Recruitment expert predicts impact of Article 50 on retail, hospitality and leisure sectors

British job hunters looking for work in the retail, hospitality and leisure sectors will be able to ‘name their price’ when it comes to wages, should EU Nationals be forced out of the country when the Brexit process is complete.

That’s the claim from a recruitment expert specialising in the retail, hospitality and leisure sectors, following market research which revealed almost two thirds of organisations in the industries will lose staff if a reciprocal agreement is not reached.

Mike Wood, managing director of Detail2Recruitment– which undertook the research in March 2017 – predicts retail, hospitality and leisure brands could be forced to close some of their doors, especially in the more provincial areas, if foreign workers are asked to return to their home country. This, he says, is due to a lack of willingness from British job seekers to undertake lower level and service-based job vacancies, which EU Nationals are typically keener to fill.

Mike said: “At best, they will be forced to compromise on the levels of customer service they can deliver, but the knock-on effect could be the hours they are able to stay open or if they have enough staff to even run a business.”

The data revealed that EU Nationals make up at least 20 per cent of the workforces in two out of every five UK retail, hospitality and leisure businesses. It is perhaps unsurprising then, that 53 per cent of recruiters working in these industries said they will find it significantly harder to fill job vacancies without a reciprocal agreement.

Reacting to the findings, Wood says that should a reciprocal agreement not be reached following the triggering of Article 50, “the government will need to significantly overhaul the current benefits system.

“These industries collectively contribute £514billion to the economy[1]. If organisations in these sectors do lose a high percentage of their workforce, the only way to plug the gap will be to make the current benefits system so unattractive that previous claimers feel compelled to work.”

According to Wood, the outcome of the Referendum caused such uncertainty in the hospitality industry that investment was instantly paused, with plans for expansion also put on hold. This, he says, has taken months to recover from.

However, he predicts that despite the potential for a large proportion of workers to have to leave the country, the triggering of Article 50 will actually go some way to reassuring those responsible for HR, recruitment & resourcing, instead of panicking them.

“We’ve been waiting for this to be announced for a long time; ultimately, people want to know something is actually going to happen,” he said. “The fact Article 50 has been triggered won’t change businesses overnight, but it will make company recruiters sit up, take stock and put a plan in place.”

Though the research undertaken highlighted particular concerns from HR professionals working in the industry – such as a lower spend on food and drink, an increase in supplier costs and fewer tourists visiting the UK – Wood applauds the businesses broaching the situation positively.

“Reassuringly, over half (54 per cent) of those we surveyed said they’ve already been planning for the impact of Brexit for months now,” he said. “These will be the businesses that end up on the front foot, if and when their current EU National team members are asked to return to their home countries.

“Whether triggering Article 50, and the subsequent outcomes have an immediate impact on the retail, hospitality and leisure sectors, or it takes years for us to realise the consequences, ultimately we need to get to a position where we rely on the capabilities of British job seekers, and they are encouraged to be proud of undertaking work in these sectors.”

Wood, who opened Detail2Recruitment in 2002, points out that other countries with economies which are significantly outperforming the EU could prove to be the gold pot at the end of the Brexit rainbow.

“Our joining of the EU was only supposed to be to increase our trading opportunities; in hindsight, it would’ve been beneficial to stay that way so we were never left in this position.

“However, we only need to look at places like India and Brazil to see alternative options; GDP is growing by around 7 per cent a quarter in India, compared to the 0.6 per cent we see coming out of the EU,” he said. “We’re not restricted to trading with the EU, and this could actually open up more opportunities for organisations to strike new, more profitable deals which also bring with them a new generation of talent.”

Looking forwards following the announcement of Article 50, Wood is optimistic that the industries in which he sources and places the very best talent will continue to prosper – but only if businesses allow their operations and recruitment teams to be proactive in the face of uncertainty.

“Even the very best economists are stuck in limbo; the majority predicted the outcome of the Referendum would lead to an economic crash – we’ve survived. They won’t make similar predictions again, simply because they can’t.

“Businesses that consider themselves smart – whether large and small – need to get their contingency plans in place now; employ and team up with experts who are best placed to source permanent, hard-working candidates to fill the job vacancies already emerging in the retail, hospitality and leisure industries. Not doing so will leave you high and dry, while the effects of Brexit continue to happen around you.”

Comment from Mike Wood, managing director of Detail2Recruitment

[1] https://www2.deloitte.com/uk/en/pages/press-releases/articles/leisure-sector-grows-to-117-billion.html
http://www.bha.org.uk/wordpress/wp-content/uploads/2015/09/Economic-contribution-of-the-UK-hospitality-industry.pdf
https://www.google.co.uk/webhp?sourceid=chrome-instant&ion=1&espv=2&ie=UTF-8#q=retail+industry+in+UK&*