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Business Development & Marketing Cash Flow & Forecasting Finance General

What are the threats to UK farming in a post-Brexit world?

tractor and seed drill on field at sunsetThe UK farming industry uses 70% of the land in the UK and its efforts make the country 76% self-sufficient in home grown food.
It employs an estimated 400,000 people and the total income from farming in 2015 (the most recent figures available) was £3,769 million, contributing around £10.7 billion to the UK economy.
As a business farming cannot be short term and many decisions are made looking five years ahead.
But farming as a business is not now and never has been easy because of the many pressures farmers face, both natural and man-made. It is weather-dependent, with seasonal peaks and troughs and at the same time subject to well-known pricing pressures from the food producers and the large food retailers further up the supply chain.
There is no doubt that the UK’s decision to leave the EU is likely to have a significant impact on farming as a business.
Firstly, UK farmers have been used to a subsidy under the Common Agricultural Policy (CAP) that contributes an estimated 55% of farmers’ incomes, a total of £3 billion in 2015, according to data published in the Financial Times in late 2016.
While the Chancellor has said that the Treasury would replace any shortfall in EU funding to farmers that might arise between now and the end of the decade, there has been no word on what would happen after 2020.
This leads to a second threat, which is the pressures that farming faces from competitors both in and outside the EU after Brexit. There has been press commentary on a US trade deal that will expose UK to the lower standards for US farm products that allow hormone-treated animals and GM crops while European farming will presumably remain heavily subsidised giving it a competitive advantage over the UK.
Thirdly, many farming sectors rely heavily on seasonal labour for harvesting fruit and vegetables and in the Eastern Region, for example, labour from the EU has been crucial for the crop picking and packing period. Given that one of the primary issues on the minds of both those who voted to leave the EU and on the Government has been numbers of immigrants in the UK and in the absence of sufficient numbers of UK workers, the prospects of losing access to those workers is a major concern for farmers.
A final pressure that has been a well-rehearsed bone of contention for a number of years but has been given added impact by the devaluation of £Sterling since the referendum. With large retailers already passing on higher prices to shoppers from imported foods, the likelihood is that they will use their buying power to continue to squeeze farmers in order to keep their prices as low as possible.
Given all these pressures the challenges to the viability of UK farming are considerable.

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Business Development & Marketing Finance General Turnaround

How is the Recruitment Industry faring post-Brexit?

job vacanciesThis week’s employment figures published by the Office for National Statistics (ONS) showed that the unemployment rate held reasonably steady at a near 11-year low of 4.9% in the three months to August with a small rise of 10,000 to 1.66 million.
That will be broadly welcomed, especially by those politicians who have been arguing that the vote to leave the EU has so far had little impact on the economy.
But the question is for how long and what are the longer term implications for the jobs market given the question marks over what will happen to those from other countries currently working in the UK and the ongoing skills shortages which many employers are still highlighting as a significant issue.
The Recruitment and Employment Confederation (REC), of which many Recruitment Agencies are members, takes a monthly in-depth look at the state of both the recruitment industry and the sentiments of employers.
In its latest Markit/REC monthly survey on jobs published on October 7 the key findings were a moderate increase in permanent placements and vacancies and a slightly slower decline in candidate availability.
However, the results of another monthly REC survey published in late September, this time among employers, found that a third of those surveyed stating that they had no spare capacity to take on more work without hiring more staff while 25% expected to take on more staff in the medium term.
Confidence is also a factor and most likely the reason for a lack of investment in both productivity and growth since 2007. Related to this is the uncertainty about Brexit. While a decline in the value of sterling may justify investment in UK plc by foreign companies, if it remains at the current low levels, the lack of investment will result in low value jobs.
Confidence, too, has weakened each month since the referendum with a third of those surveyed reporting that economic conditions were worsening.
This prompted REC Chief Executive Kevin Green to say: “there are question marks around the sustainability of positive trends we have seen since the referendum. Skills shortages are a major problem in many sectors, one that will only get worse if the supply of skilled EU workers is in any way curtailed. Employer confidence has fallen significantly, suggesting that while businesses continue to perform well, there is much anxiety about what the future holds.”
The sectors where it is most difficult to find suitable candidates are in engineering, tech, construction, health and social care.

