The issue of free movement is one of the defining issues of the Brexit debate and the topic of workforce mobility is one of the key priorities for business leaders as they prepare for the UK's departure from the EU.

And whilst we don't yet know the detail as to how Brexit will impact on the movement of people and how the new immigration system will operate, it is highly likely that the UK will seek to restrict free movement and therefore immigration controls will come in to place. For the many UK businesses that are dependent on overseas workers, a future system that still enables access to both skilled or unskilled labour would be the optimal outcome for the Brexit negotiations.

The anticipated changes to the immigration system are already affecting businesses and individuals, who are seeking to understand what their impact might be. Cities and regions too are looking at what they can do to remain attractive to international workers post Brexit.

For businesses, many are in the midst of planning as how they will respond to these changes. We have seen a slowdown in the cross-border movement of workers since June 2016. Mobility within organisations also appears to have reduced as both companies and individuals work out exactly what the future landscape is going to look like. For instance, a number of global financial institutions have put on hold decisions to move people, but this is not just limited to moves in to the UK. They are also holding off on decisions in to continental Europe and even Asia, until there is greater clarity around Brexit and when they will have a clearer view as to what proportion of their operations will be in London relative to other locations. Depending on the outcome of the negotiations, we may see a considerable increase in the number of business travellers to and from to the UK post Brexit, as organisations look to deploy more flexible arrangements as opposed to formal, longer term assignments.

Taking action

Some business are now taking action despite the uncertainty and have moved beyond the planning phase - taking steps in preparation for life after Brexit. Financial institutions in particular have started to apply for the relevant licences to trade from an EU centre, a process that takes many months to complete. Many will also be putting staff in place before March 2019 to ensure a smooth transition of service provision.

Such an approach is sensible. Working back from the day Britain leaves the EU, the first point businesses need to consider is whether they can continue to operate as effectively post-Brexit as they do today without any changes. If the answer to that question is yes, then little needs to be done. If the answer is no — as it is for many financial services organisations who may no longer be able trade freely from London into Europe —  the likelihood is that they will have to move people into the EU in response. Smart redeployment of workers will be vital in order to minimise disruption.

Sectors that are heavily reliant on non-UK workers (such as hospitality, agriculture, healthcare and construction) are particularly concerned about how they will continue to access labour – that is, both high and lower skilled workers, post March 2019. There has been much discussion around the need to continue attracting highly skilled migrant workers, but less around the UK's reliance on those that would be described as less skilled. For example, in a recent House of Commons paper, it was estimated that 98% of the UK's seasonal agriculture workers are currently recruited from elsewhere in the EU1. Due to the seasonal nature of demand and falling unemployment in the UK, the agriculture and horticulture sectors would likely be subject to an acute labour shortage if no longer able to access these workers.

Continued attraction to the UK

Cities and regions are also having to think about this issue post Brexit. The question many are now asking is whether the UK will continue to be the magnet for European and global talent that it has been for the last two decades. Encouragingly, Deloitte's recent Power Up report showed that despite Brexit, the UK remains highly attractive to international talent and has a number of perceived strengths such as cultural diversity, global connectivity and opportunities to study; the UK will need to build upon these in the coming years. London is also seen as a key attractor and it is important that work continues to develop regional hubs such as the Northern Powerhouse.

Whilst Brexit brings the issue of labour mobility into sharper focus for the UK, there are a number of other issues that need consideration. There is a global fight for talent, with major cities investing heavily to build their skills base and to attract the workers they need – whether that's by developing infrastructure, providing incentives for those with the skills in highest demand or investing in 'softer' assets such as the arts and culture. There is also the increasing role of technology in the workplace and the need to develop the skills required for the future. Brexit provides an opportunity for the UK to develop a skills and immigration policy that is attuned to the needs of the modern economy and for business leaders to consider the long-term make-up of their organisation.

Whilst there are still many unknowns, what we have seen so far is that the starting point for many organisations has been to try and minimise the movement of workers to new locations, whilst ensuring that they can continue to serve their customers seamlessly post March 2019. The question will be as to whether over time, these new locations develop at the expense of the UK. A future policy framework designed to promote UK business competitiveness would be help to reduce this risk. There is also a strong argument to see Brexit as a catalyst for much needed longer term planning on future skills by business and government alike: our previous Talent for Survival research found that there is correlation between some of the sectors with the highest proportion of EU workers and those that have high potential for automation. Brexit could be a prompt for UK business to invest further in automation. However, given the lead time for such innovations and the high proportion of roles that simply can't be automated, continuing to have access to migrant workers on a needs basis beyond 2019 is desirable for all sectors.  

Footnotes

1 – House of Commons briefing paper – Migrant workers in Agriculture, July 2017

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