How Brexit is affecting the cleaning sector

Posted on November 28, 2018 in General Info

It was a monumental decision, and almost certainly a defining moment in Britain’s modern history. Although, there’s no doubt leaving the EU will have its pros and cons and for the time being, the future remains uncertain, therefore, let us explore how Brexit is affecting the cleaning sector in the UK.

There are more than 9,000 cleaning companies in the UK, hundreds of which are in London and the cleaning industry has a market size of approximately £7 billion. The industry employs many EU migrants. In fact, one study showed that approximately 25% of people with the industry don’t have British nationality.

In comparison, the average number of foreign employees across other British industries is below 18%. Moreover, recent results also point out that three quarters of the approximately 1 million immigrants that are currently working in the UK are working in low-skilled jobs.

WE’RE OUT

Whether you agree with the results of the referendum or not, the ‘majority’ of the British population wanted to leave the European Union. Approximately 52% of the voters decided it would be best for them and their country to leave the European Union.

However, ‘Europe remains a very important market for the UK cleaning industry, and every effort should be made to make the transition to a non EU state as smooth as possible’ -British Cleaning Council.

OPINION OF THE INDUSTRY

The survey canvassed the opinion of Cleaning Matters magazine’s readers in December 2016 on the impact of Brexit on the UK cleaning industry. Two-thirds of respondents believed the price and availability of imported/exported cleaning equipment would be affected once Britain begins the process of leaving the EU. Almost half (46%) of cleaning professionals think the workforce will be affected by Brexit, followed by investment plans (40%), supplier relationships (34%), business processes (25%) and client relationships (22%).

EFFECT OF THE POUND FALLING

On the other hand, due to the devaluation of the GBP, causes inflation, as imports become more expensive and exports become cheaper. With the drop in GBP value, companies which rely on immigrant employees will also experience a hard time finding new employees.

Moreover, inflation will cause higher levels of unemployment in the coming months, leading to less demand for cleaning services from potential customers. According to Mark Carney, an international expert economist, there is an increased risk of lower labour demands from companies and deferred consumption from customers.

IMMIGRATION

There has been a lot of debate around the topic of immigration; with the leavers immigration is out of control and the remainers that EU migration is good for both the economy and businesses. However, how does this affect the cleaning industry?

According to statistics from the ONS, three in four migrants from Eastern Europe are filling low-skill jobs. In 2016, almost three quarters of the 872,000 Eastern European workers in Britain were in low-skilled jobs. That’s a large proportion of people that help prop up the British economy.

The leave campaign’s argument was that EU migrants are taking these kind of jobs away from the British public; under the assumption that British people want to and are even fighting against migrants over securing these jobs. But the truth is this is simply not the case.

Our workforce is bolstered by EU migrants, that work very hard and to an equally as high standard. We simply can’t see how the important job roles within our organisation would be filled without them.

FREE MOVEMENT

If the government adopt a new policy which treats EU migrant workers like how we currently treat non-EU migrant workers, we will most likely see a drop in low-skilled EU migration.

INFLATION

The Bank of England warned that the pound’s value could drop dramatically following a Brexit – which came true. Its latest monthly inflation report has dubbed a Brexit as the “most significant risk” to the UKs economy since the recession.

Mark Carney estimates that “households could defer consumption and firms delay investment, lowering labour demands and causing unemployment to rise”. This is much like many of the outcomes from the 2008 global recession when property prices plummeted for the first time in over a decade, the value of the pound fell to a 28-year low and a string of austerity cuts were brought in which are still affecting us eight years later. Now we’re leaving, we face lower labour demand, and luxuries like hiring a weekly cleaner will be slashed as people tighten their budgets.

LAWS

Another point Vote Leave claimed is hindering the growth of Britain is restrictive EU laws, vowing that the UK should govern its own lands and create its own laws. One segment of the remain campaign’s pledges is that a Brexit could see Britain withdrawing from the European convention on human rights, and replacing it with a British Bill of Rights.

There’s also changes to employment law that people are worried about. Dan Peyton, a partner at London law firm McGuireWoods says “it is unlikely we will implement a system of employment law that’s starkly different from what we have already”. Nodding to the need to retain commercial relationships with European countries as the reason for this.

The EU are also responsible for putting in place the Working Time Regulations that limits the number of hours a person can work a week. With a vote to leave, our government will have the freedom to tinker with these rules.

SUMMARY

All in all, with the cleaning business being a private sector niche, it will be most affected by how CEOs and business leaders in their organisations respond to new employment legislation.

The fact that Brexit threatens to reduce the freedom of movement between the UK and the rest of the European Union, could lead to a decrease in employees and an increase in prices for everyday clients. If and when the new post-Brexit regulations are put in place, it could lead to a disastrous effect on the commercial cleaning industry, not just for the companies, but for customers as well.

It really is too early to tell the full effect of Brexit. Only time will tell. However, a smaller available workforce, the devaluation of the GBP, inflation, and the rest of the factors will eventually lead to an increase of prices for the average consumers, but also to an increase of costs for cleaning companies.