Brexit as a challenge for the European recruitment of skilled workers

Table of contents

List of figures

List of abbreviations

1 Problem definition

2 Theoretical background of brexite
2.1 Brexite as a challenge
2.2 United Kingdom
2.2.1 Economics
2.2.2 Multicultural society and immigration
2.3 European Union
2.3.1 Internal Market of the European Union
2.3.2 Free movement of workers
2.3.3 VWL Germany
2.4 Comparison of national economies
2.5 Impact to date

3. basics of classical recruitment
3.1 Classification of Recruitment in Human Resources Management
3.2 Principles and objectives of recruitment
3.3 Distinction between internal and external recruitment

4 Recruitment of skilled workers in the EU
4.1 European recruitment channels
4.1.1 Public employment services
4.1.2 Private Employment Agencies
4.1.3 Personnel leasing
4.1.4 Recruitment fairs
4.1.5 Online recruitment
4.1.6 Job advertisements in newspapers and magazines
4.1.6 University marketing
4.2 Shortage of skilled workers
4.3 Immigration

5 Forecast of European personnel recruitment after UK exit from the EU
5.1 Brexite vs. free movement of workers
5.1.1 Current situation
5.1.2 Restrictions on cross-border staff deployment
5.2 Scenario analysis - free movement of workers after Brexit
5.2.1 Scenario 1 - The 'Norwegen″ scenario:
5.2.2 Scenario 2 - The 'Schweizer″ scenario:
5.2.3 Scenario 3 - The 'Drittstaat″ scenario:
5.2.4 Scenario 4 - The WTO option:
5.2.5 Scenario 5 - Free trade agreements
5.3 Impact on labour migration
5.4 Skills shortages in the United Kingdom
5.5 Shortage of skilled workers in Germany

6 Impact on European recruitment
6.1 Recruitment in the United Kingdom
6.1.2 Opportunities and risks for British recruitment
6.2 Recruitment in Europe - Germany
6.2.1 Opportunities and risks for German recruitment

7 Conclusion and outlook
7.1 Conclusion
7.2 Outlook

Bibliography

List of figures

Figure 1: Country comparison

Figure 2: NMC study

Figure 3: Migration (Stepstone)

List of abbreviations

Abbildung in dieser Leseprobe nicht enthalten

1 Problem definition

On 23 June 2016, the inhabitants of the United Kingdom voted in a referendum by a majority of 51.9 to 48.1 percent in favour of their country leaving the European Union (EU). The decision to "British exit" (brexite) marks a turning point in the more than 40-year relationship between the United Kingdom and the European community of states. It is the first time that a member leaves the European family of states - a decision of primarily symbolic significance, which brings with it decades of constant enlargement and restriction of the EU's internal market.

In the campaign for EU withdrawal, the issue of "abolition of free movement of workers" and the associated immigration played a central role. Somit aims to reduce immigration and its dangers such as "state loss of control and surveillance". From an EU perspective, every EU citizen loses the opportunity to take up and pursue work in the United Kingdom under the same conditions as citizens between EU states. From a UK perspective, the decision has a clear political objective, but it can have devastating consequences for the domestic economy.

This scientific work will therefore deal with the opportunities and risks of abolishing the free movement of workers. The focus will be on forecasting the possible effects on European recruitment. Using an analogy between the United Kingdom and an EU member state (Germany), precise differences will be analysed and challenges from different aspects will be examined.

Brexite is currently a precedent case with already many political and economic implications. Accordingly, the research approach of this thesis is a literature analysis in combination with a scenario model. This is intended to present various exit scenarios of Great Britain vis-à-vis the EU and, in combination with an analysis of publications, to form recommendations for action for these scenarios.

2 Theoretical background of brexite

The brexite process presents the EU-27 with the difficult task of, on the one hand, unravelling the links with the UK that have grown up over decades and, on the other, maintaining a close partnership and placing it on a new footing.

2.1 Brexite as a challenge

The choice to leave the EU was not an economic but a cultural uprising. It was ein Aufstand against a liberal, urban Britain - against London, against the cultural elite, against immigration. After all, the referendum was won with the slogan "Take control".

