Labour, international talent and the technology sector
Businesses have grappled with skills shortages since the removal of free movement at the start of 2021 and the IT sector was no exception. Having initially been able to sponsor workers through a relatively generous employer sponsorship system introduced post Brexit (albeit one of the world’s most expensive), rule changes in early 2024 saw salary thresholds leap nearly 50%, fees skyrocket, and the shortage occupation list was replaced with the rather niche Immigration Skills List. All this, in the face of real difficulty to recruit talent into tech roles the UK so badly needs to fill, especially with the new government’s growth agenda.
Where we are
Talking about immigration is never easy for governments. Unsurprisingly in the recent general election both main political parties committed to reduce ‘net migration’, although notably the Labour Party stopped short of a target figure or a cap.
Whilst there is always focus on illegal migration, the salary threshold rises introduced in April for Skilled Workers are already exacerbating issues in hiring talent. This is particularly challenging when the UK is already experiencing shortages in key growth roles such as cyber and AI and according to recruitment company, Hays, 95% of employers looking for tech talent have encountered shortages. Any further obstacles to recruitment will not be welcomed by a technology sector trying to grow.
However, the potential for closer ties with Europe may well be welcomed, particularly if it was to result in a Youth Mobility Scheme of sorts, which would make it easier for young people in Europe to work in the UK and vice versa.
Labour’s Plans
The Labour manifesto was light on detail for business immigration and the new home secretary’s recent statement on legal migration confirmed that the majority of the previous government’s plan to reduce net migration, including the rise in salary threshold for the Skilled Worker scheme and abolishment of the discount to the going rate for shortage occupations, will be maintained. However, the desire to upskill is clear from the launch of Skills England within the first weeks of government, and sponsors are likely to see new conditions imposed linking visa usage to an obligation to train. Exactly how this would work in practice is yet to be seen, but previous obligations to train schemes have fallen flat.
Critically, the Migration Advisory Committee will be commissioned to review occupations within the IT and engineering sector who were consistently on the shortage occupation lists and this is a key opportunity for businesses to express their view and explain the challenges they experience.
Whilst not a manifesto pledge, the Labour Party has previously stated that they would review the removal of the resident labour market test, which requires employers to show they have attempted to recruit people in the UK first before turning overseas. Those with long memories would be rightly sceptical of reintroducing a process associated with long delays, a heavy administrative burden and outdated form of mandatory advertising which rarely produced suitable candidates.
What business must do
Key is that IT businesses must be willing to engage meaningfully with the government, skills bodies and the Migration Advisory Committee with data driven analysis on recruitment challenges and shortages experienced. Requests could include transparency on how the Immigration Skills Charge is spent, sector specific concessions, short term routes, such as a wider Youth Mobility Scheme – which offers a two year visa for people under 35 who want to work in the UK – and offering constructive solutions on linking skills and visa usage.
The industry should also remind the government of all immigration policy change that business has withstood in the past five years. The pace of change has been a headache for those involved in workforce planning and as the net migration figure is already reducing, a period of calm would be advisable.
If the new government truly want to kickstart economic growth, they must make sure businesses aren’t cut off at the ankles and can hire the talent they need. Upskilling is a critical part of this, of course it is. But it takes time and here and now, the UK needs a world class immigration system capable of landing talent quickly.
In many ways, the speed and objectivity of the UK system (and lack of a prescriptive system of labour market testing) makes it attractive to businesses compared to longer processing times elsewhere in the world. Any changes should enhance this and not return us to a ‘hoops to jump through’ criteria before allowing the sponsorship of workers.
Louise Haycock is a Partner at the global immigration and mobility law firm Fragomen.
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