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Brexit Effects Adding to Wage Pressures on UK Employers

Written by: Keith Tully

Reviewed: Wednesday 15th August, 2018

Fewer EU nationals are coming to the UK to work in the wake of the Brexit referendum of 2016 and the situation is now adding to the pressure on employers to increase wages among their workforces.A pound coin with the Union Jack flag

That’s according to the Chartered Institute for Personnel and Development (CIPD), which has reported that the number of people moving to Britain from other EU countries is at the lowest level since 2013.

Partly as a consequence, the total number of people applying for jobs within the UK economy has fallen significantly during the past year, from 24 to 20, on average, in the case of low-skilled jobs and from 19 to 10 in the context of medium-skilled positions.

For just over half of the businesses polled by the CIPD, this dwindling in the number of potential candidates for their specific positions has resulted in a need to pay higher wages to attract and retain the right people.

Around 40 per cent of all employers asked said that it has become more difficult to recruit people to job vacancies in the UK over the course of the past 12 months.

Key staff and new starters are among those most likely to be beneficiaries of increased salaries as employers battle to maintain the right balance within their respective workforces.

Around 30 per cent of companies have increased salaries for the majority of their staff, while 25 per cent have reportedly done so for people they consider to be key members of their teams.

“The most recent official data shows that there has been a significant slowdown in the number of EU nationals coming to work in the UK over the past year,” said Gerwyn Davies, senior labour market analyst for the CIPD.

“This is feeding into increasing recruitment and retention challenges, particularly for employers in sectors that have historically relied on non-UK labour to fill roles and which are particularly vulnerable to the prospect of future changes to immigration policy for EU migrants.” 

It is currently unclear on what terms the UK will exit the EU as it is scheduled to in March 2019 and what ramifications Brexit might have on the prospects of British and European businesses.

Keith Tully

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Keith Tully
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Keith has been involved in Business Rescue since 1992, during which time he’s worked for both independent and national firms. His specialties include company restructuring matters and negotiating with HMRC on his clients behalf.

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