As the dust settles on a decision that many of us didn’t expect, and it seems, our own government didn’t prepare for, we ask what the future holds for the UK recruitment industry.
The FTSE has rallied and climbed beyond its pre-Referendum heights with the pound also retrieving ground, albeit slowly, against the Euro and Dollar.
As the man who steered the UK through the financial crisis of 2008, Mervyn King, the former head of the Bank of England suggested the immediate fall in markets is not a major concern:
“Markets move up, markets move down. We don’t yet know where they’ll find their level.”
With the immediate panic dying down, perhaps some silver lining can be found in the UK’s exit.
Agency Fees will Rise
A shrinking pool of talent, or at least the fear over the pipeline to skilled migrants being cut off, will make those that can provide access to talent that much more of a lifeline.
Uncertainty over job security, will lead candidates into digging their heels in at their current roles. Which means the need for agencies that can tempt them out will increase.
A boom in contract work
In times of economic volatility businesses tend to apply a belt and bracers attitude to company spending and hiring, which is why they tend to lean on the contract market.
Many businesses implement a headcount freeze during times of instability, which is reflected in the Institute of Directors immediate report following the Referendum. According to the report a third of businesses intend on pausing their permanent hires, and an additional 5% thinning their ranks.
The contract market tends to pick up the slack that’s left when the brakes are placed on perm hiring. As can be seen during the 2008 to 2014 financial crisis where contract placements actually grew. Over 500,000 people turned to self-employment and almost 2million contractors now operate in the UK.
Possible relaxation over IR35
One of the biggest bugbears of contractors is determining whether they sit as a permanent employee or a contractor for tax purposes.
Spearheaded by George Osborne, changes to come into place next year will shift the responsibility of determining IR35 onto the recruitment agency placing them.
With Cameron stepping down in October, and Osborne likely to follow suit, it’s unlikely that more stringent policies or changes around IR35 will come to the fore. Or, if the Chancellor’s replacement will hold the same stance towards IR35, especially as the economic uncertainty will increase the reliance on a flexible workforce.
Increased UK training and apprenticeships
A host of investment will be poured into nurturing home-grown talent to fill the void left by skilled migrant caps.
This will start in schools but also be metered out in training and apprenticeships.
A lot can happen in two years
The immediate panic appears to be subsiding and business doesn’t seem to have been bankrupted.
Carney’s reassured the markets and businesses that weathered the financial crisis are more prepared to deal with uncertain markets.
For now anyway, all the major banks and businesses that threatened an exodus, are holding fire to see how the chips fall over a new EU trade relationship.