2016 is likely to go down in history as one of the most unpredictable years in decades, particularly from a business and political perspective.
The year marked two of the most historic political events in a generation. Britain’s decision to leave the European Union on the 23rd of June sent shockwaves throughout Europe and indeed the rest of the world, and resulted in the resignation of Prime Minister David Cameron followed by the appointment of Teresa May as our new Prime Minister. A few months later, Donald Trump defied pre-election polls by defeating Hilary Clinton to become the US President-elect.
The end of Globalisation?
In the last couple of decades, many academics, business leaders, and politicians have been commenting on Globalisation and the concept of the ‘borderless world’ that we are living in today. This is the idea that capital, goods, services, and people can move freely between different nation states, as well as the enhanced power of multinational companies who are able to operate in several different countries. Many academics were arguing as recently as ten years ago that globalisation was unanimously viewed as a good thing by states and the people that lived in them. If this statement was true ten years ago, it is hard to argue that this view remains the same on the back of the ‘Brexit’ vote and Trump’s victory.
The free movement of people to the UK from Eastern European countries was arguably the most important issue during the EU Referendum. Nigel Farage had frequently argued that this “globalised world” meant that the UK could not control the number of people coming into the country and that British nationals were being deprived of employment because of this. Meanwhile, in the US, Donald Trump was a harsh critic of America’s trade deals and even indicated that he would take the US out of the Trans-Pacific Partnership trade deal on his first day of office.
What effect could these events have on UK businesses?
I think the most interesting question surrounds the possible restrictions on the movement of labour and the effect that it might have on the skill levels of UK workforces. I am aware of one example of a prominent specialist engineering company that requires manual machinists to carry out their work. When you consider that the UK is dominated by automatic machinery, the pool in the UK for manual machinists has become so narrow that such talent comes at a high price, and the company decided it would be more sensible to recruit talent from Poland where manual machinery is a common trade. Therefore, if the freedom of movement is restricted to such an extent that Polish nationals find it difficult to move to the UK or are even forced to return to their homeland, this company could be faced with high recruitment costs or the need to upskill a significant proportion of their workforce.
This is just speculation at this moment in time as Article 50 has not yet been triggered, but hopefully 2017 will provide a clearer picture of what changes we can expect.
What does 2017 have in store?
It will be interesting to see if this assault on Globalisation continues in 2017. Aside from the ‘Brexit’ vote and a Trump Presidency, there are elections in the EU’s two main players. Angela Merkel will be running to be re-elected as Chancellor of Germany and Marine Le Pen of the National Front seems to be in a two-horse race with Francois Fillon to become the President of France. A Merkel defeat or a Le Pen victory would certainly be a significant blow to the EU.
If a similar trend continues in 2017, we could well see radical changes to the environment that businesses operate in with significant implications for the way in which they recruit talent as well as possibly ‘upskilling’ or ‘deskilling’ their workforce.
Image Source: https://www.theguardian.com/