As you have no doubt heard, Brexit has become a reality as the United Kingdom has voted to leave the European Union. Free movement of labor is one of the key founding principles of the EU. This includes the ability of EU citizens to live and work in a member country without a work permit, as well as benefits following a lay-off. Now that the United Kingdom has left the European Union, the economy will surely be affected. Banking institutions are considering downsizing or moving, which may disrupt London’s role as a financial center.
Job cuts are also likely at large organizations in the area, particularly in food production, agriculture, and mining. This is due to the chance of the free people movement being eliminated and many migrants losing their jobs. Below you can find a list of industries most reliant on migrant workers, including the percentage of migrant workers in each (via http://ind.pn/29x0GeO). The automotive and airline sectors are also being watched for downsizing.
1. Manufacturing of food products: 31% of total workers
2. Domestic personnel: 23%
3. Accommodation: 21%
4. Crop, animal production, hunting: 16%
5. Mining of metal ores: 14%
6. Warehousing and support for transport: 15%
7. Services to buildings and landscape: 14%
8. Food and beverage service activities: 13%
9. Manufacture of leather and related: 12%
10. Manufacture of textiles: 11%
While the vote was confirmed on June 23, it is crucial to note that the specifics of this change will be subject to negotiation for the next 2+ years. The image below (via http://pwc.to/29Ojxhu) summarizes the potential short and long term impact. Overall, economists predict a lot of uncertainty as the effects unfold, and encourage those in business transactions with the UK to be prepared to assess changing circumstances.
To help us better understand the implications of Brexit on global organizations, we reached out to Lynne Hardman, Chief Executive of Career Partners International – Working Transitions in the United Kingdom for her commentary. Her immediate thoughts are listed below.
- Exchange rates: The dollar is strong, so businesses should consider local currency billing where possible.
- All banks, financial services, airlines etc. with a strong UK or EU operation may be considering moves.
- It is highly unlikely that EU employment law changes will be overturned in the UK, especially those affecting redundancy and employees impacted by M&A activity.
There is an influx of both positive and negative results, none of which are certain. It is critical to take the situation day-by-day, make oneself aware of the effects, and work diligently to adapt accordingly.