While we’re here in the U.S. busy watching, with keen interest, the drama that unfolds between Donald Trump and Hillary Clinton, the world woke up this past Friday, June 23rd to the global news of Brexit. You may be asking yourself what’s with all this talk about Brexit.
What in the world is Brexit?
It is a portmanteau of the words Britain and exit. It signifies Britain’s surprising decision to exit the European Union also known as the EU. The two major sectors that will be greatly affected by this decision are the global economy and the recruitment industry. The effects will be examined in this article.
Effects on Global Economy
Investors do not like uncertainty and this is what the Brexit decision will and has already caused. The decrease in Asia’s equity markets can be regarded as an early indicator of the impact this decision will have on the world economy. The US markets lost more than 800 billion in market value, according the Wilshire index this past Friday. Its worst trading day in 10 months. Britain comprises about 3.9 percent of the world’s output. This cannot be likened to the output produced by America or China. However, America’s economy has been weak for sometime now and we are worried about China’s ability to pay its huge debts. Britain’s economy is reputable in Europe and the last thing anyone wants now is the disruption to the growth of Europe.
A recession perception will be sure to follow in Britain because corporate investment will be affected as a result of uncertainty about future access to the single market as well as other places where Britain has piggybacked on trade deals conducted by the European Union.
The bleak outcomes of the economy become more glaring, expenditure on big-ticket items is likely to reduce. The falling pound will increase inflation, thereby crippling real incomes. Jobs will be lost. The hours spent whole working as well as wage growth will reduce drastically. A recession in Britain is enough to have a meaningful effect on the entire European economy. Europe will suffer a fall of about half in Britain’s GDP growth.
The extent to which Brexit will influence the existing fault lines noted in China’s and southern Europe’s economies is a big concern. We need to remember that Italy also has its own referendum in October and Matteo Renzi, Italy’s prime minister, stated that he will resign if he’s not favored by the result. Brexit will definitely help his chances. The European Central Bank can intervene and help suppress the increasing anxiety by buying bonds, it however, cannot do much to cure the menace of weak growth.
A weaker European economy, that is likely to emanate from the Brexit vote, will also affect Chinese exports. A renewed bout of the strength of dollar is a bigger risk. As the European currencies weaken, pressure will be exerted on the yuan.
The kind of trade deal that Britain can negotiate with the EU and how quick it can be done will determine lots of things. If Britain secures a quick deal with no huge reductions in accessing the single market, then the negative impact the Brexit vote will have on the world economy may be prevented. Markets, however, seem not to be paying attention to this.
Effects on Recruitment Industry
The Brexit vote will make it more difficult for recruitment companies, like mine to hire the best hands from EU countries. At the moment, businesses in Britain are able to hire staff from the European Economic Area (comprising all EU countries and Norway, Iceland and Lichtenstein) without the need for immigration permission. However, Britain leaving the EU could lead to the inability of workers from other member states to freely travel to the UK for work and vice versa.
The Brexit vote will enable Britain to apply its policies to assess new arrivals and not the current regulations set by EU. This may include a points-based system like the system applied to non-EU citizens. With this, employers will be responsible for ensuring that their employees were allowed to work in the UK. Also, workers from other countries may be discouraged from looking for work in the UK.
Moreover, the United Kingdom may find itself in a situation similar to that of Norway, if it remains in the European Economic Area and bound by the EU’s policies on the free movement of workers. With this, the recruitment of workers from the EU will be easy. However, with the Brexit vote, the free movement of workers will be more conditional with strict restrictions.
As global companies continue to rid themselves of what they perceive as excess costs and employees, I believe that Brexit coupled with the current global tyrannical tone set forth will continue to create bumpy recruiting repercussions. What do you think about the Brexit vote? Do you think other countries that make up the European Union may follow suit and exit? Would love to hear from you through the comment section below.
I am president and owner of A. Solomon Recruits, a 100% minority, woman (WBENC and WOSB) certified search boutique that caters to finance, Fintech and healthcare. Data Governance Management, Infrastructure Management, Information Technology and Cyber Security conducted searches for both industries. I am also a career catalyst, an impetus for professional change. I offer game changing, disruptive insight on executive search, career tips, advice as well as, real talk messages that will inspire, empower and create limitless pathfinding journeys. My goal is to make you continue to think, question and push your career boundaries. I’m also a girl, who proudly reps Brooklyn. A proud Brewers (Vassar) alum. A mother of four beautiful children. An always keep it real champion of global inclusion and social responsibility recruiting initiatives. If you like my writings and would like to continue reading about my executive search journeys and unique career coaching techniques then like, comment below and follow me: Facebook: https://www.facebook.com/asolomonrecruits/ ; https://www.facebook.com/Cocktails-Career-Talk-534763273361609/ Twitter: https://twitter.com/RealTalkRecruit https://twitter.com/CocktailsCTalk