Home Business Insights & Advice The changes to the UK skilled worker visa: Challenges and opportunities for British businesses

The changes to the UK skilled worker visa: Challenges and opportunities for British businesses

by Sarah Dunsby
21st Jun 24 2:54 pm

The skilled worker visa program has undergone recent changes as part of the government’s plan to curtail rising net migration figures and Immigration Lawyer Manchester will explain you changes.

According to data released by the Home Office, 337,240 work visas were granted to main applicants in 2023, 26% higher than in 2022. This increase in net migration is partly due to skills gaps, with the highest demand for skills being workers in the health and care sector.

As the government takes steps to address this issue, it’s essential for businesses operating in the UK to understand the challenges and opportunities that the new system will present. If you are an employer who hires foreign workers, here are some adjustments to the Skilled Worker Visa route that you should be aware of and their impact on your business.

The surge in salary threshold

The new regulations require UK businesses to offer higher salaries to overseas talent on a Skilled Worker visa. The general salary threshold for most jobs under this visa route jumped by 48% from £26,200 per annum to £38,700 per annum, and this new rate became effective on April 4, 2024.

However, the new threshold does not apply to health and care workers and those in education. Instead, their salaries are set using nationally agreed pay scales.

This salary surge for migrant skilled workers is significantly higher than the average salary for full-time employees in the UK in  2023, which stood at £34,963.

As such, the costs of sponsoring foreign talent have increased, and many roles across UK organisations will no longer qualify for sponsorship. Additionally, many employers might exit the international recruitment market.

With the new adjustment, the UK government aims to focus its immigration system on hiring only highly skilled migrants. This way, employers will fill only critical skills gaps and boost productivity and a more innovative workforce, which can help grow the UK economy.

The increase in going rates

With the increase in the minimum general salary threshold, the going rates for the occupation codes have increased simultaneously.

The UK government previously set the annual going rates for each occupation code at the 25th percentile of the Office for National Statistics (ONS) Annual Survey Hours and Earnings (ASHE) 2021. However, the new going rates are now set using the 50th percentile salary in line with the ASHE data from 2023.

This increase will be significant for many occupation codes. For instance, HR managers would have been paid the new minimum threshold of £38,700 per annum, which is higher than the old going rate of £36,500. However, according to the provisional ASHE 2023 data, the new median going rate for that role is £49,409.

For those already on the Skilled Worker route before April 4, 2024, the new rates will still be in the 25th percentile but based on the ASHE data from 2023 instead of 2021. While this increase is less than those for new applicants, it is still significant.

Every business should consider these figures in its recruitment plan. Employers might choose to adjust their compensation packages while ensuring the new figures align with the recruited role.

The abolishment of the shortage occupation list

The Shortage Occupation List (SOL), which helped employers fill critical skills shortages while paying workers 20 per cent less than the general salary threshold, has been abolished. In its place, a new Immigration Salary List (ISL) has been launched.

With old SOL, migrant workers could take up essential roles for lower wages while benefitting from reduced visa application fees and a faster application process.

However, the government doesn’t want British businesses to continue relying on cheap overseas labour. There have also been concerns about this scheme leading to modern slavery and exploitation of workers in the care sector.

Under the new Immigration Salary List, roles will only be included if they are essential in shortage, and it is sensible to include them. Additionally, it scraps the 20 per cent salary discount. This will increase hiring costs for employers, and businesses outside London, where earnings are lower, might feel the effect even more.

On the other hand, this measure will encourage employers to hire UK-based workers first. In doing so, more domestic people who have been unemployed for a long time will return to work.

The immigration health surcharge hike

The UK raised the Immigration Health Surcharge (IHS) by over 60 per cent on February 6th 2024. The annual fee went from £624 to £1,035 for most visa applicants and their dependents. Dependent children on the skilled worker route now pay a yearly IHS fee of £776, up from the previous rate of £470.

The restrictions on care workers

Another significant change is that foreign care workers can no longer bring their dependent children or partners to the UK. In 2023, the government issued 203,452 visas to health and care dependents, most of whom entered the workforce.

Thus, this decision was made to reduce the number of dependent visas and, subsequently, the number of migrants in the immigration system.

However, this will limit the number of individuals coming into the UK through the Health and Care Visa route, as those with families will likely not apply for care roles anymore. Critics already deem this new rule harsh, and since the National Health Service (NHS) is already strained, there’ll likely be further workforce shortages.

Additionally, the Care Quality Commission (CQC) is now regulating social care providers who wish to sponsor foreign workers. The UK government says this decision is to prevent the exploitation of migrant care workers.

Conclusion

The new Skilled Worker Visa system presents unique challenges and opportunities for UK businesses. While attracting top talent and reducing the reliance on low-skilled labour are attractive prospects, employers might find it challenging to adapt to a higher salary threshold.

To bridge the skills gap, businesses should focus on domestic talent development by training and upskilling their existing employees. This will create a more resilient workforce, which will benefit the business and the UK economy.

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