Since the EU Referendum vote in June 2016, the CIPD’s Labour Market Outlook and Resource and Talent Planning surveys have closely monitored the impact of Brexit on employment and workforce trends, as well as market perspectives and expectations. The following digest is compiled from our most recent data and analysis to help employers remain alert to potential changes and sustain their ability to attract and retain people best-suited to their needs.

Overall employment

Despite early concerns about Brexit’s impact on employment, employment levels have continued to grow relatively sharply since the referendum to leave the European Union in 2016. While employment growth slowed in 2019, the labour market remains tight and the number of vacancies is still very high.

Impact on recruitment

As a result, the share of organisations reporting recruitment difficulties has increased for many employers. This is partly because the increase in the number of EU citizens that have come to the UK to work has not risen in line with the overall employment growth in recent years.

According to the CIPD’s Labour Market Outlook (LMO) report, the share of organisations reporting hard-to-fill vacancies increased from 56% in the Spring 2017 report to more than three in five (61%) organisations in the Spring 2019 report. In response many organisations are raising salaries, especially for key staff and new starters. According to the LMO Autumn 2019 report, 59% of private sector employers reported raising salaries to help offset their recruitment difficulties.

The tight labour market therefore seems to be putting upward pressures on wages for many workers. However, it is curious why employment investment in skills has continued to decline over this period.

Employing EU migrant workers

Given the shrinking supply of skills and labour, it seems that Brexit has not dampened employers’ interest in employing EU migrant workers. At the beginning of 2018, some two-thirds of organisations said they would continue to recruit EU nationals. The most common reason given by employers as to why they employ EU workers is that they do not consider nationality when hiring, but simply choose the best person for the job. For semi-skilled or unskilled roles, the main reason given was that employers could not find domestic applicants to fill those vacancies.

Ahead of the introduction of new migration restrictions in 2021, employers will need to ensure they have made the necessary preparations to ensure they continue to have access to the skills their business needs.

Addressing recruitment difficulties

In addition to increasing salaries to attract staff, employers can introduce more inclusive recruitment practices, build on their employee offer through non-financial benefits or enhance their brand. These will not only address hiring difficulties in the short term but make their organisations more attractive as an employer in the long run. Likewise, measures such as the provision of flexible working and clear career development will help organisations both recruit and retain the people and skills they need.

Workforce planning and development

The scarcity of available skills and labour, potentially exacerbated by further reductions post-Brexit once free movement comes to an end, means workforce planning and development should become a priority. To be able to respond in due time, employers need to assign greater urgency to undertake strategic workforce planning that will help identify the skills and knowledge required now and for the future, which in turn will help to narrow down the focus of the learning and development required.

Statistics from early 2018 showed that while 72% of employers have a dedicated training budget, growth in this area was comparatively slow. More than half (55%) said that leaving the EU has had no impact on their training and skills development investment, while 20% said it had caused them to reduce it. This shows that some employers are dialling back on development and training, at the very time they should be investing heavily to mitigate against the real risk of the current skills shortage worsening post-Brexit.

Interestingly, organisations that employ EU nationals were significantly more likely than employers that don’t recruit EU nationals to be investing in training and seeking to recruit from a wider range of under-represented or disadvantaged groups, such as older workers or those from minority ethnic backgrounds. This strongly indicates that organisations which employ EU migrants were typically doing so as part of wider efforts to find the labour they require and to build workforce skills, not because they were failing to invest in UK-born workers or looking to cut costs.

Perspectives on Brexit

CIPD CEO Peter Cheese, regional and international chiefs at the CIPD, business leaders and commentators provide their views on Brexit

Managing and communicating change

Managing and communicating change

In the context of change and uncertainty, it is vital for organisations to support and communicate effectively with their workforce and help build resilience