The Future of Europe? Brexit and Beyond · 2020-05-04 · Arrows indicate the direction of revisions since November 2018 SIA | Staffing Industry Analysts Contingent Workforce Strategies

The Future of Europe? Brexit and Beyond

14 March 2019

SIA | Staffing Industry Analysts Contingent Workforce Strategies Council Webinar

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Speakers:

14 March 2019

Moderator: Peter Reagan, CCWP & SOW Management Expert

Senior Director of Contingent Workforce Strategies & Research, SIA

▪ Fiona Coombe, CCWP, Director of Legal & Regulatory Research, SIA

▪ John Nurthen, Executive Director, Global Research

▪ Adam Pode, CCWP Director of Research (EMEA & APAC)

SIA | Staffing Industry Analysts Contingent Workforce Strategies Council

Agenda

▪ General Overview

▪ Polling Questions

▪ Legal Issues

Brexit


Brexit Pros and Cons

Issue Pros Cons

Membership Fee Net Saving of £8.5bn Loss of Free trade and inward investment

Trade Ability to strike own trade deals Loss of existing free trade with neighbours

Investment Freedom from EU rules and regulations

Threat to status of City of London

Sovereignty Control over domestic affairs Loss of global influence

Immigration Control over borders Positive economic benefit/skills shortages

Security Control over borders Weakened security relationship with EU


Brexit Countdown Timetable

Date Event

12 March May’s bespoke deal (with backstop “guarantees”) voted down

13 March Parliament votes to “kill” Hard Brexit

Today Decision on extension to Article 50 to 30 June…..or longer?

21-22 March EU Summit

29 March Brexit Day (if no extension to timetable granted)

After March 30 Post-Brexit trade talks (18 April if No-Deal)

30 April €7bn net contribution to EU budget 2019 due

23-26 May European Parliament elections

1 June UEFA Champions League Final


UK Growth Compared to G7

7

6

5

4

3

2

1

0

-1

-2

-3

-4

2011 2012 2013 2014 2015 2016 2017 2018

Year on Year growth rates in percent; G7 countries

Source: Haver Analytics & IMF estimates

Fastest growth among G7

United Kingdom

Slowest growth among G7

Brexit Vote


Fifteen Year Impact on UK Growth

-10%-9%-8%-7%-6%-5%-4%-3%-2%-1%0%

No Deal

Free Trade Agreement

Chequers deal with amendments (May's Deal)

Chequers plan

Norway-style membership of EEA

How Brexit will affect UK GDP 15 years after the UK leaves the EU?

Source: HM Treasury, November 2018

-9.3%

-6.7%

-3.9%

-2.5%

Note: Each scenario has a range of outcomes; these figures show the middle point assuming 100% reduction in migration

-1.4%


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No-Brexit Impact by Sector

25

15

5

-5

-15

-25

-35

Estimated sectoral impacts in percent deviation of value added from No-Brexit scenario

Source: IMF

FTA WTO


UK Staffing Market Short-Term Growth

Top 50 firms €6.1 billion

30.9

31.2

31.9

32.5

33.2

5%1%

2%

2% 2%

0%

1%

2%

3%

4%

5%

6%

29.5

30

30.5

31

31.5

32

32.5

33

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2015 2016 2017 2018 2019

Market Size (£) Y/Y Growth

Source: Staffing Industry Analysts


Least Complex Contingent Markets in Europe

Source: Staffing Industry Analysts

Country

Staffing

market

maturity

Temporary

Agency Work

Regulations

Independent

Contractor

Usage

MSP/VMS

Maturity

Labour

Market

Efficiency

Employment

Regulation

Rigidity

Trade Union

Influence

Enforcing

Contracts

Pricing

Environment

Political

Stability

Human

Capital

United Kingdom 1 1 8 1 2 3 7 3 1 3 2 32 (30)

Switzerland 5 2 8 4 1 3 6 4 2 1 1 37 (37)

Netherlands 2 2 8 1 3 4 8 5 4 1 1 39 (41)

Ireland 7 2 8 1 4 3 5 6 3 3 2 44 (42)

Germany 4 5 9 3 3 5 8 2 5 2 1 47 (48)

Sweden 6 2 9 4 4 5 9 3 5 1 1 49 (48)

Hungary 4 4 9 5 6 5 3 2 2 6 4 50 (49)

Estonia 9 7 9 8 3 6 2 2 2 3 1 52 (54)

Austria 6 4 8 8 5 7 7 2 2 3 1 53 (49)

Belgium 4 5 8 4 5 4 10 4 4 3 2 53 (52)

