So now that the vote is done and the electorate has had its say, what does a leave vote mean in the short, medium and long term?
Well the short term is probably the easiest to predict. Volatility in the markets. Political upheaval in the UK. Probably political upheaval in the EU too. But in legal terms, no change at all at the moment. We can all continue to do business as we have for what for most of us has been all of our working lives, for now.
The first “legal” step is likely to be utilising Article 50 of the Lisbon Treaty to start the process of ceasing EU membership. That could happen as soon as next week. It might not happen for several months. For the UK, there may be a benefit to starting negotiations before it presses the Article 50 button, but it’s unclear at this stage whether the EU would be open to such a tactic.
And then, in the medium term, two processes will probably run concurrently:
- The negotiations to establish how we get out; and
- The negotiation to establish how we will continue to trade with EU members or the EU generally moving forward.
- The first set of negotiations will revolve around how we unravel 40+ years of shared legal history. Which EU laws stay and which go? How will we handle the fact that the UK has many expats living and working in the EU, just as the remainder of the EU has a number of expats living and working in the UK?
- The second will cover what our future trade might look like. Some of the likely outcomes, could be:
- Becoming part of the European Economic Area like Lichtenstein, Norway and Iceland. If we followed this route, we’d remain bound by some EU legislation and be required to co-operate with other parts of EU legislation but free movement of goods, services and people would continue in a manner fairly consistent with how it does currently.
- Become part of the European Free Trade Area, like Switzerland. Theoretically this would result in less EU law being retained but in order to enter into bilateral trade agreements with EU states, we may have to make a number of concessions in retaining EU law. Adopting this model is likely to have some impact on the movement of goods, services and people, but probably not a huge difference.
- We enter into a single free trade agreement with the EU, much as Canada has. This would have the greatest impact on movement of goods, services and people.
And the two processes will have to run side by side because we cannot answer what stays and what goes without answering what future trade agreements look like.
And the long term? We just don’t know yet.
So what does this mean for the recruitment industry – a business sector very literally tied in to the movement of people.
Our industry has been subject to a succession of legal changes in recent years, which really started in earnest with the Conduct Regulations and is ongoing now with the IR35 consultation for public sector workers. We’ve seen enormous legal change in the industry in the last 15 years, much of it unpopular.
But actually of all those changes, really only AWR can be put squarely at the door of the EU. The EU didn’t mandate the Conduct Regs, or the Managed Service Company regulation, or the Pensions regulation or the Intermediaries legislation, or the current changes to IR35. Our own UK governments down the years have been responsible for those. So like them or dislike them, there’s no reason to think that leaving the EU will make any difference to any of these pieces of legislation. So in the short and medium term, will it be easier to do recruitment business? No. But it won’t be harder either. The long term we can’t predict until we know what will happen in the next two years.
And then what of the people themselves? All the UK nationals working abroad, and all the members of other EU states working here? Will they be able to continue working there or here as applicable? Well in the short term, definitely. And only once negotiations are underway, will we have any idea what the future would look like. If we look at any of the trade options outlined above, all of those have contained requirements on movement of workers, precisely because the EU understands the imperative of that in a global economy. So there will certainly be change but is that going to stop UK nationals working in the EU or EU nationals working here? I cannot imagine that could happen.
The real unanswerable question for our industry, is what our clients do. We may end up negotiating trade agreements which result in almost no change to the status quo for the movement of workers. But if our clients decide that they want an EU based hub, that’s something the UK will not be able to provide moving forwards. And this is a question we can’t answer now. In fact, our clients will probably spend the next decade answering this question.
Should we be concerned? Well on some level yes, of course. Change is unsettling. Uncertainty is unsettling. Not knowing which horse to back is unsettling. Involvement will be key. As an industry we must get our voice heard in the coming debate – because very literally the workforce depends upon it.
And therein lies cause for optimism. We don’t know what the legal framework will look like in two years. But then actually, we never did. We could only make vague assumptions based on the political will of the incumbent parties, and down the years, political parties of every persuasion, have pulled some surprising curve balls. Change is the only constant. Change has always been the only constant.
What the recruitment industry has proven time and time again, is that it has an extraordinary ability to evolve and change, to invent and progress. Will the jobs we recruit for change? Of course they will. Who would have thought 15 years ago that “social media executives” would have existed? Will the clients we recruit for change? Of course they will. 22 years ago, Amazon was run out of a garage. But will clients always need candidates? Yes. Will candidates always need work? Yes.
And that, on a morning of unexpected results, unanswered questions and uncertain long term answers, remains a cause for cautious optimism.