With the vote to stay or leave the European Union just over a month away, the opposing views on whether we should Brexit are in full swing. Each poll seems to report that a different side will win and by a variety of different margins. Major figures in the global political-economic arena have continued to warn of the detrimental effects on the UK if we exited, pointing to the impacts on trade and the wider economy, whilst the “vote to stay” campaign continues to counter and issue their own predictions.
In truth, no one will know what the true impact will be until long after the 23rd June – presently it is all conjecture. However, we do know that the uncertainty around whether or not there will be a British exit is currently creating a huge amount of uncertainty amongst business leaders, which in turn is having a cooling effect on the job market.
The CBI have recently reported that the Brexit uncertainty is having a “tangible impact” on spending plans and “economic signals are mixed – we are in an unusually uncertain period”. Deloitte have drawn similar conclusions from their quarterly report of CFO’s where they found 8 out of 10 British CFO’s felt political uncertainty was their main cause for concern. Interestingly, Deloitte found the hiring plans of CFO’s have drastically reduced with only 18% having plans to hire, down from 47% in Q3.
The impact has also been seen directly in the recruitment market with Indeed, one of the UK’s major job sites, seeing a 9% decline in job openings in April. This figure has to be appreciated in light of an extended Easter period which historically always impacts on the hiring plans of businesses, although this is unlikely to solely account for a 9% decline. At PageGroup we are also feeling the impact, as recruitment processes are taking much longer to complete, many vacancies are being postponed or cancelled during the recruitment process, and briefs are frequently changing. We are seeing a progressively risk adverse attitude to hiring during this period of uncertainty against the backdrop of a longer-term trend of steadily increasing cost of labour over the last eight years, according to the CIPD due to increased legislation. This perfect storm of conditions affecting the labour market has resulted in many business leaders absorbing the workload rather than hire additional resources.
Interestingly, what we have not seen at PageGroup is uncertainty creeping into the candidate’s confidence to enter the labour market. Despite a decline in client activity we are still seeing candidates keen to explore opportunities, take risks on new roles and push for progression. Whilst we are getting calls from clients putting their candidate search on hold, we are not fielding calls from candidates to put their job search on hold – if anything, short-term talk of a Brexit is nothing to the positive momentum that has been built over years, not months, of post-recession economic growth.
Candidates are so confident that we have seen an increasing number resign without positions to go to if they are unsatisfied with their development and prospects in their current role or company. Whilst Brexit is putting companies off hiring, it is not putting candidates off looking.
If investment guru Warren Buffet is to be believed, with his often quoted (and few could argue unsuccessful) strategy of “being fearful when others are greedy and greedy when others are fearful”, now could well be a great time to recruit. Aggressive strategies to retain good staff will continue post Brexit whatever the outcome. However, with less competition for the best candidates, logic dictates that there may never have been a better time to capitalise on a short-term dip in demand in a market not lacking in supply.
I suspect the pattern shown during last year’s general election will help guide the outlook for the labour market post the Brexit vote. The challenges we are now finding are identical to those that the run up to the election brought. Once a party was elected the labour market became saturated with employers looking to hire as business leaders looked to adapt their organisations to a change in political agenda and the return of certainty. I believe post referendum that we will see a huge demand for top talent in the labour market, which the market will be unable to support. Thus, intensifying aggressive retention strategies, driving up salaries, increasing the time taken to recruit and reduce the number of candidates available. Perhaps now is the time to be greedy and recruit top talent whilst others are fearful.
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