Czech Republic 8 4 8 6 5 3 4 6 3 4 2 53 (52)

Denmark 8 3 9 5 3 4 10 3 5 2 1 53 (51)

Norway 7 8 9 5 3 8 7 2 2 1 1 53 (53)

2018 score

(2017 score)


Foreign Workers by Occupation

EU-27 nationals living in the UK UK citizens living in the EU-27

Source: Brexit Implications for Employment and Social Affairs, European Parliament


UK Net MigrationNet migration by citizenship, rolling year estimates (‘000’s)

Source: Office for National Statistics

Non EU figures adjusted for unusual pattern in student migration

By Type Annual Net Migration

EU Citizens

+74,000

Non-EU Citizens

+248,000

British Citizens

-49,000

TOTAL +273,000

To end June 2018


0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50%

Definite job

Looking for work

Study

With or joining family

Non-EU arrivals EU arrivals

Reasons People Come to the UK

Source: Office for National Statistics

EU and Non-EU arrivals 2016

Most migrants from the EU come to the UK to work

Most migrants from outside the EU come to the UK to study


Immigration Perceptions

Does immigration of people from outside the EU evoke a positive or negative feeling for you?

Source: Eurobarometer, European Commission, Autumn 2018


Who Else Wants a Referendum?

Sources: Ipsos Mori, Bloomberg


Attitudes Towards EUIn general, what image does the EU conjure up for you?

Source: Eurobarometer, European Commission, Autumn 2018


Potential EU Leaving Names

BREXITIREXIT

ESPANOPE

ADIEU

DEPARTUGAL

SWEDONE

FINISH

SOURKROUT

CZECH-OUT

GREXIT

BYEGIUM

DITCH

DUMPMARK

ROAMANIA

WITHDRAWSAW

OUTSRIA

NULLGARIA


European Union Challenges

▪ Economic and societal changes

▪ Pending departure of the UK from the EU

▪ Democracy and rule-of-law concerns in Poland, Hungary and some other parts of Europe

▪ A resurgent Russia

▪ Heightened terrorism threat

Source: The European Union: Ongoing Challenges and Future Prospects, Congressional Research Service, December 2018


Source: YouGov

Most Important Issues Facing the EU

Immigration


Source: YouGov


Terrorism


Source: YouGov


EconomicSituation


Source: YouGov


Unemployment


European National Debt

0%

40%

80%

120%

160%

200%National debt in Q3 2018 in relation to GDP

Source: Eurostat

182%

133%125%

111% 100% 98%86%

69% 61% 59% 53%38% 35%


Unemployment

0%

5%

10%

15%

20%

Unemployment % across the EU

Source: Eurostat

3.2% 3.6% 3.7% 4.0%5.0% 5.3% 5.6% 6.2% 6.7%

8.8%10.3%

18.5%

14.1%

6.7% 6.5%7.8%


0

50

100

150

200

250

Column1

Skills Activation

Skills Development

European Skills Index

Source: European Skills Index Technical Report, Cedefop 2018

Composite indicator measuring the performance of EU skills systems

Skills Matching


EUR v USD 15 March 2014 to 14 March 2018

Source: www.xe.com

Brexit Vote

Weakened Euro

$1.13 @ 14/3/18


GBP v USD 15 March 2014 to 14 March 2018

Source: www.xe.com

Weakened Pound Sterling

Brexit Vote

£1.32 @ 11/3/18


Source: OECD, March 2019

Global Economy Facing Serious HeadwindsInterim Economic Outlook Projections

Year-on-year GDP%. Arrows indicate the direction of revisions since November 2018


Source: SIA European Employment Barometer

Declining Temporary Demand in EuropeYear-on-Year change in temporary employment EU-28


Source: Company Financial Results

Country Adecco Manpower Randstad

UK +1%* -4% +5%

France -1% -3% -4%

Germany -10%** -21% -7%

Italy +1% -5% -1%

Netherlands -15% +3%

Belgium +1% 0***

Q4 Revenue Trends by Country (Organically in constant currency and trading days adjusted)

*Including Ireland**Including Austria

***Including Luxembourg

-11%***

Declining Temporary Demand in Europe


Agenda



▪ Legal Issues


Polling Questions

Will your contingent workforce programme be better off, worse off or stay the same as a result of the following Brexit scenarios:

No-Deal Brexit:a. Better offb. Worse offc. No changed. Don’t know


Polling Questions


Brexit with some kind of withdrawal agreement:a. Better offb. Worse offc. No changed. Don’t know


Polling Questions


No Brexit:a. Better offb. Worse offc. No changed. Don’t know


Agenda



▪ Legal Issues


Brexit: Deal?▪ Scheduled leave date: Friday 29 March 2019 at 11pm

▪ Withdrawal Agreement “transition period” to 31 December 2020

– Free movement continues– UK can negotiate trade deals – NI to remain in customs union pending a “soft” border solution (the “backstop”)– Rights of workers in the EU and UK continue– Data protection rules are adequate– Recognition of professional qualifications and the right to carry on

recognised professions remains– Enforcement of contractual provisions and judgements is facilitated;– Public procurement rules and the validity of framework agreements

▪ Political declaration on future relationship


Brexit: No Deal?

