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Whatever way you voted on Brexit, in less than two years the UK will have officially left the EU. Naturally, speculation has been rife about what affect this will have on the Facilities Management industry but the simple truth is that nobody can know for sure.
This uncertainty is clearly shown by the results of the FM Business Confidence Monitor 2017, a yearly survey published by the British Institute of Facilities Management. Such was the anxiety over Brexit that the respondents were asked outright what affect they felt Brexit would have on the UK economy.
- Very positive –4%
- Positive –23%
- No impact –21%
- Negative –44%
- Very Negative – 8%
Although over half of respondents felt the UK would be negatively affected by the split from Brussels, plenty of people are still positive about the UK’s economic future. The lack of a common consensus reflecting the absence of concrete information on the negotiations. And with the recent election results leading to a minority government, the future would appear to be even more unclear.
One thing is for sure though, if you want your business to flourish you’ll need to be prepared to evolve – whatever the outcome.
One of the biggest sticking points when it comes to negotiations with the EU will be the free movement of people.
Before the recent election results, government were determined to pursue a ‘hard’ Brexit which would limit, or even completely stop, the movement of workers between Britain and EU countries, with some politicians even pushing for all non-UK workers to be sent home. It’s likely though that Britain would need to make concessions if they want to remain part of the free-market.
Applying the current visa requirement for non-EU migrants and applying it to EU workers in the UK reveals that 88% of them would not qualify1, hinting that Facility Management’s reliance on migrant labour could soon be forced to end.
If instead we move to a ‘soft’ Brexit, as may be the dictated direction of the election results, this may reduce the impact on EU worker movement as we’ll cede control of key points of negotiation. The UK might find an arrangemet along the lines of the EFTA more palatable, providing more control but with continued acccess to the single market and the EU-workers within.
And we’ve not even considered the impact if there was a complete U-turn! The only certain thing is uncertainty itself.
With 7% of Britain’s workforce made up of EU-nationals2, the only thing certain about triggering Article-50 was that any change to free-movement would send a shockwave through the UK economy.
The FM industry heavily relies on migrants to fill low-paid roles, for example: 24% of the cleaning industry are non-UK nationals3. Facilities Management businesses are therefore extremely vulnerable to change, with any reduction in migration making recruitment a bigger focus.
But if we were to soften the departure from the EU, how instead might the UK look to reduce the impact of a potential labour shortage? Can we effectively plug the gap with non-UK, non-EU migrant workers?
Although we can’t predict what will happen, we can look at the immediate results of the referendum and make some reasonable assumptions.
The latest data shows the number of EU workers in the UK has dropped sharply since the referendum, with over 100,000 EU migrants leaving the UK between September ’15 and September ’164.
That number looks likely to drop even further too, with 27% of businesses noticing that non-UK workers were planning on leaving Britain before Brexit comes into effect5.
“The most recent official data suggest that there has been a significant slowdown in the number of non-UK nationals from the European Union in work in the UK. This is creating significant recruitment challenges in sectors that have historically relied on non-UK labour to fill roles and who are particularly vulnerable to the prospect of future changes to EU immigration policy6.”
Gerwyn Davies, labour market adviser for the CIPD
If that suggests FM businesses may struggle to fill roles in the future, the latest information from Government’s Office of National Statistics suggests the UK could already be feeling the effects of Brexit, with low-skilled roles like cleaning and hospitality making up 45% of a record 748,000 job vacancies at the start of 2017.
The UK’s reliance on EU-workers is further shown by the fact that 30% of businesses surveyed as part of the Labour Market Outlook 2016 said they plan to continue recruiting EU nationals where possible - absorbing any extra costs from fines7.
A labour shortage might not be the biggest problem facing FM though. That might be a shortage of skilled workers to fill specialist roles currently taken by highly-skilled EU-workers.
Statistics from The Centre for Economic Performance show that around 44% of EU immigrants have some form of higher education, compared with only 23% of UK-born workers. They also show that in general, EU immigrants are actually more educated, younger, more likely to be in work and less likely to claim benefits than people born in the UK8.
This data suggests that FM providers will struggle to fill high-skilled positions without access to the EU’s workforce. One fictitious scenario is that without workers to provide specialist services, FM businesses could need to decrease their services.
Brexit could prove to be a positive change for businesses that want to create more opportunities for British workers at all levels of their business. Without skilled EU-nationals to fill specialist roles in your FM organisation, you’ll need to train UK employees.
As university prices continue to spiral, the FM sector might look increasingly attractive to young people, offering practical work, on-job training and more apprenticeships than ever.
In fact, 22% of businesses have already begun plans to increase their investment in apprenticeships because of Brexit9.
Here we mustn’t forget other positive impacts for worker of being part of the EU, for example:
- EU laws requires equal treatment for fixed-term, part-time and agency workers.
- The EU has also introduced standards for health and safety, including the need for employers to provide 4 weeks paid annual leave as part of the Working Time Directive.
- UK employers are now under more extensive obligations to inform and consult workers than previously.
- EU law also prohibits discrimination on grounds of sexual orientation, religion, belief and age.
A potential outcome of Brexit is wage inflation for unskilled labour roles, which will impact sectors reliant on low-paid EU workers like FM.
With a smaller pool of labour available, businesses may have to increase the wages they offer, as they struggle to fill vacancies vital to operations. You might end up having to pay considerably more for the right people and given that staffing is the largest cost in Facilities Management, this could have long-lasting effects.
When the UK does withdraw from the EU, other elements of employment law could also change and further confuse FM contracts purely because they were penned when Britain was part of the EU - for new contracts and those being negotiated now, it could be wider to seek to include clauses that offer protection from the uncertainty of Brexit.
UK firms working across European countries might find business becomes more awkward and costly, leading them to bring work back to UK facilities that will soon require managing.
Whilst EU businesses that have facilities in the UK might now find it inefficient to do business in Britain and move operations to another EU nations – resulting in fewer buildings to be managed.
As uncertain as we are of how Brexit will impact the FM industry, it’s likely that your employees are just as worried – whether they’re UK-born, long-term EU migrants or recent arrivals to Britain.
And although there may be downsides for both your business and workers, there are also opportunities too.
Brexit may well increase the need to upskill existing and new, workers; you’ll then be left with a highly trained workforce that may be more committed and productive.
If we do indeed move towards a soft Brexit, should this preclude you from proceeding with making additional investments in your UK workforce? Clearly no. A recent study by the Chartered Institute of Personnel and Development found that 95% of hiring managers considered employee training as a key retention tool: “The only thing worse than training employees and losing them is not to train them and keep them” – Zig Ziglar
Whichever direction the UK takes, it’s clear that investing in your workers will only have positive consequences for your business – and doing it now while your competitors wait for definitive direction, or instead bury their heads in the sand, will ensure the impact to your business is lessened whilst allowing you to steal a march on your competition.
There is much uncertainty regarding Brexit, and at this stage any discussion about the effect on free-movement between the UK and EU countries is purely conjecture. - whatever happens though, EU migration to the UK will likely fall short of current levels.
In preparation for what comes next, it would be prudent to formulate process strategies based on managing the increased recruitment of UK workers, wage inflation and training schemes to fill the skills gap of new workers.
This isn’t something that can be rushed but ensuring you have accurate and consistent data across the organisation can simplify the task – and a dependable workforce-management system (WFM) can be central to this.
Choosing the right technology to get your data under control will help your business prepare for any impact Brexit might have, especially if you’re one of the 27% of UK businesses that said they weren’t certain how many non-UK workers they’re currently employing10.