The Home Secretary has commissioned the Migration Advisory Committee (MAC) to review the “reliance on international recruitment” in the IT and engineering sectors, asking for a report in nine months “to allow time for sufficient stakeholder engagement to inform any conclusions.”
We advise those working in these sectors to contribute if as expected there will be a call for evidence.
The Home Secretary’s emphasis on “bringing down the high levels of migration” is clear. Yvette Cooper’s letter to MAC chair Brian Bell asking for the review says “the current high levels of international recruitment reflect weaknesses in the labour market including persistent skills shortages in the UK.”
She identifies Information Technology and Telecommunications Professionals and Engineering Professionals as among the professions where Britain has been most reliant on international recruitment and asks the independent committee to examine why and come up with recommendations. Other sectors are likely to follow
The review will consider areas including:
- “What types of roles are in shortage?
- What are the different drivers of these shortages including training, pay and conditions?
- How have the sectors sought to respond and adapt to these shortages, beyond seeking to recruit from overseas?
- Where relevant, what, if any, impact has being on the Shortage Occupation List had on these sectors/occupations?
- What policy levers within the immigration system could be used more effectively to incentivise sectors to focus on recruiting from the domestic workforce? This could include whether the Immigration Salary List should remain in its current form.”
Immigration solutions for shortage occupations
Last April, the last government scrapped the Shortage Occupation List to help employers grappling with skills gaps – a move the Labour government is unlikely to reverse. Employers had been able to sponsor migrant workers in shortage roles on the list with lower application fees and a 20% discount on the general Skilled Worker visa salary threshold as well as a 20% discount on the going rate of pay for occupations which employers must meet. Like the last government, the Labour Party saw this discount as undercutting resident workers’ wages. The Shortage Occupation List was replaced by an Immigration Salary List at the same time as the minimum general salary threshold and going rates of pay for all Skilled Workers increasing too.
The Immigration Salary List (ISL) will still allow employers to pay lower application fees and a lower general salary threshold – £30,960 instead of the new minimum threshold of £38,700 for most new Skilled Worker visas. However there is no longer a 20% discount on the going rates of pay for the shortage occupations on the list so very few shortage roles are left on the new list, as most pay above £38,700 .
So, for example, there is a current shortage of programmers and software developers in the UK. Up to April they could be hired as a Skilled Worker visas on a £27,200 salary (based on a 37.5 hour week). From 4 April, they would have to be paid a minimum of the new higher going rate for that occupation code of £49,400 (based on a 37.5-hour week). As this figure is higher than the new £38,700 general Skilled Worker threshold, there is no point in this occupation being on the new Immigration Salary List – which now includes a vanishingly small list of shortage roles that pay under that amount – which is why Yvette Cooper has asked the committee to examine what is the point of the list “in its current form.”
Regional immigration levers
The Home Secretary also instructs the influential committee to consider options “including the merits or otherwise of a differentiated approach, based on region, occupation and/or other factors. These must be balanced against the risks of undercutting the wages of British workers and of over-complicating the system.”
The new higher thresholds that employers must pay to sponsor Skilled Workers are based on national averages, so obviously make it much harder for employers in areas that do not pay London wages to recruit internationally. In the past when regions and sectors have asked for regional differences to be taken into account the MAC has dismissed such an option, but now with much higher salary thresholds to meet, and the disproportionate burden that puts on regional businesses and areas demographically short of the talent they need, it will be interesting if they change their mind. It is encouraging that the new government is open to such regional differences – something the Scottish government in particular has been lobbying for with its demographic concerns, as the last government had ruled it out.
The Home Secretary also indicates that on this and other regular reviews going forward, the MAC will work closely with Skills England – the new body announced in the King’s Speech to get a grip on skills and training needs around the nation, the Industrial Strategy Council, as well as the Department of Work and Pensions. “The MAC should also work closely with the Devolved Administrations,” she adds.
Concerns for IT and engineering employers
A skills strategy for resident workers that addresses the shortages through training and reduces reliance on immigration is a great ambition, but the main questions for UK employers of tech and engineering staff will be where will the burden for this fall.
Until such time any skills strategies deliver a large enough pool of skilled labour to draw upon, employers will need the flexibility to recruit from outside the UK in order to grow their businesses and the economy.
They already use one of the most expensive immigration systems in the world, so sponsoring staff from abroad is not a choice made lightly. Training people into highly-skilled roles with entry-level training or apprenticeships isn’t always possible on the job so industrial skills strategies should rely on the education system too. Apprenticeships may not always be a viable option for workers themselves when factoring in lower rates of pay and the recent rises in the cost of living.
Work visas for start-ups and scale-ups
Start-ups are unlikely to have the time or capital to invest in training as they need to hit the ground running and will require skills and experience. Even larger firms cannot solely rely on training staff from scratch.
For start-ups and SME’s for whom entry-level training is not an option but who cannot afford to pay the full market rates due to their size or age, it may be worth considering an old scheme that was previously offered by Britain’s immigration system. In November 2015, following recommendations by the MAC that year, UKVI added a number of digital technology roles to the Shortage Occupation List but it was not open to every sponsor to count these roles as shortage occupations – the employer had to apply to UKVI for specific permission on the basis they were a “qualifying company”.
A scheme with a similar premise, if not the same exact criteria, may enable small companies who are not in a position to provide training or apprenticeships to recruit skilled and experienced workers that are not otherwise available. The previous scheme also limited the number of people such a company could sponsor, which prevented over-reliance on immigration and would mean that, as they grew, they would need to depend more and more on resident workers. This would target the benefits of the immigration system on those sponsors that most need it while requiring other sponsors who are more able to balance the cost-benefits of training to meet the full median market rate to hire internationally.
The Scale-up sponsor licence is a good example of a similar, cost-effective and easier sponsor licence that allows qualifying rapidly-growing businesses to access the skilled staff they need to continue growing. It launched on 22 August 2022, then Chancellor of the Exchequer Rishi Sunak boasting that the Scale-up visa was at the centre of his government’s “plan to make our visa system for international talent the most competitive in the world.”
Contact us on 0207 033 9527 or [email protected] if you may benefit from advice on any of the immigration options mentioned or require assistance with the sponsorship process for these or other work visas. We are highly rated in guides such as the Times Best Law Firms for our work with companies of all sizes.
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