The implications for the recruitment industry

Uncertainty is likely to affect the recruitment industry, as for any other business, for the foreseeable future.
But, depending as it does, on being able to source and supply suitably qualified and skilled candidates the recruitment industry is going to be affected not only by confidence among employers but also by its ability to find the right candidates.
In addition, there is a question mark not only on post-EU immigration policy as it will affect the ability to recruit the best people, but also on the potential for a raft of additional legislation about checking on candidates’ eligibility to work.  That may add to the industry’s responsibilities and make its job even more difficult.
There may also be a distortion in the employment stats with the number of self-employed workers increasing by 273,000 to 4.79 million – 15% of all people in work.

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Business Development & Marketing Cash Flow & Forecasting Finance General Rescue, Restructuring & Recovery

Labour's promise on zero hours contracts may result in a rise in unemployment

The run-up to an election can be relied on to generate ambiguously-worded promises that may or may not be delivered by the eventual winner.
One such is the promise in Labour’s manifesto to “ban exploitative zero hours contracts so that if you work regular hours you get a regular contract”.
This pledge has been truncated in some media to “ban exploitative zero hours contracts”.
Either way the pledge could be read in more than one way. Is it a complete ban on all zero hours contracts or is the key word here “exploitative”?
The fact is that a zero hours contract can be very useful, particularly for SMEs to justify employing staff. In a volatile market it gives a company flexibility and allows it to keep overheads as low as possible by tailoring the workforce to demand. Orders cannot be guaranteed and businesses will behave rationally. If they cannot use zero hours contracts then they have other alternatives such as overtime for existing employees, to simply not take on the work, to outsource it to low-wage or more flexible countries, or they can use agency-supplied workers.
There is one aspect of “exploitation” that does need to be addressed which is when an employer makes the contract exclusive to them thus preventing the employee from taking any other work to fill in the gaps.
It is acknowledged that there is an issue for employees due to the lack of a guarantee of a minimum level of hours. There is however a market for jobs whereby employees will weight up the wages and security offered by some employers against those of others and behave rationally. It is also why the market for jobs needs to be underpinned by an effective unemployment benefits system.
So what is Labour really proposing? To close the loopholes that allow exploitation by allowing workers to have more than one zero hours contract? To get rid of zero hours contracts all together, and replace them, with what? To limit them somehow, whether a maximum period of work, or by size of employer?
Absent all other factors, any major reduction in the use of zero hours contracts will result in a rise of unemployment. This may however be the real objective of Labour’s paymasters as it is believed that very few employees on zero hours contracts are members of unions.

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Business Development & Marketing General Rescue, Restructuring & Recovery Turnaround

You just can’t get the staff these days!

 

A problem that many SMEs struggle with and have raised again in recent weeks is finding suitably qualified people who will fit in.

There are several issues that particularly affect the small employer.

As well as paying another salary, NI and pension contributions, there is the management and admin time spent on payroll which has significantly increased due to tax and employment legislation such as the recently introduced Real Time Information (RTI) for PAYE.

While there may still be many unemployed people available since the 2008 financial crisis, finding someone with the right set of skills can be a costly and difficult business and already would-be employers have been identifying a shortage of people with IT, sales and financial skills.

Also, according to new research, The Flux Report, produced by the talent management group Right Management, the most important qualities employers will want from future employees will be resilience, flexibility and the ability to cope with change.  This is partly because of the economic volatility that has been apparent since 2008, and partly because the pace of change in technology, marketing and other areas has accelerated dramatically.

So what other options are available to SMEs?  Plainly costs need to be kept under control and many do not have the resources to train someone.  One solution to consider is outsourcing basic functions such as bookkeeping, payroll, credit control, secretarial work or answering the phone. Other functions such as sales & marketing, IT, delivery, premises management, and even manufacturing or servicing clients are often best done by external experts brought in as and when necessary. This can leave an SME to really focus on what it does best.

I know of a number of professional service and management consulting firms that focus on marketing to bring in the work and then outsource it to others to actually carry out. I know others that outsource their sales and marketing so they can focus on doing the work.

Those who want to take on staff might consider offering work experience to interns, seeking help with the cost of apprenticeships or with new employment costs from the new Employment Allowance scheme that can contribute up to £2,000 towards an SME’s National Insurance bill.

Most importantly growth starts with having a clear business model, a clear plan and identifying what skills gaps will be needed before starting to search for the right person.