In this week’s column Mark Essex discusses whether the UK can feasibly attract, retain and nurture talent, with a falling pound enticing more work this way.
Foreign investors are suddenly looking at the UK in a new light – and not necessarily a bad one – thanks to the fall in the pound. Brexit may have raised questions about the UK’s position as stepping-stone to Europe, but multinational companies have realised that a UK workforce now offers relative value thanks to sterling’s 14% slide against the dollar.
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I know of multinationals using lawyers in the UK instead of the US because they are now less expensive than their American peers and IT firms allocating more programming roles in London rather than New York for the same reason. But while enjoying the upside, foreign companies will need to consider the sustainability of those teams – and invest in skills and reward accordingly.
The immediate issue is one of retention. EU-born citizens working in the UK make up 7% of the workforce and as much as 13% in hospitality and 10% in manufacturing. So far, the debate here has centred around whether the government will let them stay in the country. But shouldn’t the question rather be: do EU nationals themselves want to remain here? A British Chambers of Commerce survey in September found that 10% of businesses had EU workers who were thinking about leaving the UK.
We’ve explored some reasons why that might be the case in previous columns. First, the remittances EU workers are sending home are now worth less in their home currency – dimming the attraction of what was high-wage Britain. Some no longer feel welcome in the UK or that they have been left in limbo over their long-term right to remain. Compounding that sense of dislocation are fears of some EU workers during this period of uncertainty. Will employers sponsor them for a visa? Will landlords still rent them a home? Will banks continue to lend them a mortgage?
And if the UK becomes just another global destination, which requires a visa like New York, Singapore or Sydney, then Europe’s best and brightest might take highly-mobile skill sets like computer programming to more distant destinations.
So what are the repercussions for companies attempting to attract and retain the very best? For now and until we understand potential future restrictions on hiring EU staff, companies will have to do more to lure footloose Europeans. That might mean help with residency permits, offers of flexible working, childcare, secondments, help with housing, training and academic courses. Employers will have to think creatively about the total package – and not just to EU citizens but all their best people in a tightening labour market.
The longer-term challenge is one of skills relating to the home-grown workforce – those who might not be the finished article yet but will become increasingly important in a country with near-full employment. That’s particularly the case if three quarters of EU citizens working here don’t meet current visa requirements for non-EU overseas workers, as a study by the Oxford University Migration Observatory found.
So if the ‘ready-made’ European migrants that British employers rely on become more scarce, then companies will either have to do more to develop skills at a local level, alongside automation. KPMG colleagues have told me some of their clients’ workers are already beginning to return to Eastern Europe with the effect that companies are struggling to find equally high-calibre applicants. That backs up a CBI finding that 69% of businesses were worried they wouldn’t have enough people to fill highly-skilled positions. The potential hit to Britain’s productivity is clear.
The government has recognised the issue and has responded with measures such as the Apprenticeship Levy. But it is also for companies – foreign and domestic – should consider the return they should reap in terms of productivity if they made strategic investments to develop and train local talent. In areas of relative deprivation that return could be amplified through the creation of an even more motivated and loyal workforce. The creation of a national or regional industrial strategy should provide important government support – but it will only work with the full involvement of businesses. As Brexit uncertainty continues about the future of this generation of workers, it is even more important for business to invest in the one that comes next.
Brexit: A catalyst for businesses to reset their futures.
This article represents the views of the author only, and does not necessarily represent the views or professional advice of KPMG in the UK. You can register for the email subscription list of this column and expert views from our Brexit leaders.