Hiring from abroad is about to get much harder

The UK government is expected to raise the minimum salary requirement for migrants as it experiments with stricter policies to curb immigration.

According to claims first reported by The Telegraph, the UK’s latest Home Secretary, James Cleverly will inform MPs later today that the minimum salary requirement for a skilled worker from overseas will be hiked to around £38,000.

UK businesses have been increasingly reliant on overseas talent due to cross-sector labour shortages. The new rules will potentially make things far tougher for firms who are battling to fill hiring gaps for technical and sought-after roles.

Government vows to “do what is necessary” to bring down net migration

News of Cleverly’s announcement, which will be formally unveiled later this afternoon, comes after prime minister Rishi Sunak has faced intense pressure in recent weeks to limit migration numbers.

Net migration to the UK was recently revealed to have hit a new record high of 745,000 in 2022, just four years after the Conservatives pledged to cut it to a third of that level.

The plan follows an embarrassing blunder for Sunak. Last month, the UK Supreme Court unanimously ruled that the government’s Rwanda scheme – under which asylum seekers would be sent to Rwanda to have their claims settled there – is unlawful.

The latest announcement indicates that the government is turning its attention away from its ‘Stop the Boats’ policy of tackling illegal migration, which represented less than 5% of total migration figures last year, by making legal migration less appealing for employers.

It will do this by raising the minimum salary requirement for overseas hires to £38,000, from its current level of £26,200. As a result, hiring from abroad will become untenable for many small business bank accounts.

According to The Telegraph, the Shortage Occupation List (a programme that allows foreign workers to be paid 20% below average salaries in sectors short on skilled talent) will also be overhauled.

Is business growth taking a back seat in Tory plans?

The minimum salary requirement is an important step as part of Right to Work checks for businesses seeking to employ those on Skilled Worker visas. This is the type of document required for employers to recruit non-UK resident workers for highly-skilled roles.

Many UK industries are currently being propped up by foreign skilled workers, most notably in hospitality and social care. However, raising the threshold specifically for Skilled Worker visas will also have an impact on those based in the scientific or technical sectors.

The news will baffle many startup owners in these industries, who are already grappling with a digital skills gap that has left many struggling to grow. Overseas hires have been crucial in helping startups and small businesses maintain pace with emerging technologies such as AI.

The UK had been pulling ahead in the tech arms race. Plenty of innovative AI startups had already made a name for themselves in the SME landscape, while foreign support schemes such as the multi-million EU Horizon accelerator helped further the government’s stated commitment to support AI growth and innovation.

Now, a significant cost barrier has been put in place to block small firms from hiring specialist and technical roles, without increasing salaries on offer.

The result is a lot of raised eyebrows as experts ask how the government’s decision to limit skilled worker migration sits alongside its goal to grow the economy in 2024.