The Impact of Brexit on the UK Job Market

Wednesday, March 29th marked one of the most pivotal moments in the 60-year history of the European Union, as Britain’s Prime Minister Theresa May triggered Article 50 of the Treaty of Lisbon, and began negotiations for the UK to leave the EU.


There has been widespread uncertainty about the impact of Brexit on the job market since the referendum in June last year, escalating in the wake of Article 50 being signed. We wanted to investigate the impact of the Brexit vote on employment in the UK, and look at the most affected industries.

To answer this, we looked at the change in employee headcount at FTSE 100 companies, an index comprising the 100 largest companies in the UK by market capitalization.


In the Craft company database, we looked up employment statistics for these 100 companies during 2016*, and calculated change in employee headcount between year-start and year-end 2016.


We found that the Financial Services sector experienced the greatest decline in employment during 2016, with an 11% decrease in headcount. We know that London’s Financial Services industry is under threat from Brexit, and this trend in jobs certainly confirms that. What was surprising was the strong growth in the Business Services sector, which showed headcount growth of 12%.


Of 20 sectors, 14 had positive growth in employment, and 6 negative. Overall, employment across the FTSE 100 companies rose 2.2% from 5.1 million to 5.2 million during 2016.


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This table shows the fastest growing and shrinking sectors in the FTSE 100, weighted by percentage of total employees working in each sector.

                                                           

Business Services was the fastest growing sector at 12% weighted increase in headcount. Quality control services provider Intertek had 29% employee growth during 2016, and was the fastest growing company in this sector.


Telecoms was the second fastest growing sector at 8%. The fastest growing company in this sector was the Vodafone Group, increasing headcount by 25%.


Financial Services was the fastest shrinking sector, with a 11% decrease in headcount in 2016. The London Stock Exchange Group reduced headcount by 33% during 2016, and was the fastest shrinking company in this sector.


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The FTSE 100 companies employ over 5.2 million people, accounting for over a sixth of the UK workforce. Here are the fastest growing and shrinking companies by headcount.


Pharmaceutical producer Shire grew 469% over 2016, and was the fastest growing FTSE 100 company by headcount. This growth was largely driven by the vertical industry acquisition of Baxalta in June 2016.


Real Estate investors and residential living provider British Land Company was the second fastest growing company, with a 233% rise in headcount during 2016.


Seven of the 10 fastest shrinking FTSE 100 companies were in the Financial Services sector. The London Stock Exchange Group was the fastest shrinking company in this sector, and the fastest shrinking company overall.


Insurance and reinsurance provider RSA Insurance Group was the second fastest shrinking company overall, reducing headcount by 22%.

  

Investment services provider Hargreaves Lansdown was the fastest growing Financial Services company, increasing headcount by 49% during 2016. Coming in second was wealth manager St. James’s Place, growing 30%.


Royal Bank of Scotland was the fastest shrinking banking services company, decreasing headcount by 12% during 2016. The three other banking services companies in the FTSE 100, HSBC, Lloyds and Barclays all shrank, at 8, 6 and 6% fall in headcount respectively.


The 11% fall in headcount resulted in nearly 60,000 jobs lost across the 21 FTSE 100 Financial Services companies in 2016.


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There were more sectors in the FTSE 100 with positive growth than negative, and nearly two-thirds of the companies in the index increased headcount during 2016. Overall, the FTSE 100 increased employment by 2.2% during the year, showing stability among some of the largest employers in the UK.


With aggregated UK unemployment at a 5 year low, though some sectors experienced negative effects from the Brexit vote, the UK job market overall appears resilient.


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Sources and Notes:    


* We used company filings for year end 2015, and year end 2016 to calculate change in employees over 2016.
- There was no data available on Scottish Mortgage Investment Trust (Financial Services).
- FTSE 100 company filings (March 31, 2017)
- Office for National Statistics, UK.


About Craft: 


Craft is a machine-learning powered data and analytics platform building the "Source of Truth" on companies, and mapping the global economy. We organize data from thousands of sources to provide comprehensive, up-to-date sector and company profiles. ranging from early-stage to the largest companies in the world.


As the economy, and nature of work continue to undergo massive transformation, Craft's mission is to provide context and freely available tools to help people discover and evaluate companies and opportunities. Our platform is used for market and sector research, customer lead generation, competitive analysis and career research.


We welcome your feedback. Please feel free to contact us at [email protected]

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