A year after the still-contentious referendum on the UK’s membership of the European Union, Helen Swire asks what employers need to be thinking about
It was the decision that was promised as an election pledge. It was debated and voted on, has been debated again endlessly, both in Parliament and across the land – and the process of implementation is now beginning.
Brexit – the shorthand for the UK’s departure from the European Union – has divided the country’s opinions, put politicians out of jobs, and caused more inter-family tensions than almost any other recent political vote.
The referendum, held on the 23 June 2016, resulted in a 51.9% ‘leave’ majority, with more than 30 million people voting. While the vote continues to be a source of criticism and conflict among the Leave and Remain camps, Prime Minister Theresa May has been clear: “Brexit means Brexit”, and triggered Article 50 on 29 March 2017, which allows the leave process to start.
Now that this has been done, the UK has two years to negotiate withdrawal from the EU – and employers must use this time to consider what it may mean for them.
As Tim Perkins, director of employee benefit software provider Nudge, puts it: “A year on from the momentous decision to leave the EU there has been little progress towards understanding exactly what the longer-term implications of Brexit will mean for UK employers and their people.”
However, headline figures from research by Secondsight show that two-thirds (62%) of HR professionals expect the decision to affect their HR strategy, and the uncertainty is leading them to take a more cautious approach to recruitment, with 37% opting not to hire over the coming year.
The research also shows that 35% believe the vote will affect profits, and a further 43% expect an increase in costs.
The potential economic impact must also be weighed alongside an increased administrative burden and lack of time when it comes to HR planning in 2017.
“HR teams need to consider a whole host of strategic factors, such as their talent management, global mobility and recruitment programmes,” says Perkins. “But they will also need to think about how the changes will affect the lives and personal finances of their people.”
For example, Nudge has noted post-Brexit that employees’ interests on their financial education platform have focused on the ‘Holidays and Travel’ and ‘Savings’ sections.
The Financial Services Compensation Scheme has already changed its protection limit on savings (safeguarding against a bank’s financial crash) in line with the fall in the value of the pound, rising by £10,000 to £85,000 as of 30 January. Meanwhile, inflation has increased sharply, rising to 2.3% in February – the highest rate for three and a half years.
Nudge’s latest research shows that financial education will be a real concern for employees, as 63.4% of reward professionals believe that the impact of Brexit on the economy will drive demand for financial education, with a further 42.8% expecting demand driven by the falling value of the pound, and 38.6% from employee fears over job security.
Perkins warns: “Wages, in real terms, are declining. Add to this gender-pay gap pressures, the increase to National Minimum and Living Wage levels and the Apprentice Levy, and we can see that reward teams face increasing pressure to help their people better plan and manage their financial futures.”
And it’s not just finances that will be affected: for example, data protection laws will come under review and both British expatriates and foreign workers in the UK face considerable uncertainties about what will be decided on the freedom of movement.
“Even sectors that appear to be weathering the storm – such as technology – remain concerned about ensuring the UK remains a destination of choice for the world’s best talent,” says Perkins.
He adds: “What we need now is a speedy and orderly Brexit process to ensure the UK government, business leaders and individuals alike can plan for life outside the EU.
“In the meantime, reward leaders must consider how they can best help to educate people to better plan and manage their finances to avoid stress having an impact on productivity and absence levels.”
Knee-jerk reactions and panicked decisions are not going to help British business. But now that Article 50 has been triggered, employers must consider the needs of their business and staff.