Impact of Brexit on HR Practices - Assignment
Added on - 21 Apr 2020
Running head: IMPACT OF BREXIT ON HR PRACTICESImpact of Brexit on EU/NON EU employeesName of the Student:Name of the University:Author note:
1IMPACT OF BREXIT ON HR PRACTICESImpact of Brexit on the HR policies in the organizations of UKLiterature reviewBrexit is the common term for Britain’s exit from the European Union (EU). On June 23,2016, the citizens of Britain voted in the referendum for leaving the EU. 51.9% voted to leavethe EU and 48.1% voted to remain in the EU (Goodwin and Heath 2016). This historical decisionhad a big impact on the global economy, and caused the British pound to decline to its lowestlevel in the 30 years. It also led to change of Prime Minister in Britain as David Cameronstepped down and Theresa May took charge. The formal exit process started in March 29, 2017as Theresa May triggered the article 50 of the Lisbon Treaty. This process of negotiation for newterms of business with EU would take two years (Dhingraet al.2016).Brexit has impact on every aspect of the economy. Among the economic anddemographic factors, the migration of the skilled and unskilled labor would be affected badly.Similarly, the HR practices in the organization would also be affected due to Brexit. Immediatelyafter the referendum, there was uncertainty among the businesses regarding the migrant workers.Majority of the businesses were not prepared for this result and hence, they did not plan forcontingency (Kierzenkowskiet al.2016). After the referendum, the business sector must modifytheir employment strategies and resource planning. According to Pisani-Ferryet al.(2016),firstly, there would be changes in the employment laws on anti-discrimination rights, familyleave entitlements, transfer of the undertaking regulations, collective consultation regulations, orworking timing regulations. Number of nationals to be employed and rules regarding that wouldalso change. Secondly, the migration laws would now become more strict. More than millionsmigrant workers might have to leave Britain in future if they do not qualify for the new
2IMPACT OF BREXIT ON HR PRACTICESmigration laws and the Points Based system for EU and NON EU workers. The process ofselection for the EU and NON EU workers will be very selective and technicality, seniority,relevant experience, rate of pay, citizenship of UK and skills would matter the most after theBrexit (Wadsworthet al.2016).The uncertainty of Brexit has led to employment of more part time and temporaryworkers than the full time workers. Economic and political uncertainty or instability results inpeople leaving job and country, reducing level of investments and expenditures, and reducinghiring in the organizations. It could also affect the ability of the organizations to access therequired skills. There might be highly skilled migrant workers but the British organizationsmight not be able to hire them due to new rules. All the economic sectors of the country wouldface this problem. Moreover, many financial businesses might relocate to EU from UK to avoidthe rules and employ skilled labor without any problem. This would cause huge losses to UK(Portes and Forte 2017).According to a report by PWC, Brexit’s impact would be most visible in trade and supplychains, financial policies, FDI, regulatory policies, labor market and sector specific issues. Thechange in migration policies will affect the entire business operations and performance of thecompany. Hence, the HRM of the organizations must prioritize the short and long term issues.The short term issues include communication, leadership, motivation of the current employees,data and technological expertise, and long term issues include the maximization of efficiencies,impact of migration policies on the immigration in the labor market, regionalization ofbusinesses and political and trust issues. Thus, it can be said that, the HR of the organizationsnow have more responsibilities and pressure to get the best leaders, motivated and skilledworkforce, and modify the employment policies as per the new rules (Pwc.co.uk 2016).
3IMPACT OF BREXIT ON HR PRACTICESIn this context, the workforce data is important, as this would help in evaluating the labormarket status before and after the Brexit. According to ONS, 11% of the total workforce inBritain, i.e. approximately 3.4 million are migrants from EU and NON EU countries, and amongthem 7% are from the EU and 4% are from other countries (Ons.gov.uk 2017). It has been foundthat around 2.37 million EU migrants work in UK. Since, this is quite a large population; theimpact of Brexit on these people would be quite significant. The organizations that have migrantemployees would to change their policies as well as the workforce due to the new rules.In the year ended in March 2017, UK had a net migration of 246,000. The net migrationis calculated by subtracting the emigration value from the immigration value.Table1: 2017 data for Net Immigration in UK(Source: O'Leary 2017)It is found by ONS that, after the referendum, the immigration of EU has beensignificantly low. In the last year, the fall in net EU migration was by 51,000, which is quite alarge number. The number of the EU citizens, especially from the Eastern Europe, leavingBritain, has increased post referendum and this has contributed in the fall in net EU migration(Ons.gov.uk 2017). The rate of emigration to the EU countries has fallen too. It is also foundthat, 18 specialist British industries have EU migrant workers, comprising of more than 20% ofthe total labor force. Hence, this workforce leaving the nation would leave these industriesbereft. According to The Guardian, 47.6% of the migrant employees from EU work in the fruits