"British exit" - the decision of the United Kingdom to leave the European Union (EU).¹ British Prime Minister Theresa May officially notified this to the European Council on 29th March 2017 on the basis of Article 50 of the Treaty on European Union thereby launching a two year period for exit negotiations between the United Kingdom (Great Britain and Northern Ireland) and the other 27 Member States (EU-27). Exit negotiations officially started on 19 June 2017.² If no conclusion is reached, EU membership will expire without any special arrangement. The EU treaties will then no longer apply to Great Britain. The period may be extended if the European Council decides so unanimously in agreement with the United Kingdom.³

This is the first time that the circle of EU member states has become smaller; one of the most populous and economically strongest countries in Europe has decided against the EU project. However, the British remain our European neighbours. Or, as Theresa May rightly said: "We are leaving the EU, but not Europe." The reasons that led a narrow majority to vote against the brexite are complex.⁴

One factor is seen to be immigration, which has increased sharply in the UK in recent years, particularly from Eastern Europe, and which has led to fears in some sections of the population. However, the main factor contributing to this has been the special British understanding of sovereignty, which has always seen subordination to supranational organisations and their decisions as a loss of popular sovereignty and independence. Moreover, the Brexit vote is also a decision against the solidarity community which the EU represents, for example in financial terms, and which was recently called for in the euro and refugee crises.⁵ A further argument put forward by the brexite supporters was that Great Britain would transfer the exorbitant sum of £350 million to the EU every week. In fact, despite the so-called British rebate, Britain is the second largest net contributor to the EU, even though the sum is only about £160 million per week. The British thus contribute around 6% of the EU budget, while Germany's share is more than twice as large. The brexite will therefore have an impact on the EU budget and will have to lead to spending cuts or revenue increases.⁶

However, 48% of the voters also voted against the withdrawal. The supporters of staying in the EU were mainly organised in the "Britain Stronger in Europe" campaign led by Lord Rose, former CEO of the department store group "Marks and Spencers" and Will Straw (Labour Party). The campaign was considered the official anti-brexite campaign and received millions of euros in grants, as banks and companies also participated as donors.⁷

Against this background, the task of the British government is not an easy one to implement the brexite vote without further dividing society. Theresa May had decided before the British House of Commons elections on 8 June 2017 to unite the country behind a strategy that emphasises the strength of the British nation as an international trading power. She outlined the vision of a "Global Britain" that will prosper independently and away from the supposed constraints of supranational institutions as a "fully-independent, sovereign country" in trade relations with the whole world. Its strategy is consistently aligned with the main objectives of the Brexit campaign:

- Restriction of immigration, i.e. abolition of the free movement of workers.
- Not bound by EU law and in particular by the case law of the European Court of Justice (ECJ)
- No more contribution to the EU budget.⁸

In order to free itself from all these obligations associated with EU membership, the British government intends to withdraw from the EU and thus also leave the internal market. Since the British Government has a strong interest in obtaining the widest possible access to the internal market, a compromise is being negotiated accordingly for both parties. After all, the EU is by far the largest trading partner. Without the fulfilment of the obligations associated with the internal market, however, access to it will not be easy. On the contrary, it is clear that the exit from the internal market will mean a step backwards in our joint trade relations. After all, a country outside the EU cannot be placed in a better position than a Member State which, in addition to the advantages of the EU, must also fulfil all the obligations associated with it.⁹ One possibility for further participation in the internal market would be membership of the European Economic Area (EEA). EEA membership would have the advantage of further participation in the European Union's internal market, but would potentially significantly limit UK sovereignty.¹⁰

2.2 United Kingdom

2.2.1 Economics

The United Kingdom has one of the most open economies in the world - the second largest in the EU and the fifth largest in the world in terms of gross domestic product (GDP). A disproportionately high share of the UK's GDP is generated in the services sector (80%), with the financial sector playing a crucial role at 11%. ¹¹ Since the severe economic slump in the wake of the international financial crisis, the British government has been striving for more balanced economic structures in terms of sectors and regions. To this end, it is pursuing a more active industrial, research and export promotion policy. At national level, the Northern England region in particular is to be strengthened by attracting industries and research centres. The government is planning new borrowings to finance the exit from the EU and is moving away from its previous goal of bringing the national deficit to black zero by 2020. A balanced budget is targeted for 2027. The current budget includes 3 billion pounds sterling for brexite. Foreign trade plays an important role for the British economy (tenth largest export nation in the world). At around 46%, services account for a large share of total British exports.¹²

The financial sector and related services are of great economic importance in the UK, accounting for 11% of value added and making a disproportionately high contribution to tax revenues. London is the most important financial centre in Europe and, alongside New York, the most important financial centre worldwide.

