On 4 December, the UK Home Secretary announced measures to slash migration to the UK. This followed figures from the Office for National Statistics (ONS) that showed total net migration of 745,000 in the year to December 2022, and 672,000 in the year to June 2023. The proposed changes will have huge implications for many employers across a range of industries as they continue to deal with hard-to-fill vacancies.
Key changes announced
- The most significant change was an increase in salary threshold for Skilled Workers from £26,200 to £38,700. This rise is almost 50% and is higher than the average for full-time workers in the UK (£34,963).
- The government has asked the Migration Advisory Committee (MAC) to compile an Immigration Salary Discount List (ISDL), replacing the Shortage Occupation List (SOL). These will be the occupations that will be exempt from the higher salary threshold.
- The changes in salary will not apply to health and care workers, who have made up nearly 70% of migrant workers since the reforms in January 2021.
- Care workers can no longer bring dependants, unless they meet the £38,700 threshold. In addition, care providers in England will now only be able to sponsor migrant workers if they are undertaking activities regulated by the Care Quality Commission.
- Dependants of British citizens and people settled in the UK will also need to meet a £38,700 income requirement, over twice the previous level of £18,600.
- The government has also asked the MAC to review the Graduate route to prevent its abuse.
What roles will be affected?
Despite there being no salary threshold changes for care workers, the restrictions on dependants are likely to impact the thought process of overseas care workers considering coming to the UK. Although the role was added to the SOL in February 2022 and 144,000 care workers had arrived in the UK in the year to September 2023, 152,000 vacant posts remain. The majority of those working in care are young and female. Those migrant workers will now need to come alone, making it a far less appealing option. Low pay and poor working conditions often make this sector unattractive in the first place.
Regarding higher skilled roles (eg those on Skilled Worker visas), the Migration Observatory soon after the announcement published the income levels of the main occupations where Skilled Worker visas were granted in the past year. Most of those coming to the UK and working in the top five salaried occupations are above the new salary threshold.
However, a quarter of programmers and software developers (the occupation with the largest number of visas granted) currently earn below the new salary threshold. If the new proposals were applied to existing workers (which they will not be), IT and telecommunication professionals would also be heavily affected. Despite there having been some 40,000 job vacancies, due to the sparsity of technical skills in the UK labour market, these are anecdotally some of the hardest to fill. All IT roles will now likely need a minimum salary of £37,800.
The three occupations with the lowest salaries are all within hospitality. It is likely that almost all visas granted in the past year were to those under the threshold. Should these occupations not be added to the ISDL, employers in hospitality will struggle to fill the 120,000 vacancies which remain – this represents one vacancies for every 20 jobs.
Some regions may be disproportionately affected too. Employers outside London and the South East of England pay less on average: for example, the average salary in Northern Ireland is only £32,879, some £5,000 below the proposed threshold.
There has also been little detail on how the salary thresholds for young people and postdoctoral research roles that previously had different rules would be affected.
Employers of migrant workers should be alert
The changes are not yet in force but will come into place in Spring 2024. There is a lot hanging on the ISDL. The MAC will come under pressure from the government to make the list as small as possible. It will only provide recommendations, but ultimately it is those in power who make the final decisions.
Employers who currently employ migrant workers in roles on the SOL shouldn’t take for granted that those will carry across to the ISDL. Indeed, there will no longer be a 20% going-rate salary discount for shortage occupations. Those with acute shortages only have a few months to make use of the current system.
Considerations for employers
The changes carry workforce challenges for employers, especially in social care. Employers can use strategic workforce planning to assess business drivers and goals, formulate contingency plans and address challenges such as labour costs and skills shortages. Our strategic workforce planning guide can help with this.
Given the impact on resourcing, now would also be the time to collect data on your resourcing efforts and establish how you can improve them. Employers can harness data to source, assess and engage talent as well as create a more inclusive, diverse and equitable workforce. You can use our talent management planner to get started.
Employers should also analyse their organisational data more broadly to review overall workforce performance. This includes historical data on the number of applications you have sponsored for roles paying under £38,700, which may no longer qualify under the new rules.
The CIPD report on migrant workers and skills shortages in the UK found that employers who hire migrant workers were also more likely to be taking action to invest in UK-citizen workers. We encourage employers to focus investment and development in resident capability, in both people and technology.
On 21 December, the Government published additional information on reforms. The Minimum Income Requirement (MIR) for dependants of British Citizens and people living in the UK will only rise to £29,000 initially. There will be a staged implementation to match the £38,700 threshold, in line with the Skilled Worker threshold (no further detail announced). In addition, those already on the Skilled Worker route will not be required to meet the new £38,700 salary threshold when they come to change employment, extend their visa, or settle permanently in the UK.
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