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Last week marked the last deadline to agree an extension to the Brexit process. The transition period, alongside the key cornerstone of the European Union, freedom of movement, is set to come to a definitive end in December 2020.

One of the greatest impacts of Brexit on the HR landscape is set to be the effect on the labour market. We discuss the ramifications on workforce planning.

Labour and skills shortages

The outlook of employers post-pandemic is that it will be an employer’s market, with anticipated recruitment challenges being the lowest we’ve seen them since the 2008 recession. Out of the respondents to our UK Reward Management Survey, only one in five anticipate difficulties in retaining employees and less than one in three anticipate challenges in recruitment over the next 12 months, in contrast to two thirds of respondents expecting difficulties in our autumn 2019 survey.

Whilst low levels of turnover are usually synonymous with periods of turbulence as people seek job security and redundancies mean that more talent may be available, this might be exacerbated by the skills shortages reported across a variety of sectors before the outbreak of coronavirus. Finding the right talent and skill for the role is crucial and there is a focus on tech roles, possibly attributed to the fact that IT systems have to support widespread remote working, alongside traditionally ‘low paid’ roles, which bring unique challenges.

Reward that goes hand in hand with recognition

Key workers have been recognised by the country for the critical role they play in keeping society safe, well, educated, fed and in receipt of deliveries. However, the National Living Wage has pushed up salaries uniformly for certain employees, so that the lowest paid individuals in retail will be paid the same as the lowest paid employees in Care homes. Yet the stress and emotional turmoil of these roles cannot be equated, therefore employers are grappling with how to meaningfully reward roles that pose additional mental and physical challenges to employee health.

The pandemic and post-Brexit immigration landscape could have a profound impact on how jobs are evaluated in the future. Job evaluation designs may need to flex to reflect the value placed by society on critical roles. The social side of the role of carers and NHS workers has been brought heavily into focus and conversations have increasingly turned to whether the correct value is attached. Now is the time to query whether the job evaluation systems can acknowledge that there is more responsibility and pressure involved in certain roles, particularly in a healthcare and care environment, which is more challenging and requires greater social skills.

Sector challenges

Construction, healthcare and residential care employers anecdotally reported some levels of reduced talent pools to draw from pre-pandemic, as many returned to countries across the EU. The new Immigration Bill that marks the end of freedom of movement will introduce an income requirement of £25,600. Many key workers earn below this threshold and The Royal College of Nursing warns that this will “exclude some health and care workers from entering the UK.” Recruitment strategies may have to change to attract people from the earliest opportunity in universities and schools. Increasingly, employers will be required to think outside the box when planning their recruitment and retention strategies, which requires a lot of groundwork that should be implemented sooner rather than later.

The new points-based system of the Immigration Bill is particularly set to affect seasonal workers in agriculture, baristas and those generally on zero hours contracts. This may require more carve-outs, some in the form of tourist visas, to attract candidates for these roles. Employers will have to monitor the impact on their staff levels and how this lands. Uncertainty requires important contingency planning for the long-term when it comes to talent.

Lessons learnt from the pandemic

The widespread ‘working from home’ experiment that all organisations have had to implement during the coronavirus lockdown may lead to reduced office spaces and commuting, as more people request the option to work flexibly in the long-term. This in turn may enable employers to access whole new talent pools.

Accessing new demographics is an increasingly effective strategy to overcome skills shortages. Embracing remote working may mean that those who cannot complete their workday in the 9am to 5pm time frame can be hired, alongside those who cannot get to the office everyday and are more geographically diverse. Flexible working may mean that new talent is injected into certain sectors, particularly to associates and institutes and residential care, where organisations are increasingly looking to secure a pipeline of talent to future-proof their business.

Looking beyond pay practices to attract and retain

Pay increases had buoyed to three per cent on average over the last couple of years, but respondents to our UK Reward Management Survey (spring 2020) are now evenly split with 40 per cent offering two per cent and 42 per cent offering a three per cent increase. A significant number (up to 56 per cent) of pay awards were largely already agreed and being implemented before lockdown, therefore most have proceeded as planned. However, 12 per cent expect pay freezes over the next year.

Therefore, employers will have to consider how to maintain employee engagement during a tumultuous economic period where pay increases may be rare and redundancy levels might rise in the wake of the pandemic. Being as transparent as possible about commercial restraints whilst emphasising the other benefits on offer will be one way for employers to overcome pay budget limitations. Employers increasingly consider the financial, physical and mental wellbeing of their employees, so reinforcing the support they offer in these areas alongside learning and development opportunities through Total Reward Statements may be one way of driving engagement.

Post-Brexit impact on business operations

Businesses need the UK and EU to “knuckle down and agree a deal” according to the British Chambers of Commerce (BCC), as “livelihoods in both the UK and EU depend on rapid moves to break the logjam”. The BCC continue their campaign to keep things as fluid as possible across borders instead of introducing numerous compliance costs when firms are already dealing with higher costs and lower revenues in the wake of COVID-19.

Stay up to date

Do you have any queries about how you can strengthen your reward system and prepare for workforce planning post-Brexit? Talk to us today about reward frameworks and how to design a robust reward system for the future.

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