In a decisive policy shift, the Home Office has announced sweeping changes to the UK’s immigration rules, set to take effect in Spring 2024. This update, announced by the Home Secretary on 4 December, aims to curtail legal migration by approximately 300,000. Central to these changes are revisions in the Skilled Worker visa category, the Shortage Occupation List, dependant visas and the Graduate visa route.
These measures align with the recent hike in visa application fees and the impending rise in the Immigration Health Surcharge due to start in January 2024, marking a significant transformation in the UK’s approach to immigration. This article offers an analysis of the impending changes, discussing their broad implications for businesses and skilled workers, we shall follow with an article on the potential impact to families of British or settled persons.
The most notable reform is the drastic elevation of the Skilled Worker visa minimum salary threshold, which has been increased by nearly 50%, going from £26,200 to £38,700 annually. This change, however, exempts Health and Care Workers.
The new threshold, surpassing the median UK salary, poses significant recruitment challenges, particularly in sectors like hospitality, where the majority of sponsored visas for roles such as chefs and managers are likely to fall below the new requirement.
Research indicates that this salary hike will affect approximately 210 out of the 225 eligible occupation codes for a Skilled Worker visa, excluding health and education sectors.
Worryingly to meet the new threshold, salaries for some of the jobs within these codes would need to rise by 1% to 47.7%. Specifically, 55% of these occupations will require a minimum salary increase of at least 47.7% to comply with the new rules, assuming a standard 37.5-hour work week.
The salary calculation, based on a 37.5-hour week, must be pro-rated according to the working hours stated on the certificate of sponsorship (CoS). This may compel employers to extend working hours as a strategy to meet the new salary requirements or mitigate additional costs.
While these changes have a broad impact, the Migration Observatory notes that they predominantly affect a limited segment of visa recipients. In the year ending September 2023, around half of the 208,000 Skilled Worker visas granted to primary applicants were allocated to care workers, who are exempt from this salary increase. Additionally, 20% of these visas were for health or teaching professionals, whose salaries are based on national pay scales and thus unaffected by the new threshold.
Therefore, the remaining 30% of visa grants, primarily in the private sector, will experience the most significant impact. However, many migrants in these roles already earn above the new £38,700 threshold. The raise’s impact will be more pronounced in middle-skilled occupations like butchers and chefs, where typical salaries are closer to the previous threshold. Smaller businesses, especially outside London and the South East, are more vulnerable to these changes due to generally lower salary offerings.
The increase will not immediately affect salaries of current employees. However, it’s unclear whether transitional measures will apply during visa renewals. The possibility of sponsored skilled workers being paid below the new threshold through ‘tradable points’ for new entrants or jobs in shortage occupations is also yet to be clarified.
The government plans to replace the current Shortage Occupation List (SOL) with a new Immigration Salary List, eliminating the 20% salary discount for shortage occupation roles. However, a general salary threshold discount is expected to remain.
This change, coupled with a review by the Migration Advisory Committee (MAC) suggests potential disruptions in sectors like technology, engineering, and construction. Employers in these industries should prepare for a likely reduction in the number of occupations on the list, affecting recruitment strategies.
These comprehensive immigration reforms signify a pivotal shift in the UK’s approach to managing legal migration, with far-reaching consequences for businesses and workers, connected to the UK immigration system.
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