Businesses having to pay above market rate to recruit after Brexit Watch

ThomH97
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I wasn't sure what to title this because I don't agree with what they've defined to be market rate, and am kind of annoyed that these people are actually being put in charge of recruitment at any firm if this is the terminology they use.

In the past year, most of the 400 firms surveyed by the OU have struggled more to recruit employees, citing employee inertia, uncertainty from EU nationals over Brexit and there not being enough adequately skilled applicants. Their solution has been to try to poach employees from rival companies, and they are somewhat confused at having to offer these people more money than they are currently earning in their current, very similar job.

I don't have a degree in business, but I would define the market rate for a type of employee as the amount of money you need to pay to get enough of them to work for you. That it has gone up and they are paying their current employees less is a matter of loyalty or inertia (and they might want to look at that too before their employees start looking around). For smaller firms, they are typically having to offer about £4k more in salary than they had a year ago, and larger firms £5.5k.

The OU have pointed out the obvious, that since there aren't enough of the required employees, the companies themselves should offer apprenticeships. After all, who better to train someone how to do things in your business than the business itself?

Perhaps controversially (and it's be interesting to hear the reasons against), I would also conclude that being in the EU has suppressed the salaries of the employees of such companies by £4-5.5k. In total, the OU estimates this is more than £2bn extra in salaries.
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999tigger
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(Original post by ThomH97)
I wasn't sure what to title this because I don't agree with what they've defined to be market rate, and am kind of annoyed that these people are actually being put in charge of recruitment at any firm if this is the terminology they use.

In the past year, most of the 400 firms surveyed by the OU have struggled more to recruit employees, citing employee inertia, uncertainty from EU nationals over Brexit and there not being enough adequately skilled applicants. Their solution has been to try to poach employees from rival companies, and they are somewhat confused at having to offer these people more money than they are currently earning in their current, very similar job.

I don't have a degree in business, but I would define the market rate for a type of employee as the amount of money you need to pay to get enough of them to work for you. That it has gone up and they are paying their current employees less is a matter of loyalty or inertia (and they might want to look at that too before their employees start looking around). For smaller firms, they are typically having to offer about £4k more in salary than they had a year ago, and larger firms £5.5k.

The OU have pointed out the obvious, that since there aren't enough of the required employees, the companies themselves should offer apprenticeships. After all, who better to train someone how to do things in your business than the business itself?

Perhaps controversially (and it's be interesting to hear the reasons against), I would also conclude that being in the EU has suppressed the salaries of the employees of such companies by £4-5.5k. In total, the OU estimates this is more than £2bn extra in salaries.
Whats your point? the EU and single market have given the UK access to cheap labour which has enabled them to be more competitive?
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ThomH97
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(Original post by 999tigger)
Whats your point? the EU and single market have given the UK access to cheap labour which has enabled them to be more competitive?
I'd say it's a misuse of the term market rate, and also that the EU has allowed such companies to be less competitive with regards to recruitment and also allowed them (or our country as a whole) to grow lazy in training up their (our) own staff.

Ideally we wouldn't have it happening all of a sudden, but these are things companies should have been doing all along. Training rather than poaching staff, and we've now had an extra £2bn of spending money flowing through our economy.
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999tigger
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(Original post by ThomH97)
I'd say it's a misuse of the term market rate, and also that the EU has allowed such companies to be less competitive with regards to recruitment and also allowed them (or our country as a whole) to grow lazy in training up their (our) own staff.

Ideally we wouldn't have it happening all of a sudden, but these are things companies should have been doing all along. Training rather than poaching staff, and we've now had an extra £2bn of spending money flowing through our economy.
Its enabled them to be more competitive because they have been able to do their function would more cost effective labour.

I dont see where the abuse of market rate comes from as the EU is our labour market because we are in the single market.

Poaching staff is just a hiccup as companies decide it makes more economic sense to have a ready made member of staff with skills and experience v the considerably more expensive and lengthy task of training someone, eventually it will be more beneficial to train someone or a new source of labour will become available.

I dont see your point and not convinced you understand how it works.
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ThomH97
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(Original post by 999tigger)
Its enabled them to be more competitive because they have been able to do their function would more cost effective labour.
Sure, they could produce or provide services at a more competitive rate to the consumer, but I'm assuming that by these companies still existing, these pay rises to the necessary staff are affordable to the companies without becoming unviable.

I dont see where the abuse of market rate comes from as the EU is our labour market because we are in the single market.
How would you define the market rate of, say, a network admin? The salary you need to offer today to get applicants, or the salary you offered last year who some of your team are still on? Note I said it was a misuse of the term, and that I was annoyed that recruiters could be misusing such a term like this.

Poaching staff is just a hiccup as companies decide it makes more economic sense to have a ready made member of staff with skills and experience v the considerably more expensive and lengthy task of training someone, eventually it will be more beneficial to train someone or a new source of labour will become available.

I dont see your point and not convinced you understand how it works.
I don't have a point really apart from the EU has hurt the employees in over £2bn a year in salary (they will have had other pros and cons elsewhere of course), and that I agree with the OU's recommendation of investing long term in employees rather than complaining that poaching costs more than retaining.
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Quady
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Great - salaries up!
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999tigger
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(Original post by ThomH97)
Sure, they could produce or provide services at a more competitive rate to the consumer, but I'm assuming that by these companies still existing, these pay rises to the necessary staff are affordable to the companies without becoming unviable.

How would you define the market rate of, say, a network admin? The salary you need to offer today to get applicants, or the salary you offered last year who some of your team are still on? Note I said it was a misuse of the term, and that I was annoyed that recruiters could be misusing such a term like this.



I don't have a point really apart from the EU has hurt the employees in over £2bn a year in salary (they will have had other pros and cons elsewhere of course), and that I agree with the OU's recommendation of investing long term in employees rather than complaining that poaching costs more than retaining.
1. You miss the whole point of capitalism and running a business in a marjet.
2. Its the rate that applied at the time of recruiting. Obviously on your take on events it has changed. So what rates change all the time based on supply and demand.
3. Whilst it might have had a deflationary effect in some places, its also helped create jobs, so I think you need a more balanced view.
4. Whether or not they invest more in training is up to them. Brexit hasnt been decided yet and they could just as easily remain in the single market. They could also outsource or invest in robots. poaching is just short termism that suits the business at that time.
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ByEeek
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(Original post by ThomH97)
The OU have pointed out the obvious, that since there aren't enough of the required employees, the companies themselves should offer apprenticeships. After all, who better to train someone how to do things in your business than the business itself?
On paper, this is the goose that lays golden eggs. The reality is quite the reverse. If you need more people, bringing in apprentices is about the worst thing you can do since you loose you senior staff to their having to train the apprentices.

I was on a project that was severely behind schedule. Much to our protestation, the management decided to hire a load of contractors. The work output halved because so much of the teams time was spent supervising contractors.
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Whiskey&Freedom
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Upon Brexit we must eliminate the minimum wage as it artificially inflates wages beyond there true value. Too many British workers with limited skills are overpaid.
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Quady
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(Original post by Whiskey&Freedom)
Upon Brexit we must eliminate the minimum wage as it artificially inflates wages beyond there true value. Too many British workers with limited skills are overpaid.
Clearly they still provide value otherwise they wouldn't be employed.
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james813
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The OP makes it sound like a bad thing, we should no longer have an unlimited supply of low skilled and unskilled workers so wages will increase to attract them, instead of being compressed. UK unemployment still exists and we can have seasonal work permits so no problem.
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