Brexit and the ramifications on Global Mobility
In a historic vote, the United Kingdom has elected to depart the European Union.
In a historic vote, the United Kingdom has elected to depart the European Union. The confirmation of the results has divided the nation. With leave having won on a narrow margin (in percentage, but securing a decisive victory in individual votes), the issue of leaving the EU was one won in the counties and rejected, categorically, from the cities of industry - London, Edinburgh, Manchester, Liverpool and Cardiff all voted for remain. Birmingham, the largest city to vote for leave, is historically one tied to manufacturing and immigration; however, one that has seen itself emerge as a potential candidate for multinationals seeking UK headquarters with lower seat-costs on the back of the high-speed train, which will cut travel to London to under a hour.
The vote from Birmingham is just the beginning of surprise associated with the result of leave. The atmosphere in most multinationals and across the capital has been one of quiet confidence in remaining within the EU; however, this underestimated the voter turnout in the counties and the emotive issue of the political reasonings to leave. The political ramifications of the vote will have seismic changes across Britain, but it is yet unknown what those will look like. The morning has seen the UK have its Prime Minister step down, the EU issue a statement they wish to resolve this quickly (no timelines have been agreed), a concern around the position of Scotland and a crash of the pound into its worst value since 1985.
As Nick Jackson, Head of Global Mobility at Lloyd's Register says, "We won't know for some time how this is really going to pan out, but at least we've got a decision. There will undoubtedly be more administration for us in regards to immigration in particular and I would expect many of us will see some shift in the countries we see our people going to as businesses adapt to a new order." And while this is correct: we do have a decision after months of debate and discussion, we still do not have answers. The failure of the leave campaign for Global Mobility (political machinations aside) has been its inability to confirm what the face of immigration will look like following the exit.
Selina Jones-May, Group Director of Global Mobility for WorleyParsons added, "The polls in recent weeks have been close, so any last minute contingency planning undertaken will form a great foundation for the beginning of this new journey. Mobility professionals have been brainstorming and hypothesising over the many ramifications of a decision to leave – these issues have now become a reality and yet there is no clarity yet available to ascertain the way forward. What duration of grace period will be granted to our populations impacted by the removal of the free movement of workers principle? Planning around future mobilisations will be further challenged as a result. Also, how about the existing tax treaties and social security totalisation agreements which the UK benefits from – can these be re-negotiated as effectively now that the UK has voted to leave?"
The air of uncertainty is mirrored across programmes - those based in the UK, those based in Europe and those based elsewhere. The UK has benefited from the freedom of movement. Key sectors, such as finance, consumer goods and engineering have been buoyed by the top talent from Europe and, in the past twenty years, London has seen itself emerge as the undisputed financial capital of the world as well as one of the most desirable locations for people to live. The freedom of movement, as part of the EU directive, has allowed Global Mobility professionals to enable their businesses to grow and expand rapidly by being able to bring in a bigger pool of candidates.
Can businesses in the United Kingdom continue to have their strong talent agenda with the restrictions that are sure to come in as part of the exit from the EU? Is there any planning that can go into what the face of immigration will look like and how programmes can already begin to adapt? The reality is: no. Leave has failed in delivering their plans, choosing instead to surge to victory on the back off a promise that things will change and be better, but the outline of better has not been robust enough for mobility programmes to develop contingencies and future plans for what the face of Britain will look like in the coming years. So while it will be business as usual on the surface, the turmoil inside global mobility is beginning now.
For global mobility professionals, the instability of what the future will look like means additional work and a considerable amount with very little insight to what they can do immediately and how to begin planning long-term to support the strategic aims of their organisations. The question this morning, outside of talent, is with an exiting Britain, will multinationals wish to keep their regional headquarters in the UK? We have already seen some multinationals shift their operations onto the continent prior to this vote as a result of the uncertainty and it turns out - this was not unfounded. Will this continue? If it does, what does this mean for Global Mobility inside the UK? Will we need to begin making plans to relocate centres of excellence and entire teams to Berlin, Amsterdam or elsewhere? And, indeed, what will the EU's position be on UK immigration into the continent?
Selina posits, however, "On the counter argument, could a future outside of the EU for the UK be rosier? Switzerland and Norway have maintained their competitiveness as non members so perhaps the freedom and flexibility presented by independence could present more advantages in the longer term." And it is true, the uncertainty could go in the favour of the UK and, even, for global mobility. What we could see is an advantageous agreement with regards to highly skilled workers from the EU and from outside of it. There has been some discussion that the UKVI could change the Tier 2 as a result of leave to attract and enable top talent from non-EU countries such as America, Canada and Asia. The recovery of immigration control into UK hands will be a fascinating one.
Theresa May and those in government have committed to reducing net migration into the UK and their changes to legislation have reflected this for the past few years; however, with the leave vote winning, will this position change? Simply put, it will need to. The bigger cities in Europe are poised to take top talent from within the EU borders. This limits Britain, this reduces our competitiveness, this restricts the ability to have the right people in the right place. If immigration remains as restrictive for non-EU nationals, the UK will have no pool on which to easily bring people and the administrative burden of this on mobility will be critical. Turnaround for Tier 2 visas can be up to three or more months and needing to invest this time to bring talent delays the business in achieving what the purpose of the hire was for.
Selina is right when she says, "‘Brexit’ provides Mobility professionals across the country with a fantastic opportunity to showcase our specialist skill set and problem solving capabilities. Collaborating with internal stakeholders to roll out a communications strategy, undertaking due diligence activities and partnering with the business to navigate through this period of uncertainty will demonstrate the true value of our discipline."
This is a turning point for Global Mobility and for those who work within the industry. In the next few weeks, we will be leaned on increasingly to understand the changing legislation and to come up with strategies that will protect the business. Today, what Global Mobility professionals can do is begin to outline their communications plan around the Brexit impact. It will behoove those in management and senior positions to open dialogue now with the business about what they will need in the next year, two years, five years and onward. This allows mobility professionals to begin to scope out the requirements, which can then be adapted as more information is released on how Britain's exit will look with regards to immigration and other compliance issues. It will become mobility's job in the coming months to calm the fears of their business and navigate the changes as "captain of the ship."
There has been discourse about the strategic development of global mobility for the past decade. What is the future of the function? What should our titles be? Where do we sit in the business? The opportunity from Brexit is not just to define those answers, but to establish, firmly, a culture of mobility as partner, not reactor. The chief problem to this is the leanness of many programmes in a cost optimised world. Mark Derksen, Head of International Mobility at ARUP says, "For mobility this makes things more complicated, creates more admin and will be more expensive. I am also afraid it will be more difficult to get European young talent to the UK due to the high thresholds for visa. Off course, it might be. Since, we will not know anything today, and might only know some things in 2 years’ time."
Do you have the resource in your programme to take on the new administrative work that will be part of adapting to Brexit? With a trend having sat with outsourcing and reducing in-house talent, this could have shockwaves in the amount of work required and take directors and managers away from the strategic thought and put them instead working on process. As a positive result,this could spell a new generation of mobility professionals and ensure the business sees mobility as not just an investment in their employees, but in the function.
As more information is released and positions are determined, FEM will be reporting in tandem with our in-house members and our supplier network to ensure you are kept up to date.