The labour market has now recovered after the slump in the financial and economic crisis. At 75%, the employment rate in autumn 2017 is slightly lower than in spring 2017, but shows a positive development compared to the previous year (74.4%). The growing employment is accompanied by a considerable structural change in favour of the service sectors. In recent years, the rise in employment has been strongly driven by immigration from other parts of the EU. In November 2017 the unemployment rate stood at 4.3%, the lowest level since 1975, but youth unemployment is still relatively high despite positive developments. The minimum wage was raised twice in 2017, most recently to 7.83 pounds sterling per hour. The labour market has remained stable even after the EU exit referendum. There is no evidence of increased emigration associated with this.¹³

2.2.2 Multicultural society and immigration

The United Kingdom is a multicultural society. London alone is a kind of microcosm of the world. ¹⁴ According to the 2001 census, 12% of 16 to 25 year olds in school education have an Asian or Afro-British background. There are almost one million Muslims, half a million Hindus and a quarter of a million Jews living in the United Kingdom. Despite these large numbers, the issue of multiculturalism is not taken for granted in the United Kingdom. Over the last 10 years, there has been a growing reluctance among the population to accept further immigration.¹⁵ Around 75% of respondents say in surveys that they would like less immigration, with the primary motives being fear of job competition and the threat to the British way of life, particularly from Muslims.¹⁶ In 2006, 510,000 people immigrated to Britain. Over a third (139,000) came from the so-called New Commonwealth, i.e. from Africa. 205,000 people came from the then 25 EU states. 102,000 from the Indian subcontinent and 80,000 from the old Commonwealth states (Australia, Canada, New Zealand and South Africa).¹⁷ Since the attacks in the USA on 11 September 2001
, increased immigration and the granting of asylum have been seen as a terrorist threat. According to this, domestic policy or the British parliament is trying to reduce immigration by means of restrictions. Nevertheless, immigration is important for the domestic economy and productivity. In 2015, the Office for National Studies (ONS) reported that the majority of immigrants come to the UK to study or work. 294,000 people came to work between 2015 and June. Two thirds had a permanent job. And 180,000 people came from the European Union.¹⁸

2.3 European Union

The European Union is a unique economic and political association of 28 European countries, which together make up a large part of the European continent. The EU's predecessor organisation has its origins in the period after the Second World War. It all began with the promotion of economic cooperation. The idea behind this was that countries that trade with each other become economically interdependent and therefore tend to avoid armed conflict.
The result was the foundation of the European Economic Community (EEC) in 1958 and a growing economic cooperation, originally between six countries, namely Belgium, Germany, France, Italy, Luxembourg and the Netherlands. Since these beginnings, 22 other countries have joined this group and created a large internal market whose potential is constantly being developed. What began as a purely economic community has now become an organisation covering a wide range of policy areas, from climate change, environmental protection and health to foreign relations and security, justice and migration. This change was taken into account in 1993 when the EEC was renamed the European Union (EU).¹⁹

The EU's achievements include more than half a century of peace, stability and prosperity, its contribution to raising living standards and the introduction of a single European currency - the euro. The euro is now the currency of more than 340 million EU citizens in 19 countries.²⁰

2.3.1 Internal Market of the European Union

In the EU internal market, the basic freedoms guarantee that all economic goods may be offered and sold in all member states. This means that suppliers from different member states compete on an equal footing.²¹

The European internal market is thus a common economic area within the EU borders, in which the free and unrestricted movement of goods, persons, capital and services is guaranteed. Within the internal market there are no more customs duties or other trade barriers. Imports from other countries, the so-called third countries, are subject to a uniform external tariff (customs union). The member states of the European Union automatically belong to the EU internal market²². It is based on four fundamental freedoms: Freedom of goods, freedom of services, freedom of capital and freedom or free movement of labour. In²³ simple terms, this means that every EU citizen can shop, work, provide or use services and invest wherever he or she wants. Italian wine on supermarket shelves, a Norwegian restaurant in Munich, an investment in Denmark and a job in the United Kingdom - all this does not sound unusual to our ears, it is the implementation of the internal market.²⁴