▪ No transition period

- Visa-free travel ends on 29 March 2019

- Border checks and tariffs on goods applied

- Cross-border transfers of data will need additional security measures e.g. standard contractual clauses, to meet EU standard

- Workers will not have benefit of any new EU rights in UK

- Recognition of professional qualifications & background checks may be affected

- Validity and enforcement of contracts may be more problematic


Brexit: Immigration

▪ Up to Friday 29 March 2019 at 11pm– EEA workers can live and work in UK without restriction and apply for permanent

residence (PR) card (i.e. indefinite leave to remain) after 5 years (British Citizenship after 6 years)

▪ Deal - During Transition Period to 31 December 2020: – EU Settlement Scheme: From 30 March 2019 EEA workers with or without PR card

must apply for “settled status”

- Deadline for applications: 30 June 2021 for those who by 31 December 2020 have five years continuous residence in the UK

- Pre-settled status for anyone who arrives in UK before 31 December 2020 – they may apply for settled status after 5 years


Brexit: Immigration

▪ No Deal

– EEA citizens resident in the UK before 29/3/19 are protected by the EU Settlement Scheme but must apply by 31 December 2020

– EEA citizens arriving may travel freely and stay up to 3 months

– For 3+ months, EU citizens must apply for European Temporary Leave to Remain for up to 3 years and any non-EU family members must apply in advance for a family permit

– Irish nationals are excepted under the Common Travel Area


Post-Brexit: Immigration

▪ From 1 January 2021:

- Visas for EEA citizens to travel and work

- Immigration based on skills shortages;

- Removal of Tier 2 cap and resident labour market test; reduction in skills threshold for Tier 2; easier to change employers

- Restrictions on low-skilled workers (12m, specific countries only); reintroduction of agricultural workers scheme

- Extend Immigration Skills Charge £1000 per visa year to EU nationals

Source: Recommendations of Migration Advisory Committee Report


Post-Brexit: Workers Rights

▪ No reduction in UK workers’ rights based on EU directives: – Agency Worker Regulations, Working Time Regulations, Fixed-Term,

Part-Time

▪ Right to vote on adoption on new EU rights

▪ Consultation on future alignment with new EU directives

▪ UK: “Good Work” plan (April 2020)– Clarifying tax and employment status– Right to request indefinite contract after 12 months– Statement of terms on day one– Removal of “Swedish derogation” contracts giving agency workers exemption

from equal pay


Post-Brexit: Data Protection

▪ For UK-based businesses– EU (Withdrawal) Act 2018 (EUWA) retains the GDPR in UK law

– UK Government will make appropriate changes to the GDPR and Data Protection Act 2018 to ensure data privacy framework remains aligned

– UK will recognise adequacy arrangements for free flow of data to all EEA countries and EC recognised countries

▪ If selling goods or services to EEA consumers– Must appoint an EEA-based representative, subject to exceptions

– Inform data subjects of details of representative

– Contracts and consents may need updating



▪ For EEA-based businesses

– UK becomes a ‘third country’ and for data flows to be ‘adequate’ other mechanisms are necessary i.e. standard contractual clauses (SCC)

– Amend contracts and update privacy notices; update records

– Review consents to ensure there is agreement to transfer to a third country

– Review nominated Lead Supervisory Authority



▪ For data flows from UK to US

– “In order to receive personal data from the UK in reliance on the EU-U.S. Privacy Shield Framework, Privacy Shield participants must update their Privacy Shield commitments by the Applicable Date, depending on how the UK and the EU implement the withdrawal”

– Update public commitments re UK data flows

– Update any policies relating to such data flows e.g. privacy notice, HR policy

– Maintain records


Post-Brexit: Contracts etc.

