On June 23, 2016, citizens of the United Kingdom will take part in a historic referendum to decide whether Britain should remain a member of the European Union. Some believe that a British exit — or “Brexit” as it is commonly called — would strengthen Britain’s position within Europe by reaffirming the nation’s sovereignty, strengthen the British pound against other world currencies and reduce the strain on housing and public services that extensive immigration to Britain has caused.
Those who oppose Brexit say that the benefits of EU membership outweigh any sovereignty that Britain may gain by leaving the EU. Brexit, they say, would make British goods less attractive to other nations because tariffs would result in higher import costs. Opponents of Brexit also believe that it could harm the British economy by stifling corporate investment in Britain and slowing the creation of new jobs.
One thing about Brexit is certain: many citizens of the United Kingdom feel that Britain gives away more than it receives as a result of EU membership. To that end, Prime Minister David Cameron has negotiated certain provisions with the EU that will take effect if British citizens vote to remain within the EU. So, the job market is certain to change in some way regardless of how people vote. Let’s take a look at the ways in which Brexit could affect job hiring and recruitment.
Will Hiring Foreign Workers Become More Difficult?
The British job market is an attractive one for workers throughout Europe. Many British companies have the ability to pay their employees well, and they frequently hire workers from other EU member states to make up for domestic talent gaps. If Brexit passes, it is possible that Britain will move to limit immigration by restricting the number of approved worker visas. It is also possible that Britain will negotiate for the continued free movement of workers in exchange for the free movement of products.
If Brexit passes, Britain will most likely move to negotiate a temporary agreement quickly to avoid the possibility of EU citizens employed within Britain being forced to return to their homes immediately. After all, Brexit would affect British citizens employed in other EU member states as well — and few people want to cause a major disruption in the job market. The negotiation of a permanent labor agreement between Britain and the rest of Europe, though, could potentially take years to complete.
Will Foreign Worker Benefits Change?
For British companies making child benefit payments to foreign workers, those payments will probably decrease if Brexit fails to pass. David Cameron has already negotiated special exceptions for Britain in the event that Britain opts to remain within the EU. One exception is that British companies will be able to recalculate child benefits for foreign workers in accordance with what the children in those nations would ordinarily expect to receive. In many cases, child benefit payments will decrease.
David Cameron also negotiated a provision allowing Britain to limit benefits paid to foreign workers living in Britain for their first four years of employment during times of “exceptional” migration. Britain will most likely opt to limit benefits immediately, as the agreement with the EU only allows this “handbrake” to be in place for a maximum of seven years.
Will I Lose Employees?
Some companies fear that they will lose employees or valued contractors if Brexit passes. Many companies that export products to Europe, for example, use Britain as a base of operations. Companies as varied as Ford, Coca-Cola and Wal-Mart all transport goods throughout Europe via London. The same is true of the many American financial institutions that use London as a gateway to the European financial market. JP Morgan has already come forward to warn that they will cut as many as 4,000 British jobs if Brexit passes.
If Brexit passes, financial and transportation companies as well as companies that send goods to Britain for sales throughout Europe will need to decide whether they want to shift some of their operations to Europe or leave Britain entirely. If your company is is in an industry that could change as a result of Brexit, some of your workers may depart with the hope of receiving higher wages elsewhere. However, no major corporation has shifted business away from Britain yet.
Will Brexit Increase the Cost of Travel?
Many people see membership in the EU as a boon to Britain’s tourism industry. Because EU citizens can travel freely between member states, it doesn’t require a great deal of planning to enjoy a holiday on short notice. Some fear that Brexit will result in increased travel costs, though. For example, airlines currently consider the entire EU a single travel area. Airlines can compete with one another freely, which keeps fares low. If Britain leaves the EU, airlines may need to renegotiate service agreements, potentially resulting in increased fares.
Brexit could result in higher incidental travel costs, as well. For example, mobile phone providers within the EU have agreed to end roaming charges by 2017. If Britain leaves the EU, people traveling between Britain and the EU will probably pay higher rates for phone calls. Travel insurance may increase in price, as well. David Cameron has estimated that the cost to travel from Britain to another EU state will increase by £230. The uncertainty has left some companies in the tourism industry cutting their hiring forecasts.
Will EU Nations Stop Importing My Goods?
In the near future, British companies that export goods to other EU nations may see an upswing in sales if Brexit passes. Because the pound will likely lose strength against the euro in the short term, importers of British goods may take advantage of the opportunity to stock up.
Over the long term, though, an exit from the EU may create new obstacles for commerce between Britain and EU member states. Trade tariffs, for example, may make goods more expensive to import or export. Because of the increased cost, there may be less demand for British goods. British companies that currently export goods to EU states may see fit to put hiring plans on hold until the full effects of Brexit become clear.
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