In many areas, goods and services are subject to uniform rules and standards of the European Union. This approach is intended to ensure harmonisation of standards at Community level and facilitate trade. In addition to the 27 EU states, Norway, Iceland and Liechtenstein also belong to the EU internal market. They are linked to the European Union within the European Economic Area (EEA).²⁵

With over 493 million consumers and an economic output of around 11.5 trillion euros, the European internal market is the largest single market in the industrialised world. In 2005, German companies supplied goods worth around 500 billion euros to the other EU countries - that is almost two thirds of our total exports. Exports to the new member states are becoming increasingly important, and in 2005 they accounted for around 8.4 percent of German exports. This means that the new EU states are just as important for Germany as the USA (8.8 percent of German exports). The dismantling of trade barriers helps companies to concentrate on the essential: their competitiveness. Unified markets mean more innovation and an increase in trade in the participating countries. For consumers it means better products at lower prices.

The internal market is boosting the Union's economic performance by 0.6-0.8 percentage points per year. Social protection is an indispensable part of the European market model. European rules apply to safety, health, information and participation in the workplace. The internal market also includes the protection of migrant workers, equal treatment for men and women and non-discrimination against disabled people.²⁶

2.3.2 Free movement of workers

Living and working anywhere in the European Union - that is a European citizenship right. The "free movement" of workers (employed and self-employed) has been guaranteed in all Member States since 1968.²⁷ Since the beginning of the 1990s, students and those who have left the labour market have also been able to choose their place of residence freely. This means that workers from different Member States are also in competition with each other. They can take up a job in the internal market, in any other state. You can also be sent by your home employer to another Member State to provide a service there as its agent. The transfer of an employee from one Member State to another, where he is used by a hirer like his own employee, is also permitted in the internal market. European workers and employers make use of this freedom of movement: in 2014, 7.07 million EU citizens were working in a Member State other than that of their nationality. This represents 3.3% of the total population of the European Union. In the same period there were approximately 1.92 million postings by 1.15 million workers. Most of these workers were posted to Germany (414,220 of 1.92 million).

Therefore, in the following sections, comparisons between Germany and the UK will be presented to show the exact extent of the effects at the end of this scientific work.²⁸

2.3.3 VWL Germany

The German gross domestic product (GDP) will grow by 2.2 percent in 2017. In 2016, GDP had increased by 1.9 percent. According to the figures, the strong economic upturn was driven by consumer spending, increased investment by many companies and the strong global economy, which is boosting demand for products "Made in Germany". Germany's exporters are heading for their fourth record year in a row in 2017. In the first eleven months, machinery, cars and other goods worth 1.18 trillion euros were exported (up 6.5 percent)²⁹ For the current year, the Federal Government expects an increase in gross domestic product of 2.3 percent (price-adjusted).³⁰

An increase of 2.1 percent is expected for 2019.³¹ The tax authorities are also benefiting from the economy, which has been flourishing for years - and the persistently low interest rates: according to statisticians' calculations, the German state was able to earn more money than it spent in 2017 for the fourth time in a row.³² The surplus of the federal government, the states, municipalities and social security funds amounted to 1.2 percent of GDP, compared to 0.8 percent in the previous year. The last time Germany had recorded a minimal deficit was in 2013. The German economy is therefore in very good shape. One success story in Germany is the increase in employment.³³

After 43.5 million people were gainfully employed in 2016, this number will increase by 320 thousand people in 2017. This means that not only the total number of people in gainful employment but also the number of employees subject to social insurance contributions will reach a new high. Compared to 2013, the number of people in employment last year increased by around 1.5 million, and compared to 2005 by more than four million. The high level of immigration into the German labour market from the European Union will also contribute to the growth in employment. By contrast, the high level of immigration of people seeking protection will only gradually have an impact in the form of higher employment, but also unemployment. The unemployment rate is currently at its lowest level for 25 years and is likely to stabilize at 6 percent. The youth unemployment rate is at the lowest level in the European Union.³⁴

