Brexit and Recruitment: Will it bring a contractor bubble?

This isn’t Project Fear. Nobody really knows what the impact of Brexit on recruitment strategies will be, especially with a no-deal still on the table. Yet we can only make educated guesses based on what is happening now and past experience. However, with 1 million EU nationals working on a permanent basis in the UK and many industries already facing a skills shortage and recruitment difficulties, I believe a perfect storm is brewing. One that may eventually create a contractor bubble like the one we saw in the lead-up to the Millenium bug scare in the ‘90s. Here’s why.

Settled status: barriers to ‘unwanted’ citizens

Even if just 5% of eligible applicants struggle to apply or are rejected, 175,000 people would be living in the UK without status.

There are currently 3.8 million EU nationals living in the UK, of which around 1 million are in permanent employment. Whilst EU citizens and their families will be able to apply to the EU Settlement Scheme to continue living in the UK after 30 June 2021, it is not straightforward

The think tank British Future has highlighted the many potential barriers to people applying for settled or pre-settled status - ones which are more likely to affect the vulnerable or those with limited English or IT skills.

After 2021: a more stringent system

From December 2020, the new skills-based system will apply. However, nobody knows how these applications will be assessed. Look at how Trump’s immigration policy has effectively created an “invisible wall” in place of the Border Wall. We may pour scorn on Trump in Britain, yet the progressive roll-out scheme has already effectively earmarked the ‘wanted’ and ‘deserving’ EU citizens.

Will EU citizens be ‘screened out’ by employers?

Over 50% of UK business leaders would be put off employing EU citizens after immigration laws change post-Brexit

A 2018 study by Blacks Solicitors, via Workplace Insight

The administrative and tax burdens that businesses will face to retain or hire new EU workers will be large and will unsurprisingly put many businesses off. As a recruitment consultant, I’ve had plenty of employers seeking to screen out non-EU nationals over the years.

Contractors can name their fee

All of this leads me to believe that we’re about to see a contractor bubble on a similar scale to the ‘90s. The Millenial Bug scare saw IT contractors worth £30 an hour (20 years ago) charging £150 an hour as fear gripped businesses. Contractors should be taken on to fulfil projects, which are then followed through by permanent staff. However, businesses may be left with no choice but to plug the skills gap by hiring contractors for what would ordinarily be permanent roles - leading to rates quickly escalating. Great news for existing contractors - and those brave enough to make the transition from permanent to contract. And for businesses who hire now before the impact of Brexit on recruitment begins to take hold, it presents a competitive advantage. 

Get a Brexit bulletproof hiring strategy in place. with our Brexit Recruitment Checklist. It covers all the employment areas you need to consider - and the steps to take to turn Brexit from a threat to a top-talent magnet.