▪ Review – Contractual commitments and termination rights– Pricing, tariffs and exchange rate mechanisms– Choice of jurisdiction– Data protection wording

▪ UK judgements will not be automatically enforceable in the EU

▪ EU trademarks and Community design rights will no longer have effect in the United Kingdom

▪ The UK will become a ‘third country’ for EU VAT purposes


IR35 Off-Payroll Working Rules Reform

▪ Consultation on reform to 28 May 2019

▪ From April 2020 amended off-payroll working rules apply to public sector and medium and large private sector businesses i.e. >50 employees; t/o >£10.2m; balance sheet total >£5.1m

▪ Client hirers must determine employment status of PSC (personal service company) workers

▪ Fee-payer to withhold tax and NICs on deemed employment income paid to PSC workers


IR35 Off-Payroll Working Reform Proposals

▪ Client must provide determination to person they contract with [and the off-payroll worker]

‒ By the start of the contract or before the worker starts work

▪ Party contracting with client [and off-payroll worker]has right to request reasons in writing within 31 days

▪ If not provided at all or within timescale, client is liable for income tax and NICs due

▪ Proposal for client-led status disagreement process

▪ CEST enhancements and guidance


Summary

▪ Make plans for “No deal” and a softer exit based loosely around May’s deal

▪ All exit outcomes likely result in slower growth for UK economy – some worse than others

▪ Don’t expect changes in employment legislation

▪ Don’t be surprised if skills shortages worsen and agency fees increase

▪ Be vigilant and don’t overlook other non-Brexit challenges


Time for Your Questions…


Government Resources▪ Partnership Pack: https://www.gov.uk/government/publications/partnership-pack-

preparing-for-a-no-deal-eu-exit▪ No Deal Notices: https://www.gov.uk/government/collections/how-to-prepare-if-the-

uk-leaves-the-eu-with-no-dealSIA Resources▪ Brexit Implications for Employment:

https://www2.staffingindustry.com/eng/Research/Research-Reports/EMEA/Brexit-Implications-for-Employment

▪ Planning for Brexit: https://www2.staffingindustry.com/eng/Research/Research-Reports/EMEA/Planning-For-Brexit

▪ Quarterly Legal Updates: https://www2.staffingindustry.com/Research/Research-Reports/Legal-Compliance-and-Risk

Contact the SIA CWS Council team at [email protected]

Useful Resources

https://www.gov.uk/government/publications/partnership-pack-preparing-for-a-no-deal-eu-exit

https://www.gov.uk/government/collections/how-to-prepare-if-the-uk-leaves-the-eu-with-no-deal

https://www2.staffingindustry.com/eng/Research/Research-Reports/EMEA/Brexit-Implications-for-Employment

https://www2.staffingindustry.com/eng/Research/Research-Reports/EMEA/Planning-For-Brexit

https://www2.staffingindustry.com/Research/Research-Reports/Legal-Compliance-and-Risk

mailto:[email protected]


2019 SIA WEBINARS (subject to change)

DATE TITLE

Thursday, April 11, 2019 SOW and Services Procurement- A Guide to Success

Wednesday, May 15, 2019 IR35 Preparing for Change in the Private Sector

Thursday, June 06, 2019 Workforce Solutions Global Buyer Webinar APAC

Thursday, June 20, 2019 Developing a Best in Class Contingent Workforce Program

Wednesday, July 10, 2019 The Future of MSP/VMS What does success look like?

Thursday, August 08, 2019 Tested Strategies- SOW and Services Procurement

Wednesday, August 28, 2019 Background Checks, Immigration and H1B , How to Stay out of Hot Water

Wednesday, September 25, 2019 By the numbers: The best of SIA Research

Wednesday, October 23, 2019 Human Cloud, Artificial Intelligence and the bleeding edge of Talent!

Wednesday, November 13, 2019 Workforce Solutions Global Buyer Webinar APAC

Wednesday, December 04, 2019 2019 and the Year in Review

Tuesday, December 17, 2019 2020 and the Future of Talent

*Schedule and topics subject to change with notice

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Founded in 1989, SIA is the global advisor on staffing and workforce solutions. Our proprietary research covers all categories of employed and non-employed work including temporary staffing, independent contracting and other types of contingent labor. SIA’s independent and objective analysis provides insights into the services and suppliers operating in the workforce solutions ecosystem including staffing firms, managed service providers, recruitment process outsourcers, payrolling/compliance firms and talent acquisition technology specialists such as vendor management systems, online staffing platforms, crowdsourcing and online work services. We also provide training and accreditation with our unique Certified Contingent Workforce Professional (CCWP) program.

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Documents

The Future of Europe? Brexit and Beyond · 2020-05-04 · Arrows indicate the direction of revisions since November 2018 SIA | Staffing Industry Analysts Contingent Workforce Strategies