As Brexit looms, its impact on the labour market may be bleak
Uncertainty brought about by the Brexit referendum contributed to a dampening of hiring sentiment in the labour market. Even before the referendum, Indeed ( a monthly index of UK job postings), showed declines starting in February 2016, signaling a deterioration in British employers’ willingness to hire that is only just now beginning to materialize in official employment figures.
Indeed data also showed that in the 48 hours following the announcement of the referendum results, the share of UK jobseekers looking for opportunities in European countries and in other non-EU English-speaking countries was significantly higher than the average in the days prior to the vote. In the months that followed, interest in jobs outside the UK remained at elevated levels.
Whether or not such an increase in interest will translate into a surge in emigration to EU and other English-speaking countries along with a possible decline in EU citizens’ immigration to the United Kingdom remains to be seen. Even the most up-to-date official migration statistics date back to June and they do not show any significant impact of the Brexit referendum on inflows or outflows during the run-up to the vote.
That said, one early indicator of sign of a possible impact of Brexit on the British labour market may be visible in the ONS November labour market release, which saw the number of workers born in the EU in employment level off, while the number born outside the EU increased, reversing previous trends. Similarly, the Department for Work and Pensions reported that the number of NI numbers registrations to EU nationals has flatlined over recent quarters, reversing the generally upward trend since 2010. With higher price inflation on the horizon, however, even a strong labour market may struggle to deliver the wage improvements badly needed by British workers. While there is still not enough evidence to indicate that Brexit has had a major impact on either the labour market or the economy just yet, it is also unlikely that the increasing uncertainty it brought will aid productivity growth in the short run.
Much will depend on the outcome of the negotiations that will shape the new relationship between the UK and the rest of the EU in the future. For the time being, however, a myriad of factors coming together may make for a bumpy road ahead in the British labour market.