As the drama around Brexit rolls on, uncertainty remains. In this less than ideal environment where no one can really comment with any confidence as to what will happen in the upcoming months, we consider the role HR can play to help both the business and employees during such uncertain times.
Pensions & pay - scaremongering vs. pension pot reality
Although the stock markets have been on an upward trajectory since the Brexit vote, buoyed by the weakness of the pound, UK shares remain fragile amid Brexit turmoil.
The UK stock market has slipped lower amid the political fall-out from Theresa May's Brexit plan. The FTSE 100 share index ended 0.3% lower at 7,013.88. The tomfoolery of the parties holds the headlines and has taken away the attention of the effects this will actually have on workplace pension pots.
Defined contribution schemes depend on the performance of investments; as such negative movement in the stock market will affect the value of these pension pots and any retirement income or annuity which they can buy.
HR professionals have a duty of care to employees, especially those approaching retirement, to offer some form of financial education. This shared knowledge will help ensure employees are aware of the risks associated with how their funds are invested, and the benefits of moving funds into a lower risk, lower yield portfolio closer to retirement.
Many employees are trying to improve their retirement prospects, with some delaying retirement until at least age 70 and cutting back on spending to save more for their future.
Away from retirement income, looking at the here and now, ONS data from February showed average earnings excluding bonuses rose 3.5% in the three months through December 2018 - the highest for 10 years.
Although this is good news with wages growing faster than the cost of living, allowing for some relief to households already feeling the squeeze, analysts are urging caution and are predicting no further increases before the UK exits the EU in... well, who knows?
Will points encourage skills shortages?
Now take time to sit back and imagine the UK with an immigration point based entry system.
A primary concern for the business since the Brexit vote has been around potential skills shortages, particularly for lower paid roles such as hospitality and construction.
A points-based system could mean such workers would likely not meet the criteria and high skills, high salary, five tier points based system proposed once the UK leaves the EU.
Employees could be left with a massive skills shortage in as little as four years when the transitional period comes to an end. War on talent is coming.
HR can strategically stay ahead by conducting an analysis of both their internal labour market and external factors, by means of a thorough pay benchmarking analysis and creation of a pay framework. This will allow HR to easily see where they sit relative to competitors and to pinpoint potential flight risks in key areas.
It seems like the NHS are an easy target when it comes to skills shortages. Many EU nationals have left employment in the NHS since the Brexit vote. At the end of June 2018, there were 42,000 vacancies in the NHS (around 12% of all positions), and then experts predict an additional shortfall of 5,000 to 10,000 nurses in the NHS in England by 2021.
A short-staffed NHS will obviously see a reduction in the quality of patient care. Employers will start to feel the pinch of the declining NHS unless they are able to supplement the care within their reward offering.
Reward professionals should take the opportunity to review their PMI offering and make sure employees are fully aware of the benefits offered and how they can take advantage of them. Not only will this help provide reassurance to employees should they require medical care, it will also help ease some of the strain on NHS services.
In addition, it’s time to explore new initiatives to provide more proactive and accessible support; for example Videodoc. This GP on-demand online service is available as a standalone platform or can be accessed through employee experience portals such as Hapi. The service has seen a huge increase in subscribers since its launch in September 2018. With the shortage of family doctors estimated at 8,000, pushing waiting times towards three weeks, and the NHS 111 helpline exploring digital options, there’s now no debate about the importance of viable web-based services in helping with current strains and future provision.
Relocation or Improving the View?
EY’s Brexit tracker suggests over a third of UK Financial Services firms have either confirmed or are considering relocating operations staff to Europe, with Paris set to become the new post-Brexit trading hub. Notably, the number of firms being specific about plans has increased from 19% confirming at least one relocation in Europe at the end of 2017 to 25% as of September 2018.
Up to 12,000 jobs in the City of London could be lost in the immediate aftermath of Brexit, equating to a possible £12 billion in lost revenue.
For these companies, alongside ensuring sufficient mobility within the workforce; employee engagement and communication strategies should be a top priority in the coming months, in order to reassure, retain and motivate those key employees during what is sure to be a challenging transition period.
Just because our government cannot manage their own decision-making process does not mean HR and employees has to suffer the same fate.
Ask yourself - What can you do to look after your employees in a time of uncertainty? Now is a great opportunity to offer stability in an unstable time.
To discuss how Innecto can help your HR team prepare for Brexit, email james.bigus@innecto.com or give us a call on 020 3457 0894.
