The United Kingdom’s forthcoming exit from the European Union — known as Brexit — has yet to shake up the country’s economy as predicted. Unemployment in the U.K. currently stands at a healthy 4.7 percent, but inflation — which has accelerated in recent months as a result of a falling pound following last June’s leave vote — has left workers’ wages stagnant, according to BBC. Financial institutions such as UBS plan to move some workers to other parts of Europe, but others such as Goldman Sachs and JPMorgan Chase are holding off, reports CNN.
“There’s still so much dust in the air that we don’t know how it will land,” said Frank Smeekes, board member and managing partner in Europe at DHR International, an executive search firm whose headquarters is in Chicago. The uncertainty of Brexit isn’t the only force with the potential to influence the talent market in the U.K., Smeekes said. Elections in France and Germany, the global refugee crisis and increasing populism across the globe are all contributing to the current unrest throughout Europe.
“There’s uncertainty everywhere,” Smeekes said. “We’re getting used to the uncertainty.”
So far these uncertainties are keeping things in limbo. Still, some financial services firms, including HSBC, are considering moving more workers outside of London, a traditional epicenter for the industry, according to a Reuters story from January. Smeekes said these firms and others considering a move are likely going to Germany and France.
Despite these moves, Jonathan Hime, a group managing partner at Marlin Hawk, an executive search and leadership advising firm based in London, doesn’t see the city losing its overall foothold in financial services. “London will continue to be Europe’s biggest financial center and will not lose out to other European cities,” Hime said.
Instead, the biggest impact Brexit will likely have is on blue-collar workers, Hime said, because of expected changes in migration policy. For example, 8 percent of people working in U.K. shops, hotels and restaurants are from the EU, according to a Financial Times article, “What will Brexit mean for immigration?” The article goes on the say that current U.K. policies on non-EU migration do not admit low-skilled workers. “Three-quarters of EU citizens working in the U.K. would not meet the current visa requirements for non-EU workers,” the article states. Some of those issues could cross over to the corporate world depending on the direction of the leave negotiations, the details of which are likely to become clearer after the country’s June 8 election. British Prime Minister Theresa May, who took the post shortly after last year’s leave vote, called for the election this week hoping to secure a mandate from voters that would allow her more leverage in the negotiations.
Meanwhile, some experts remain optimistic the leave won’t stop European talent from wanting to work in the U.K., depending on how the negotiations play out. “U.K. business thrives on diversity and will continue to inject talent from other parts of Europe, although this could diminish if the U.K. fails to negotiate a way to remain in the single European market,” Hime said. EU businesses are also unlikely to cut themselves off from the U.K. talent pool, a rich source that is competitively advantageous to firms across Europe.
Still, for others, the pending leave’s effect on the talent market is hard to predict due to the complexity of the issue. “Brexit represents a great example of complexity that most people thought would never happen, and now everybody’s scrambling to deal with it,” said Mark Langley, president and CEO at Project Management Institute, a professional membership association for project, portfolio and program management based in Newton Square, Pennsylvania. Through PMI’s relationships with U.K. businesses, he said trade agreements as a result of the leave could pose significant challenges for businesses to overcome, in turn accelerating the need for firms to improve their talent.
Companies will rely even more on highly skilled talent as this process continues and as organizations establish different relationships with the EU. “How that plays out is unknown,” Langley said.
Lauren Dixon is an associate editor at Talent Economy. To comment, email email@example.com.