The UK currently has jobs to spare. Ill health, early retirement and population ageing have all helped shrink the workforce, threatening to stunt growth and prolong high inflation, and leaving businesses in many sectors struggling to fill vacancies.
There is one big development acting as a counterweight to these trends, however — an unexpectedly strong bounceback in all forms of migration to the UK, including in the recruitment of overseas workers.
Despite post-Brexit restrictions, net migration to the UK hit a record high of more than half a million last year. Only a small share of that is due to cross-channel crossings by small boats, which is currently high on the list of government priorities.
The surge is partly due to one-off circumstances; arrivals from Ukraine and Hong Kong, a post-pandemic rebound in all cross-border movement, as well as an increase in student numbers.
But it is also because employers have made much greater use than expected of the new, post-Brexit migration system introduced in January 2021, which makes it much harder to hire from the EU, but in many cases easier to recruit workers from other countries — for a fee.
Under the new regime, people coming through the main skilled worker route must have a job offer from an employer with a sponsor licence, usually on a salary of at least £25,600.
Fees levied by the Home Office are high, sometimes running into many thousands of pounds. But the salary threshold is lower than it was before Brexit, and middle-skilled trades have for the first time become eligible for visas as well as graduate jobs. There is no cap on numbers.
“It has been a little bit of a gift to employers experiencing skills shortages,” says Audrey Elliott, a partner at the law firm Eversheds Sutherland. “So long as you’re happy to pay the money, you can bring people in quite easily.” She says her firm has seen “huge demand” for skilled worker visas ranging from IT and finance to marketing, engineering and even some roles in lower-paid sectors such as retail.
Jonathan Portes, a professor at King’s College London, describes the new regime as “the biggest shake-up [of immigration rules] in half a century” — one that has led not only to higher numbers, but also to a huge shift in migrants’ countries of origin, their skill levels and the sectors they work in.
Home Office figures, obtained by law firm Eversheds Sutherland under an FOI request, and shared with the FT, show in detail where the pressures in the UK labour market, combined with changes in the rules, are prompting employers to use the visa system more freely than in the past. Care workers and nurses, chefs and butchers are among the occupations where visa sponsorship has surged.
Together, the numbers overturn the assumption that post-Brexit Britain would have lower levels of immigration overall. Instead, a system of free movement for Europeans and hurdles to migration for most others has been replaced by one in which skilled workers globally can gain entry with slightly lower barriers than before, but at a higher cost.
Excluded from the system are lower-paid jobs, a big shock for sectors such as logistics and manufacturing that had previously hired freely from the EU, and are now struggling most with hiring. This can change swiftly, however, when particular roles are added to a list of “shortage” occupations with lower requirements for skill and salary.
Businesses have been lobbying ministers hard to add more roles to this shortage list, or to open new sectoral schemes of the kind already running in agriculture. The CBI, the employers’ organisation, argues this is urgently needed to “bridge the gap” until other policies to boost the domestic workforce bear fruit.
But economists caution that migration should not be seen as a panacea to labour shortages — and that while a bigger workforce leads to a bigger economy, it does not necessarily make much difference to per capita GDP.
“The economy is not some god we have to placate, it’s about how immigration affects people’s lives,” says Alan Manning, former head of the government’s independent Migration Advisory Committee. Such a rapid increase in migrant workers and students, he fears, will “crowd out” the UK’s capacity to take a more humane approach to other migrants, such as refugees.
What the data shows
In some ways, the data on visa sponsorship shows the continuation of historic trends. Some of the growth is in high-paid professional areas that have always seen a lot of cross-border movement.
Visa applications for management consultants, for example, were 40 per cent higher in the third quarter of 2022 than in the first quarter of 2021; for programmers and software developers they rose 36 per cent.
These increases partly reflect the need to seek visas for new EU recruits, but they are also due to strong demand for IT skills from companies pursuing digitalisation and a post-lockdown hiring spree in the City. Immigration lawyers say the wave of lay-offs now sweeping the tech sector has sent some recent migrants on a desperate hunt for new visas to let them stay in the UK.
But while the absolute numbers are much smaller, the data also shows a sharp increase in visa sponsorship in a range of skilled trades where employers previously relied on recruitment from the EU.
The Home Office granted almost 1,300 visas for chefs, more than 700 for butchers and around 650 for restaurant and bar managers in the third quarter of 2022 alone — even though employers would have to pay well over the UK going rate to meet the minimum salary requirements for visas. A chef, for example, would have to be on a salary of £25,600 — or £20,480 if under the age of 26 — whereas the Home Office “going rate” is £18,900.
The strains on the public sector workforce are also visible, with schools starting to look overseas to hire teachers of maths, physics and foreign languages — the subjects with the biggest shortfall in UK trainees.
By far the most dramatic change, however, is a huge surge in overseas recruitment in all parts of the NHS and more recently — following changes to the rules on eligibility — across the social care sector.
The latest Home Office data shows that healthcare now dwarfs all other sectors, accounting for 76,938 grants of work visas over 2022 as a whole — outstripping a total of 66,324 granted for other skilled workers.
This reflects the NHS’s continued reliance on international nurses, junior doctors and other specialists ranging from radiographers to physiotherapists and midwives.
It is also the direct result of government policy, following the creation of a new “health and care” visa category with much lower fees than those now levied for most skilled workers.
