Rhys Jenkins, Resourcing Specialist at PMC talks about Brexit from the retail & recruitment perspective.

As I’m sure everyone is abundantly aware there is a somewhat important vote coming up on Thursday so I thought I’d add some fuel to the fire! Working in retail technology recruitment has got me thinking about how the landscape looks for those who work in retail in a hypothetical post Brexit situation, as well as the potential advantages of remaining within the union. So here it goes…

The Argument to Remain:

Firstly it’s worth noting that 96% of “big businesses” wish to remain within the EU (you gov). The much coveted letter signed by 200 leading businesses in the UK included the signatures of some major retailers including: Dixons Carphone, Ocado, M&S and Asda. The majority of large retailers support the remain campaign due to the uncertainty and unpredictability of the future along with the problems likely to be caused by Brexit. Their main fears include:

  • Price – It is likely that prices and inflation would rise, probably immediately after an exit, certainly in the short term until the new tariffs and agreements are negotiated. The offshoot of this is likely to be an increase of costs to consumers as retailers offset this uncertainty/risk by increasing profit margins.
  • Loss of Migrant Workforce – Brexit would mean the end of free movement to the UK within the EU. This inevitably will make it harder for retailers to recruit staff in an already competitive, candidate favoured recruitment market. Migrant workers make up a considerable amount of technical IT staff within the UK. As well as this, EU migrants also come to the UK and get lower skilled work in retail distribution centres, warehouses and on the shop floor. Of course people will still be able to come to the UK to work but all migrants would need a valid visa or work permit which will cause an inevitable barrier to entry and thus pose a problem to retailers and other businesses.
  • Loss of “the gateway to Europe” – The UK is seen by multinationals as somewhat of a gateway to Europe, this is evidenced by the fact that 2 in 5 of the 250 largest companies in the world have their main European headquarters in London, this includes retailers such as Urban Outfitters and Pep & Co. Is Britain still an attractive proposition post Brexit?

The Argument to Leave:

To counter the previous argument it is important to note that many retailers’ names were absent from the 200 leading businesses who signed the letter to remain within the EU, these include household names such as: Tesco, Sainsbury’s, House of Fraser and John Lewis. Of course when considering this we must also consider that either they may not have been asked or they chose not to state allegiance to one side or the other in order to be seen as neutral by their customers. (Centre For retail Research). Nonetheless, there are some compelling arguments to leave the EU, including:

  • Wages will rise – Brexit campaigners believe that wages will rise because the labour market will not be as flooded by migrant workers, whilst this may be true in the long term it’s certainly not an exact science!
  • Payments to the EU – The net cost the UK of being in the EU in 2015 was £7.1bn (HM Treasury), the leave campaign believe this is unnecessary.
  • Freedom around employment law – Much of UK employment law is currently set by the EU and thus Brexit would enable us take back this power which could create a more productive workforce.
  • Brexit could actually increase multinational trade – many believe that being one nation rather than one of 28 would enable the UK to negotiate better trade deals
  • Cut the red tape – It’s believed by the leave campaigners that EU red tape is holding back our economy and that UK businesses, including retailers could prosper from Brexit. This is particularly interesting within retail given the tightening legislation around zero hour contracts amongst other employability issues.

What does this mean for recruitment, specifically recruitment within retail technology?

As with all other areas of Brexit, the effects on recruitment and the employment market are unknown at this stage but a few theories include:

“A decade of uncertainty” is the term used by David Cameron on the impact of Brexit on the British economy and thus the labour market, this is particularly poignant in retail given that in 2015 the UK retail Industry was worth £339 billion (Retail Economics). Even the notion of a potential Brexit has already had a negative impact on business expansion as the uncertainties have caused companies to hold back on hiring. These effects are likely to be felt for the next couple of years, at least whilst the full terms of a British exit are negotiated. If freedom of movement ends then there will be a skills shortage in what is already a skills short market. According to the website ‘Recruitment Grapevine’ 42.3% of British recruiters believe Brexit will cause further skills shortages, as previously mentioned this well effect retail in both a skilled and non-skilled capacity. However, the leave campaigners will argue that the removal of EU red tape will enable speedy global expansion for British businesses. Leave campaigners will also argue that as a result of a less flooded migrant workforce and a thriving British economy wages will rise.

To summarise and conclude, whilst at the moment we don’t know the true impact of leaving, what we do know is that the British economy is performing well as part of the EU and the retail Sector is a large part of that. More than 1/3 of consumer spending in the UK goes through retail shops, on top of this the UK retail Industry employed 2.8 million people in 2015 and retail accounts for 5% of the UK’s total GDP (Retail Economics) so it’s little wonder that most major retailers along with David Cameron are in favour of remaining! From a more generic point of view the UK is the 5th largest economy in the world by GDP and 2nd largest in Europe (or 6th and 3rd respectively depending on which stats you’re looking at) taking all that into account I can’t see a good reason to risk what we’ve got by voting to leave. Ultimately the arguments to remain revolve around tangible benefits and the uncertainty of the benefits of leaving.  Whilst there are compelling arguments to leave, I believe that the potential associated risks outweigh the possibilities of the uncertain benefits and as such I can summarise the whole piece by saying the old adage, “If it ain’t broke, don’t fix it!”

 

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