Brexit Impact

How will Brexit Impact Tech Hiring in the UK?

While UK businesses continue to grapple with shortage of technology professionals, a lot of attention has already been drawn to what the future holds – particularly after the formal exit of the UK from the European Union, scheduled on March 29, 2019.

That the Government and the businesses are worried about this eventual reality is just an understatement – the impact is expected to be far-reaching than what was anticipated. Even though the opinion is divided on the perceived benefits of the separation, one thing is certain – restrictions on the movement of people within the EU is going to severely impair the ability of firms to hire technology talent. This holds true for digital talent more than the others.

Industry leaders have also been voicing concerns that their inability to put people and jobs together is going to hamper business operations and dent their credibility in the market. The UK is widely seen as the tech leader in Europe, a distinction that may be shaken due to Brexit. To maintain its leadership position in innovation, it is important that the UK continues to pursue business opportunities through the EU Digital Single Market. While it looks like that businesses in the UK will still be accountable to the GDPR regime, at least for sometime, an important question has cropped up regarding the storage requirements of data originating in the UK. At the other end of the spectrum, tech businesses in the UK have made it clear that the Government needs to factor in data-residency laws while negotiating a Brexit deal. Without unimpeded cross-border data flows, UK’s digital economy will be seriously imperiled.

Another key concern for the UK tech sector and the digital service ecosystem is the question of access to the EU market. Industry insiders believe that while a lot depends upon the Brexit trade agreement, failure to be a part of the Single Market for services can effectively mean loss of competitive space to rivals within the EU. 

Immediate impact

Some of the immediate effects of Brexit is going to be, among others, access to talent, cross-border data flows, and innovation.

  • Free movement of people: While the freedom of movement rules will still apply during the transition period (as per the Brexit Withdrawal Agreement), tech companies are worried about the continuity of people movement once this period comes to an end in 2021. There is no doubt that the UK tech sector relies on EU talent – about 13% of all tech workers in the UK are from the EU according to a report by TechNation. If UK decides not to take part in the EU’s free movement mechanism after the transition period, tech hiring is likely to take a nose-dive – both in terms of volume as well as quality.
  • Innovation: As per a research conducted by venture capital analytics company Dealroom.co for the Government’s Digital Economic Council, UK is the home to 35% of all ‘Unicorns’ in Europe. The UK has produced 60 of the 168 ‘Unicorns’ currently operating in the continent. According to another study by London & Partners, British tech start-ups have raised £5bn in VC funding in the past 2 years since the Brexit vote. Almost £900mn have been raised in 2018 alone, reaffirming UK’s position as the tech-hub of Europe. While these trends clearly demonstrate that the attractiveness of UK and particularly London, has not changed even after the vote, it is essential to be circumspect on the continuity of innovation which is driven by talent.
  • Visa & immigration rules: While a section of the industry believes that if talent is available in any corner of the world, visa regulations will not be an impediment, there are others who feel that there could be a talent crunch if job-seekers from the EU are not given preferential treatment for visa applications.

On the other hand, there has been a lot of debate on the definition of unskilled worker and whether it should be linked to salary. By some estimates an annual salary of £30,000 is the reference benchmark for non-EU workers to gain employment in the UK. As a result, a lot of EU job-seekers who are predominantly interested in skilled but lower paying jobs as per a research by the job-site Indeed, aren’t able to get the requisite work permit, compared to non-EU job-seekers who are interested in high-paying tech jobs which are way above the benchmark. If the government decides to extend the same benchmark to EU job-seekers as it is the case for non-EU job-seekers, it will curtail access to a large section of talent. A case in point is entry-level but specialist Cybersecurity or Automation jobs which may fall short of the reference benchmark.

Moving towards a no deal scenario?

With less than 100 days to go until Brexit, and a vote scheduled mid January 2019, both the parties – UK and the EU are gearing up for a possibility of a ‘no deal’ scenario, having prepared for contingency plans. While businesses feel that a ‘deal’ with all its flaws, is an absolute necessity to maintain UK’s competitive edge, a hard Brexit could mean “the nightmare scenario of a no-deal departure which would be a wrecking ball for our economy” according to John Allen, President of the Confederation of British Industries (CBI).

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