Brexit: what's at stake for businesses

People

Being Able to Attract and Retain the Right Staff

Having the right people in the right jobs is a must for any company. With Brexit looming, two thirds of Scottish small firms say they are concerned they won't be able to recruit enough skilled employees in the next few years.

Right now businesses in the UK can recruit whoever they want from throughout the EU, with no fuss, no delay and no additional complicated paperwork. They have for years planned on the basis that they will be able to do so for the foreseeable future: no wonder over a quarter of small businesses in Scotland (26%) employ EU nationals from outside the UK. In some areas such as the Highlands, this rises to over 40% ^[1] .

We do not know what the outcome will be. however, brexit may mean:

• a UK immigration regime, with quotas for certain professions/industries and a cap on numbers, administered jointly by the state and industry. This could be based on skills or salary. There could be a similar regime for UK employees wanting to work in the EU; or
• a similar system but with rules and numbers set at a regional level; or
• a continuation of a system similar to the current arrangements.

No matter how open the system, its success will depend on the UK being attractive to potential employees. People have to want to work here. That, in turn, will depend on things like high levels of workers' rights such as maternity pay and sick leave. It will also depend on the UK being, and being seen to be, a welcoming place for the talent we need and their immediate families.

The real life examples in this section show that companies of all shapes and sizes are very concerned about their access to people with the right skills when they need them. This applies in many sectors, at all skill levels and throughout the country. It is not just about today's hard-working fellow EU nationals but also about their successors we need to see coming to join or replace them. In many cases we see that companies have tried but been unable to recruit enough UK staff. The result therefore of new restrictions could be scaling back operations, relocation or closing down altogether.

People: What Businesses Say

The examples below capture what companies are saying to us about what's at stake for them, in their own words, demonstrating the real issues they face.

Walkers of Aberlour, one of Scotland's most iconic and successful companies, is already feeling the impact of Brexit. The uncertainty is impacting on their relationships with buyers and others. Tariff free trade with EU markets is vital to their business, as is ready access to affordable ingredients. Crucially, Walkers employ around 1,700 people on a seasonal basis of whom 500 are EU nationals. The growth of the business has been reliant on these high quality workers, some of whom have advanced to hold senior positions. The company's recent strong growth would have been impossible without EU workers, as would future investment plans. The company are unable to identify many, if any, compensating opportunities which would emerge from leaving the single market.

The University of Edinburgh, one of Scotland's largest organisations, with a turnover approaching £1bn, is particularly concerned about free movement of people. 26% of university staff and 15% of students come from elsewhere in the European Union. EU nationals are not only an irreplaceable asset to the intellectual life of the university, they also add hugely to the diversity of experience of all who work or study there. Anything –whether new procedures or a less welcoming atmosphere - which reduced the flow of people (in either direction) would be very damaging. That flow is partly supported by EU funding - the University of Edinburgh is the biggest recipient of Erasmus+ funding for student mobility in the UK. It is also very successful in winning EU research funding. EU funding for student mobility and research has no equivalent within the UK - it makes possible international collaboration on a scale mirrored nowhere else. One example is the €64 million awarded over 5 years towards a unique pan-European project, led from Edinburgh, which aims to improve the testing of new treatments to prevent Alzheimer's dementia.

Bruce Farms has been a big player in rural Perthshire for many years, well known for high quality fruit and veg. They are very concerned about finding future staff, especially as they have tried in the past to recruit locally but with very little success. Taking farm and factory together, they employ 375 workers from elsewhere in the EU, largely on a seasonal basis. Treating these staff well, they have never before experienced any difficulties in attracting staff; rather the reverse. Not so this year. A combination of uncertainty - with rumours abounding about how EU nationals will be treated in the UK - and exchange rate changes - have had a dramatic impact on supply and meant that there is very real concern for the 2018 season. Existing plans to invest and expand have already been shelved; if no solution is found soon for the future supply of seasonal workers then fruit and veg production will simply have to cease.

Angus Soft Fruits says it accounts for around 60% of Scottish soft fruit sales, and 15% of total UK soft fruit sales, selling to nearly all major UK supermarkets. Angus Growers employ around 4,000 seasonal workers. There is already a 5-10% shortage of workers. Long term unemployment in Angus is low, and many of those without work would either not be physically able to pick or else based in the wrong location, so sourcing a local labour force is impossible. It is vital that future labour schemes are simple and unrestrictive. If not Angus Soft Fruits may find themselves without a workforce. Assured Produce, the Health and Safety Executive and the supermarkets determine the standards and rules which Angus Soft Fruits must abide by: in their own words "Anyone who suggests that leaving the EU will reduce red tape is deluded".

Queensferry Hotels are particularly concerned about being able to secure the range of staff they need to continue to provide excellent service to their guests, north and south of the Forth. Around a third of their payroll are from mainland Europe and they have already experienced both the departure of key members of staff and a marked increase in the difficulty of recruiting new ones. They – like many of their fellow hotels and indeed of their suppliers – are sceptical about ever replacing this workforce from UK sources. The fall in the pound may have brought in more trade in the short term but that is likely to be more than offset by rising costs, in particular of food and of wine imports.

The Scottish Professional Football League ( SPFL) state that the existing flexibility to employ players from Europe and around the globe greatly benefits clubs within the Scottish Professional Football League. Not only do these players add enormously to the standard of the game in Scotland, they also generate increased profile and much-needed revenue from the SPFL's overseas broadcast contracts in over 150 countries. The SPFL is keen to ensure that any Brexit deal maintains this flexibility and doesn't add to the costs of attracting overseas players, reflecting the fact that Scottish football makes a unique and valuable contribution to the sporting, social and economic fabric of Scotland. The SPFL is keen to ensure that any changes to the visa system for overseas players will enhance, or at the very least maintain, the flexibility currently enjoyed by SPFL clubs operating in the increasingly competitive worldwide market for players.

Camphill Scotland support more than 500 people with learning disabilities and other support needs, ranging from children to older people. Their survey found that 68% of the 251 short-term co-workers currently living and working in Camphill communities in Scotland are from other EU countries. Of the 165 people working as long term co-workers, 53% are from other EU countries. Any future restrictions upon the future freedom of movement of EU nationals, and upon their current rights to live and work in the UK, could, therefore, have far reaching consequences for the Camphill communities in Scotland, placing in jeopardy the long-term sustainability of many of the Camphill communities, and of the education, care and support they currently provide for people with learning disabilities, and with other support needs.