In addition, senior care workers were in mid-2021 added to a list of shortage occupations, allowing employers to hire on a lower salary than the usual minimum — albeit one that is still well above the going rate for the sector. Other care workers, at a skill level below the usual threshold to qualify for a visa, were added to the shortage occupation list a year ago.
Since then, their numbers have rocketed, reflecting the depth of the recruitment crisis in a sector where employers’ ability to improve pay and conditions is heavily constrained by government funding. The Home Office granted 22,100 visas for senior care workers in 2022 and 34,800 for care workers and home carers.
This is far greater than the number estimated to have come under free movement from the EU in previous years, and it is all the more striking in a sector dominated by small businesses with little capacity for bureaucracy.
With EU nationals’ interest in UK jobs apparently waning, it has contributed to a big shift in the main countries from which workers come to the UK — with around seven times as many coming on work visas from Nigeria in 2022 as in 2019, and 25 times as many from Zimbabwe.
There has also been an abrupt change in the nationalities of short-term migrants coming to work on UK farms. Until recently, the seasonal scheme’s operators recruited largely from Romania and then Ukraine. With conscription keeping many Ukrainian men at home, they have ranged further afield — to Kyrgyzstan and Tajikistan, Indonesia and Nepal.
Migration experts, including those generally supportive of an employer-led visa system, worry that such a rapid expansion of visa routes in low-paid sectors brings dangers — even as employers press ministers to include many more roles in the list of shortage occupations.
Madeleine Sumption, director of Oxford university’s Migration Observatory, noted there was “compelling evidence” of abuses in the seasonal scheme — with workers paying fees to recruiters in their home countries, then finding their hours and pay in the UK to be lower than expected. Supermarkets are now taking steps to audit the recruitment system more rigorously. But there are also concerns about care workers being asked to work additional unpaid hours.
“There is a major trade off with these types of schemes,” she says. “There is an economic argument on what would make sense for this industry, but there is a human cost of these visas and monitoring them is incredibly difficult.”
Where barriers remain
There are still many areas in which employers who would like to hire outside the UK are constrained by the new system.
Even in higher paid professional areas, employers are increasingly deterred by visa fees that could run to as much as £20,000 for an employee bringing family for a five-year term, says Chetal Patel, head of immigration at the law firm Bates Wells. Some were now sponsoring visas for just three years, to cut the cost, or making job offers conditional on the employee repaying fees if they left the company before the end of their term.
There are also potentially “substantial” barriers to the kind of coming and going that used to be commonplace between the UK and EU — short-term contracts, freelance gigs or short trips to an employer’s UK site, for example, according to a report published last week by the UK in a Changing Europe think-tank.
The think-tank also set out research suggesting that post-Brexit migration changes had contributed to “significant shortfalls” in employment in low-wage sectors such as hospitality, logistics and administration.
Business groups are now pressing ministers to expand visa routes further as one element of a broader policy drive to boost the size of the workforce. In particular, they would like to see more roles added to the list of shortage occupations as part of an upcoming review — a move that would allow employers in those sectors to hire migrants on lower salaries and fees than at present.
“We would welcome any steps . . . making it easier for employers to hire from abroad. Not doing so holds our economy back,” Shazia Ejaz, director of campaigns at the Recruitment & Employment Confederation, said after the FT reported that ministers were planning to add roles such as bricklayers, roofers, carpenters and plasterers to the list.
This would make a big difference to employers in the construction sector, says Patel, because Home Office fees make it “hugely costly” to bring in workers in large numbers for a limited period, as is sometimes needed in order to staff critical projects.
Kate Nicholls, chief executive of industry group UKHospitality, has called for the government not only to reinstate skilled roles such as chefs — removed from the shortage list in 2021 — but also to allow visas for unskilled roles. “The inescapable conclusion is there [aren’t] enough people active in the economy to be able to fill all the roles that we need,” she told the FT last week.
Some economists are deeply sceptical of such arguments from business. “Shortages are always caused by poor pay and conditions,” says Manning, formerly of the Migration Advisory Committee. “We’re short of people who want to do these jobs, not who are able to.”
Portes of King’s College London, who believes the new visa system is largely working as intended in boosting skilled migration, described it as “a bit of a mess” in the one sector where the government controls both migration policy and prevailing levels of pay — namely, care.
“Even those of us who are relatively liberal on migration think this is not the optimal approach for the long run,” he adds.
If the government does want to allow more migration in low-paid sectors, there may be better ways to achieve this than schemes tying potentially vulnerable people to a particular employer.
Sumption argues that extending youth mobility schemes, of the kind in place with Canada, Australia and New Zealand, to more countries would be a more appropriate mechanism.
The UK’s post-study visas, which currently allow international students to work in any job in the UK for two years after graduation, are potentially having a similar effect at present, she added.
Although businesses say they have gone to great lengths to make jobs more appealing to UK workers, HM Revenue & Customs data shows pay growth has lagged behind the UK average in sectors that lost the most EU workers.
Sumption said this, combined with experience in the care sector, could give ministers pause for thought before allowing more migration in low-skilled sectors.
When the Migration Advisory Committee recommended adding care workers to the shortage occupation list last year, it also called on the government to introduce and fund a minimum rate of pay for the sector, above the statutory wage floor.
“The recommendation was there should be an increase in pay and terms and conditions for everyone,” she says. “That didn’t happen. Only the immigration bit was implemented.”