Interview with iadvisor Neil Malone: Business Set-Up in the UK Pt 2

iadvisor Neil Malone; managing director of My Point Of Contact UK, shares his thoughts on the manpower and cost issues that Singapore companies might face when setting up in the United Kingdom (UK).

What are some of the manpower issues Singapore companies should take note of in UK?

With a workforce of over 30 million people, the UK has the second largest workforce in the EU. Couple this with the ability for all workers to move and work freely in the EU, and the large number of other EU member state nationals preferring to live and work in the UK, there is a diverse pool of skills in the UK which can be utilised by Singapore companies entering the market. Nevertheless, for Singapore companies considering a UK market entry, it is important that an appropriate strategy is formulated which takes due and proper account of geographic influences on the availability of suitable human resource for specific sectors. As one would expect, very often the particular strengths of universities within specific regions in the UK will have a significant bearing on the availability of a suitably skilled workforce in that region, especially in sectors requiring highly specialised skills from workers. Singapore companies entering the UK market, without adequate due diligence, might assume that all of the top UK talent lives and works in London...not so....although it would be fair to say that the capital attracts a larger share than other regions of the top talent, the other regions should not be overlooked. For example, a Singapore company seeking to enter emerging high-technology sectors in the UK should unquestionably be carefully considering the East of England as a short-listed target region for relocation having regard to the number of highly educated and highly skilled Cambridge university graduates who choose to stay on in the region after completing their studies.

In terms of the cost of manpower, the average wage in the UK is approximately £26,000 per annum (S$57,3691), with the minimum wage at GBP 5.73 ($S12.061) for adults (those 22 and over), and GBP 4.77 (S$9.611) for young people (18-21), and GBP 3.53 (S$7.111) for workers aged 16 and 17. There is a large and well developed human resource recruitment industry in the UK which, if used effectively by potential market entrants, can provide detailed and accurate sector specific data during market appraisal and fast recruitment solutions when actually implementing the market entry.

Finally, although Singapore companies will be familiar with government regulations regarding the fair treatment of human resource, it should be noted that the employment legislation in the UK is one of the bodies of domestic law which is most integrated with EU regulations and directives. Workers in the UK have statutory entitlements to minimum annual paid holiday, minimum daily and weekly rest periods, and an average work-week limit of 48 hours – this limit can in certain circumstances be opted out of. There is a body of regulations surrounding the recruitment and dismissal of employees. Thus, the recruitment, treatment, and if necessary, dismissal of employees in the UK should be a carefully managed process carried out with the underlying legislation in mind. There are a number of cost effective HR management solution providers in the UK to ensure this does not become a significant cost or burden for a new market entrant.

What are some of the larger costs of setting up a business in UK?

The larger costs of setting up business in the UK are similar to the larger costs of setting up in most of the major developed countries around the world, and the type of operation a company proposes to carry out obviously affects this significantly, but as a general comment:

Real Estate represents one of the larger costs of setting up in the UK. It is widely commented upon that there was a real estate boom in the UK until very recently which had inflated real estate values. However, in the last couple of years, these values have normalised again and this process of normalisation is creating some very real opportunities for companies that are looking in the right places.

Human Resource is also one of the larger costs of setting up in the UK. In light of the recent global economic climate, the labour market in the UK is currently very competitive and employers are in a very strong position vis a vis the negotiation of terms with highly skilled employees. The engagement of the right recruitment consultant can be extremely beneficial in this process.

What are some of the challenges unique to setting up a business in UK?

Singapore companies will not encounter many challenges in setting up a business in the UK, other than those practical challenges associated generically with setting up business overseas i.e. the problems associated with the management team being situated a 13 hour flight (and 7 hours time ahead) from where the action is taking or needs to take place! This is due in large part to the shared common language, significant similarities in the legal & regulatory environment, familiar customs and practices and stable political environment which is unlikely to be the subject of any drastic changes in the near future (the leading political parties in the UK are often described as sharing the ‘middle ground’ in the political sense).

As already mentioned, Singapore companies need to be aware of the over-arching regulatory environment created by the UK’s membership of the EU. This can in certain circumstances lead to confusion regarding the applicable legislation governing a particular situation and must therefore be managed properly by obtaining appropriate legal advice as any prudent company will do in any event. Separately, the UK immigration system can occasionally present challenges when setting up business in the UK. A relatively new points-based system has been introduced which has gone some way to clarify some of the confusion encountered under the old system but nevertheless to achieve efficiency, advice should be sought on the systems implications at the early stages of formulating a market entry strategy.

And finally, Singapore companies may find it challenging to obtain a complete understanding of all of the various inventive schemes that are available to them should they be considering setting up a business in the UK, due to the large number of different schemes operated by the EU, the UK central government, and by separate local government agencies and authorities in the UK.


All answers are provided to the best knowledge of the iadvisors at the point of answering, and are solely represented by the iadvisors, not IE Singapore.

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