Foresight Series: Brexit and Britain's workforce
On 3 November 2017, Financial Times | IE Business School Corporate Learning Alliance held a panel discussion with an invited audience of mainly HR and L&D professionals to discuss how Brexit uncertainty is affecting business.
The meeting discussed what has changed since a similar event held exactly a year earlier. Event moderator, Michael Skapinker, FT Associate Editor, was joined by Daniel Dombey, FT Brexit Editor, and James Blitz, FT Whitehall Editor, at the Financial Times. Below are some of the key conclusions:
Negotiation, legislation and administration. Brexit negotiations appear as murky as ever. Currently, the three main areas of focus are: the status of Northern Ireland (the UK’s future land border with the EU); Britain’s financial obligations to the EU (estimated at some €40bn-60bn); and the future rights of EU nationals. But negotiations are but one obstacle to a successful outcome. Legislation and administration are likely to be equally problematic given the UK government’s scandal-ridden precarious parliamentary majority, and the UK’s under-resourced, overwhelmed bureaucracy. For example, two years is deemed wholly insufficient to establish the capacity to manage trade through Dover port; border experts say that a minimum of 3-5 years is needed. Similarly, even a transition agreement that largely maintains the status quo would still require significant legal architecture to be in place.
Migrants in transition. One positive development has been agreement within an otherwise divided UK government for a transition period to avoid a so-called ‘cliff edge’ where everything suddenly changes on Brexit day. All sides in the UK government have agreed an additional two-years’ transition, though hardline Brexiteers are adamant that it should be no longer. Another important step has been consensus around the rights of three million EU nationals currently in the UK during such a transition period. However, there is no agreement around rights of those arriving afterwards as the issue is bound up with negotiations over a future trade deal which is likely to start in the new year. In short, most EU nationals will attain some kind of ‘settled status’ by the time Brexit happens.
Skilled v unskilled. The UK government says it wants to retain skilled EU workers, but hasn’t said whether post-transition arrangements would involve quotas, caps, preferential treatment, etc. Around half of the two million active EU workers in the UK are unskilled, and are prominent in the hospitality, construction and food processing sectors. While skilled workers may gain preferential treatment—such as lower earnings thresholds—there’s no clarity about what unskilled workers might expect. Such delays are likely to have practical consequences as ‘strawberries still need picking, and the elderly still need care, now’ says one participant. Britain’s National Farmers Union has expressed serious worries while EU nurses are reportedly already leaving the country. Several employers have noted departures of their Polish staff in response to Brexit uncertainty, falling sterling, and their growing domestic economy. On the other hand migration figures show a quarter million net increase. Conflicting stories notwithstanding, companies have said that they might begin leaving the UK if by March 2018 there is still no indication of the likely shape of a transitional deal.
Longer-term workers’ rights. Although employees might feel marginally more confident during a likely two-year transition phase, the longer-term framework seems as opaque as ever. A UK government white paper provides little practical detail. Even a simple registration process would create difficulties for a Home Office noted for its poor track record on new IT/immigration systems. It would be grappling with several different residency types: for those already in the UK, those who arrived during the transition, and those applying for British citizenship. Some concessions may be made to smooth the process and obtain parallel rights for UK citizens in the EU, such as European Court of Justice protection of rights, or longer transitions for family re-unification, etc. But such compromises will be limited by understandable resistance to EU citizens obtaining more rights than UK citizens.
Broader sentiments around immigration. Some of the immigration debate goes beyond the issue of EU negotiations. The British Prime Minister, Theresa May, in her previous role as Home Secretary, had long ago attempted to reduce net migration in the belief that Britain has already reached ‘saturation point’. Since 2004, immigrant workers in many sectors have soared from below 4% in several sectors to around 24%. Its reversal would create huge labour market disruption. The government might instead attempt to ‘spin’ policy to appear tough while remaining flexible on essential foreign workers. The absence of a clear government position might reflect these dilemmas, but also be attributed to deep disagreements within cabinet and the political expedience of leaving any decision to the last minute.
A chance to re-imagine the future. Optimists view Britain’s departure from the EU as an opportunity to rethink society’s whole approach to employment and the economy more generally. Brexit is seen by some as but one factor of several factors changing the world of work. These include new technology and robotics, skills training and apprenticeships, productivity and the living wage, and gender pay equality. Basically, what kind of post-Brexit economy and society we want to build in coming decades. Two particular visions stand out. The ‘focus minds’ idea holds that adversity necessitates a competitive response and that will galvanise productivity in the face of crisis. Critics disparage this euphemistically as ‘aspirational,’ especially given the UK’s political and fiscal weakness. A second post-Brexit future envisages a Singapore-style, low tax, lightly regulated economy, though the government (to say nothing of the Labour party opposition) has already ruled out diluting workers’ rights, as well as opposing food industry deregulation as part of any future trade deals. The post-Brexit vision of Britain’s economy evidently requires a lot more thought and debate.