‘Danger Wales could be left behind with a hard Brexit’
Keith Whitfield, professor of human resource management and economics at Cardiff Business School, outlines what Brexit could mean for Wales’ workforce and the wider economy
Following the shock political results seen on both sides of the Atlantic in 2016, there’s no doubt we’re living through some of the most uncertain times in a generation.
As the UK Government delivers its plan for Brexit, the impact remains to be seen – not least here in Wales, which faces unique challenges as a devolved nation.
It’s an interesting topic and my knee-jerk reaction is to say that no one has the slightest idea what the impact will be!
A lot of it has to be about the different forms that Brexit could take, and the impact on immigration policy if a ‘hard’ Brexit is chosen.
In the face of Theresa May’s insistence that the UK will leave the EU single market, the Welsh Government has pledged to fight for ‘full and unfettered access’ to it, and it’s imperative that Wales, in the coming months and years, avoids any situation which makes it more difficult for businesses here to export, trade and employ people.
The signs are certainly there that the Prime Minister is set on a hard Brexit and there’s a real danger that Wales could be isolated and left behind.
Being in the EU has brought enormous benefits to the workforce in Wales, with EU funding worth £680m to Wales every year.
Much of this is invested in social businesses and SMEs, many of which are based in the heart of communities, up and down the high street. Without this investment, fewer businesses will be able to develop and grow, leading to more boarded-up shop fronts, half-empty business parks and derelict communities.
Skills and training in Wales have also been boosted by EU membership, with, for example, Jobs Growth Wales supported by EU funding. Jobs Growth Wales has been a lifeline for many businesses, enabling them to survive through hard times, expand and flourish.
Continued skills programmes are imperative if we’re to build a workforce capable of allowing Wales to compete globally; we’re already sitting on a ticking timebomb with regards to a shortage of school and college leavers to fill the jobs vacancies expected to be available in 2024.
With the number of people in employment in Wales set to grow by around 54,000 by then, it’s essential to sustain and develop recent skills growth, but this could be seriously undermined by Brexit.
In terms of human resource management in Wales, one of the main effects is likely to be a reduction in the supply of labour, which will, in turn, perpetuate the skills shortage and develop pressures for pay increases in shortage areas.
Sustaining and expanding a business depends on having the right people in place, with the right skills and abilities to compete in the marketplace. For different businesses, this means different things; for example, a tourism business might rely on employees with foreign language skills to communicate with visitors, or a technology firm might need to foster international links.
There are signs that migrant workers are already being deterred by coming to the UK by uncertainty about their long term status.
Since June we’ve seen tentative signs that net migration is falling – although the number of previous EU migrants applying to stay in the country is on the increase – with the Brexit result seemingly undermining the attractiveness of the UK as a place to work and live.
This is likely to have an impact on recruiters already struggling to fill vacancies in key sectors such as engineering and technology, construction, education and health, and any reduction in the ability to attract those candidates – at exactly the time skills in the workplace need to be boosted – could see Wales businesses left behind.
In the longer term, it remains to be seen how Brexit will affect investment in Welsh businesses.
To my mind, if there really is a ‘hard’’ Brexit with the UK cut off from the single market, then it may well lead to disinvestment.
It seems a real possibility for the car industry and it’s definitely on the cards in the finance industry. It also depends on whether the UK can achieve a deal that will allow access in at least some sectors, whilst not agreeing to the free movement of labour.
In recent years, the economy in Wales has seen significant advances.
Close to a record number of people are in work and the employment rate has increased more than the UK average.
The Welsh Government is having a real impact on the jobs market, as seen by the recent announcement of 256 jobs in four businesses across Wales, created from the £136m Wales Business Fund and backed by European money.
Businesses now need clarification about what Brexit will mean for them, in order to forward plan.
Employers need a commitment to ensure their workforce has the right skills in place to compete on a global level, attracting investment into Wales and enabling the economy to thrive.