The labour market has developed very well in 2017: the annual average number of unemployed people has fallen for the fourth time in a row, employment subject to social security contributions has risen sharply, and the demand from companies for new employees has increased once again compared to the previous year. On average, 2,533,000 people were registered as unemployed in Germany in 2017. This represents a year-on-year decrease of 158,000. The average number of registered jobs in 2017 was 731,000, 75,000 more than in the previous year. Most vacancies (job offers) in 2017 were directed at workers in the transport and logistics, sales, metal, mechanical and automotive engineering, energy and electrical engineering and health sectors.³⁵

The free movement of persons (free movement of workers) within the European Union means that EU citizens can work in other Member States without restriction. In 2014, there were around 1.81 million gainfully employed persons aged 20 to 64 with EU citizenship working in Germany.³⁶ This was 4.8 % of all gainfully employed persons. Die At around 1.76 million or 4.6% of the workforce, the number of people from non-EU countries working abroad was similar to that of people from other EU countries. In Over the past ten years, the complete or total share of foreign workers in Germany has risen slightly. Er increased from 8.5 % (2005) to 9.4 % (2014).³⁷

2.4 Comparison of national economies

British-German relations are close, trusting and diverse. Germany and the UK are linked by membership of the European Union, NATO, the United Nations, the G7, the G20 and other international bodies. Like Germany, the UK is committed to international climate protection.³⁸ Further similarities between the two countries are shown in the following diagram, which compares the size of the two countries:

Abbildung in dieser Leseprobe nicht enthalten

Figure 1: Country comparison³⁹

With a population of just under 65 million, Great Britain is the third largest EU member state after Germany and France and thus one of the 'big three', which have a particularly strong influence on the intergovernmental areas of the EU.

In economic terms, the country has a gross domestic product (GDP) of just under €2,569 billion (2015), well ahead of France (€2,184 billion) and in second place behind Germany (€3.026 billion). Above all, the United Kingdom has recovered much better from the economic and financial crisis than most euro states and has consistently achieved higher growth rates than the euro zone as a whole since 2009.⁴⁰

While Germany has a trade surplus in goods in the EU (i.e. more goods are exported than imported), there is a trade deficit in services. For the UK, the reverse is true. With a total value of services exports to the EU of 122,491 million euros and a total import volume of 93,653 million euros in 2015, Great Britain had a trade surplus in services in the EU of 28,838 million euros⁴¹. It should be emphasised that the financial services sector accounts for almost the entire trade surplus in services from Great Britain in the EU. In 2014 (the latest year for which sectoral data are available), the total trade surplus in services was 21,239 million euro and the surplus in financial services 20,585 million euro⁴². German direct and indirect direct investment in the United Kingdom in 2015 was over 121 billion euros, British direct and indirect direct investment in Germany (such as BP, Shell, GKN, Terra Firma, Rolls Royce) was 49 billion euros.⁴³

[...]

---

¹ See European Commission, URL: https://ec.europa.eu/germany/news/brexit-erklärung-eu-wird-geeint-ihre-interessen-schützen_de, status: 09.06.2018.

² See Geppert (2017), p. 117.

³ See Hosp (2017), p. 29.

⁴ Federal Ministry of Finance, URL: https://www.bundesfinanzministerium.de/Content/DE/Standardartikel/Themen/Europa/2017-07-28-Herausforderungen-und-Chancen-im-Brexit-Prozess.html, as of May 13, 2018.

⁵ Cf. Federal Ministry of Finance, URL: https://www.bundesfinanzministerium.de/Monatsberichte/2017/06/Inhalte/Kapitel-3-Analysen/3-1-Herausforderungen-und-Chancen-im-Brexit-Prozess.html, as of May 9, 2018.

⁶ See Hefeker (2016), pp. 629 f..

⁷ See Sturm (2017), p. 241.

⁸ See Sturm (2017), p. 239.

⁹ Cf. Federal Ministry of Finance, URL: https://www.bundesfinanzministerium.de/Content/DE/Standardartikel/Themen/Europa/2017-07-28-Herausforderungen-und-Chancen-im-Brexit-Prozess.html, as of 13.05.2018.

