Here Majid Sadeghi, our Partner who assists many of our recruitment clients, reviews some of the potential short-term and long-term impacts for temporary and permanent recruitment.
Key Brexit impacts for UK recruitment agencies
- Business confidence is expected to fall, which is likely to result in delayed expansion and fewer additional employees, affecting industry performance.
- Demand for temporary employees is likely to be less affected than demand for permanent employees.
- Labour supply could be affected over the longer term if migration rules change.
- Public sector expenditure is expected to reduce should the economy enter a slowdown, resulting in reduced demand.
Temporary recruitment
The job market usually reflects the overall condition of the economy, with the level of employment fluctuating in line with general economic performance.
With business confidence expected to fall in the current year due to fears over the economy, businesses may put expansion on hold, which will inevitably lead to a falling demand for recruitment services.
Whilst this may dampen overall demand for employees, the demand for temporary employees is likely to be less affected than demand for permanent employees.
Businesses may opt for temporary employees over permanent ones over the short term, as there is less risk in hiring temporary employees in the event of further economic headwinds.
The introduction of the National Living Wage could exacerbates the problem for employers, which could add to the desirability of temporary employees over permanent ones during times of economic uncertainty.
Over the long term, the supply of labour from the European Union is likely to be affected, but any potential barriers to migration will depend on the outcome of negotiations on the UK’s exit from the European Union.
Permanent recruitment
Hiring for permanent positions is likely to be more affected compared to temporary positions due to the greater risk associated with permanent employees if conditions deteriorate and headcount needs to be reduced.
In addition to decreased demand from the private sector, stemming from lower business confidence, the public sector is also likely to postpone hiring additional employees. Tax receipts are likely to suffer if the economy enters a slowdown, which will mean further cuts to departmental budgets and weaker government expenditure. Demand from public sector organisations for industry services could therefore reduce.
How can you respond?
“There is still much that recruitment businesses can do to limit their exposure to Brexit risks by ensuring the business is operating efficiently as possible and reviewing their business and marketing strategy. Our Brexit checklist can help you assess your specific areas of risk and how to prepare for tougher trading conditions.” says Majid Sadeghi.
Download our free Brexit checklist to review the key impacts and how you are preparing your business for potentially tougher trading conditions, or contact us to discuss how we can assist your business.
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