently running at 330,000 a year, of which 184,000 are EU citizens and 188,000 are from outside the EU; these figures include a 39,000 outflow of UK citizens.

A new survey from the CIPD (Chartered Institute of Personnel and Development), the professional body for HR and people development, and Adecco Group UK & Ireland, a leading provider of workforce solutions, indicates uncertainty in the labor market as employers slow decisions on hiring and investment. According to this survey, four in ten companies think hiring EU migrants will be harder over the next 12 months as a result of Brexit. At the same time, in this same survey, employers were also asked what information would be most helpful to their organization regarding the implications of leaving the EU. Roughly two in five most wanted information around employment law and regulations (45%).

The survey validates what Weichert has seen so far — a wait-and-see approach. Relatively few companies (10%) were concerned with moving workers within organizations across national boundaries. Nonetheless, organizations still need to understand the make-up of their workforce, and how restrictions on migrant talent may affect them. They need to mitigate risk by taking proactive steps such as adapting workforce planning strategies and continuing investment in training.

Ian Brinkley, Acting Chief Economist at the CIPD, advises well: “Whilst there’s no ‘one-size-fits-all’ approach for future-proofing against Brexit’s impact on talent mobility, there are steps that employers should consider. These include conducting a detailed audit of their workforce, mapping current and future skills gaps and investing in training and development.”

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Written by Laura Levenson

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Laura Levenson is Global Practice Leader with Weichert Workforce Mobility’s Consulting group. She has worked in management capacities for workforce mobility and Big Four firms, and is well-versed in bringing clarity to the most pressing global talent deployment challenges. She brings over 20 years of experience to her role and is a frequent speaker on the global mobility conference circuit.

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