¹⁰ Vgl. Bankingpolicy, URL: http://www.bankingpolicy.eu/wp-content/uploads/2017/07/BQB1-German-updated-NE-comments.pdf, Stand: 09.05.2018.

¹¹ Vgl. Europa.eu, URL: https://europa.eu/european-union/about-eu/countries/member-countries/unitedkingdom_de Stand: 09.05.2018.

¹² Cf. Federal Foreign Office, URL: https://www.auswaertiges-amt.de/de/aussenpolitik/laender/grossbritannien-node/wirtschaft/206410#content_1, as of May 9, 2018.

13 Cf. Federal Foreign Office, URL: https://www.auswaertiges-amt.de/de/aussenpolitik/laender/grossbritannien-node/wirtschaft/206410#content_1, status: 09.05.2018.

¹⁴ See Sturm, 2017, p. 206.

¹⁵ See Sturm (2017), p. 206.

¹⁶ McLaren/Johnson (2007), p.197.

¹⁷ See Sturm (2017), p. 207.

¹⁸ See Sturm (2017), p. 210.

¹⁹ See Europa.eu, URL: https://europa.eu/european-union/about-eu/eu-in-brief_de, as of 06.06.2018.

²⁰ Cf. Federal Chancellery, URL: https://www.zukunfteuropa.at/errungenschaften-der-eu, as of 04.06.2018.

²¹ See Wilde (2017), p. 19.

²² See Zandonella (2007), p. 14.

²³ Cf. Busch (2009), p. 4 f..

²⁴ Federal Agency for Civic Education, URL: http://www.bpb.de/internationales/europa/europaeische-union/42858/grafik-binnenmarkt, as of June 10, 2018.

²⁵ Vgl. Bankingpolicy, URL: http://www.bankingpolicy.eu/wp-content/uploads/2017/07/BQB1-German-updated-NE-comments.pdf, Stand: 09.05.2018.

²⁶ See EU.info, URL: http://www.eu-info.de/europa/EU-Binnenmarkt/, as of 23.05.2018.

²⁷ Wilde (2017), p. 19.

²⁸ Wilde (2017), p. 19.

²⁹ Cf. Spiegel Online, URL: http://www.spiegel.de/wirtschaft/soziales/deutschland-bruttoinlandsprodukt-waechst-2017-um-prozent-a-1187259.html, as of 08.05.2018.

³⁰ Cf. Spiegel Online, URL: http://www.spiegel.de/wirtschaft/soziales/deutschland-bruttoinlandsprodukt-waechst-2017-um-prozent-a-1187259.html, as of 08.05.2018.

³¹ Federal Ministry of Economics and Energy, URL: https://www.bmwi.de/Redaktion/DE/Dossier/wirtschaftliche-entwicklung.html, as of May 22, 2018.

³² Cf. Spiegel Online, URL: http://www.spiegel.de/wirtschaft/soziales/deutschland-bruttoinlandsprodukt-waechst-2017-um-prozent-a-1187259.html, as of 08.05.2018.

³³ Cf. Federal Ministry of Economics (2017), p.6 f..

³⁴ Cf. Federal Ministry of Economics (2017), p.7 f..

³⁵ Cf. Federal Employment Agency, URL: https://www.arbeitsagentur.de/presse/2018-02-jahresruckblick-2017-sehr-gute-entwicklung-des-arbeitsmarktes, as of April 18, 2018.

³⁶ Cf. Crößmann/Mischke (2016), p.7 f.

³⁷ Cf. Crößmann/Mischke (2016), p.7 ff.

³⁸ Cf. Federal Foreign Office, URL: https://www.auswaertiges-amt.de/de/aussenpolitik/laender/grossbritannien-node/bilateral/206396, as of June 12, 2018.

³⁹ Figure 1: Source: Own representation based on: Country data, URL: https://www.laenderdaten.info/laendervergleich.php?country1=GBRountry2=DEU, status 18.04.2018.

⁴⁰ Bukovec (2017), p. 5.

⁴¹ See Capuano (2017), p. 3.

⁴² Cf. Capuano (2017), p. 3 f.

⁴³ Cf. Federal Foreign Office, URL: https://www.auswaertiges-amt.de/de/aussenpolitik/laender/grossbritannien-node/wirtschaft/206410 - content_1, status: 09.05.2018.