Brexit: The impact on Wales and its tech scene
by Askar Sheibani, June 21
After months of speculation, the future of the UK’s EU membership will finally be decided on 23rd June. The EU referendum will give UK citizens a choice many of them have never been given before – whether the country should or shouldn’t be part of the European Union. Naturally, this decision has been met with some debate, not least because ‘Brexit’ is becoming more of a reality than many people previously anticipated.
Observing opinion polls, the decision to leave or remain in the EU is constantly swaying back and forth. A YouGov poll conducted on 10 June revealed that 43 percent of UK citizens would vote to leave the EU, while 42 percent would vote to remain and 15 percent are uncertain. Just four days earlier, on the 6 June, the vote was 43 percent to remain, 42 percent to leave and 15 percent were uncertain.
Hanging in the balance of this uncertainty is the future of companies based in Wales – such as The Comtek Group and our neighbours, Airbus, Toyota and ConvaTec. Our local communities and employees are similarly affected. Technology companies like Comtek often benefit from the EU; being part of something bigger gives us access to a skilled labour market, plus it affords us additional investment and trade opportunities. Withdrawal will impact our competitiveness and will have a knock on affect for the community. The worry is that Brexit could lead to ‘Techxit,’ where technology companies are forced to leave or withdraw their investment from Wales entirely.
Employment, skills and entrepreneurship
There’s currently a mismatch between the skills required by employers and the skills available. This is being referred to as the ‘skills gap’ and nowhere is this more apparent than in the technology sector. According to a report by the Recruitment and Employment Confederation and Markit, there was a healthy demand for staff in May this year, particularly in the engineering sector, which saw the strongest growth of demand for services.
Despite this growth, there was a decline in candidate availability, which means engineering companies are either overstretched or having to turn down work.Being part of the EU provides companies with easy access to a huge pool of talent that will help the UK to overcome the skills gap. Any citizen within the EU can live, work and study in any European country without much bureaucratic processes.
For example, it took The Comtek Group around a year to hire a software engineer from India, whereas it took only four weeks to hire a software engineer from Italy. If the UK withdraws from the EU, the years of economic uncertainty to follow could leave European workers reluctant to work in the country unless their immigration status is for the long-term.
This, combined with the fact that many engineering courses at British universities are well attended by overseas students, means that we will be starving the UK of skilled engineers and widening the skills gap, rather than closing it.
The EU also provides funding for apprenticeships and programmes such as Jobs Growth Wales, which has created six-month job opportunities for young people to gain valuable work experience. While the programme is funded by the Welsh Government, the European social fund has contributed £25 million to support the programme. Withdrawing from the EU could mean that EU-funded apprenticeship schemes and programmes will be at risk.
Startup companies are also given access to valuable resources, including financial support and initiatives, such as Startup Europe, which aims to strengthen web and IT entrepreneurs so that their business can grow in the EU. As an entrepreneur myself, and having run Dragons’ Den style events with the local Flintshire council to find and nourish young entrepreneurs within the area, I know how hard it is to find money and resources to expand and sustain a business. While British entrepreneurs may turn to local universities and apprenticeship schemes for support, these can often take years of planning to set up.
Trade and competition
Seamless trade across Europe is critical for businesses to thrive and compete with international firms. Exporting products to countries outside of the EU can be difficult for UK businesses because of the cross-border barriers for trade.
In fact, it’s often only larger companies that are able to comfortably trade outside of Europe because of the cost, time and resources involved. By having access to the European market, where trade controls are not an issue, companies can better compete with larger firms inside the EU, consequently fighting any anti-competitive practices.
The Comtek Group, for example, currently ships its repairs seamlessly between its UK and German offices, meaning that the company can make best use of its resources to serve its customer base across Europe. It can also easily move its employees between its European offices to deal with increases in demand. When exporting to countries outside of the EU – such as Brazil – cross-border barriers for trade can result in waits of up to six months for Comtek repairs to reach the customer, through no fault of the company itself.
While larger companies are harder to compete against for small businesses, they are vital to the success of the UK economy. Brexit may push these multi-nationals, of which there are many in Wales, to move investment away from the UK in favour of EU member states. This could result in the loss of thousands of jobs and will significantly impact the development of our communities.
I strongly believe that the UK should remain a member of the EU. For countries such as Wales, membership has opened up a huge market with a population of around half a billion and no cross border barriers for trade.
British entrepreneurs, such as myself, find this vast market an exciting opportunity for growth and it provides companies – particularly startups – a great amount of support, not least in terms of finance. This not only accelerates the growth of the UK tech industry, but it facilitates the growth and success of UK tech companies at a global level, while protecting them against any undesirable, anti-competitive practices of some international giants. Britain’s departure from the EU would be devastating for Wales and its tech industry – and Techxit will certainly be a possibility.
By Askar Sheibani, CEO and founder of The Comtek Group, entrepreneurship champion for Wales, and chairman of the Deeside Business Forum
Image credit: MPD01605