It was recently reported in the UK’s Guardian newspaper that just under 100 firms, “across a broad spectrum ranging from financial technology to legal services and asset management to biotech” have been looking into the Benelux region as a result of Brexit uncertainty. At time of writing, 20 had completed dealings, whether that was in terms of expansion, relocation entirely, or just the opening of a subsidiary.EY currently estimate 7000 jobs and 1 trillion pounds of financial assets are set to leave the UKs financial services sector alone, with the long-term exodus potentially being much worse.
As much as the UK will be economically disadvantaged by Brexit (the inevitable cost of ‘taking back control’), there are net winners. Luxembourg, in particular, has become a leading destination for insurance, asset management and banking, as well a buoyant market for professional service organisations such as law firms and the ‘big four’ accounting giants.
It’s difficult to look too far ahead with any degree of certainty in these, well, uncertain times. However, I believe there will be some immediate short-term opportunities which are particularly relevant for those companies focused on talent management in Luxembourg.
Talent management will be critical: Where companies go, people will follow
The inevitable dislocation and likely recession to the UK economy following a no-deal Brexit has already encouraged many major companies (read, employers) to move some or all of their operations into the European Union. For every organisation that relocates to France, Germany, Luxembourg or Ireland, a question is posed to their workforce; should I follow?
Despite the cultural and geographical proximity of Ireland to the United Kingdom, Luxembourg appears to be the location of choice for many financial service companies and their employees. Given the direct access to the wider EU market, the quality of infrastructure and communications, not to mention the highest per capita GDP in Europe, it’s easy to see why.
With increased business flowing through Luxembourg, new demand is straining the existing talent pool. This is possibly most acute in technology skill sets. There are already thousands of IT workers based in the UK who commute to Luxembourg for their jobs – losing this source of expertise in a hard or no-deal Brexit will add to the current skills shortages. Employers will have to recognise that it is more important than ever to be flexible in terms of training, experience levels and employee engagement to attract and keep staff.
Luxembourg: destination of choice
Based on relocation announcements through to the end of August 2018, KPMG reported that 41 companies, the great majority of which are financial firms, decided to relocate to Luxembourg, compared to 30 opting for Ireland as a destination.
A large majority of these organisations relocating to Luxembourg to maintain access to the European market are in the asset management and insurance sectors.The recent failure of the UK to reach agreement by the Brexit deadline of 29thMarch will have only exacerbated this trend.
For Luxembourg, the looming impact of Brexit presents hurdles and opportunities in the acquisition and retention of IT talent. I believe we’re unlikely to see this unique set of circumstances again, so, at least from a talent management perspective in The Grand Dutchy, fortune may well favour the brave.
Cyrille Gobert, Belux Managing Director