How will the government’s five-point plan to reduce net migration impact on the UK’s tech sector?

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The government’s push to drive down net migration figures has been well documented. 2024 will see a raft of changes aimed at reducing this figure from the 745,000 that was recorded for 2022.

Whilst there is no doubt that the changes will result in reduced migration, it will also make things more difficult for sectors that rely on the sponsorship system to fill vacancies in areas where there are skills shortages in the resident labour market. 

Here, we take a look at how the five-point plan will impact the tech sector. 

With UK having skills shortages in the resident labour market, many employers in the tech sector turn to sponsorship to help them fill critical vacancies. The changes being implemented this year will increase the general salary threshold for sponsorship to £38,700 and removes the Shortage Occupation List which recognises the roles that are considered to have the most shortages in the resident labour market. A salary reduction of 20% is offered to these roles.  

The Shortage Occupation List is being replaced with an Immigration Salary List. There are 51 roles listed on the Shortage Occupation List and only around 25 roles have been recommended for inclusion on the Immigration Salary List. The good news is that a salary discount of up to 20% will apply to roles on the new list but the bad news for the tech sector is that no roles in this sector look to be included on the new list. 

There are currently various tech sector roles on the Shortage Occupation List, these include: 

  • design and development engineers
  • IT programmers; 
  • software developers; and
  • web design and development.  

The current going rate for programmers and software development professionals is £34,000 but with the role’s being included on the Shortage Occupation List this means the minimum salary for sponsorship currently sits at £27,200. 

As none of the tech sector roles have been included on the new Immigration Salary list, from 4 April, the minimum salary threshold for sponsoring workers in these roles will be £38,700. 

The justification given by the Migration Advisory Committee for not including these roles on the new Immigration Salary List is that the median salary for roles in this sector (based on data from the Annual Survey for Hours and Earnings from The Office for National Statistics) is above £38,700 and so they would not receive a salary discount if on the new list. 

What does this mean for Tech businesses?

Whilst many businesses will already offer more generous salaries, and therefore more than is required for sponsorship, many smaller businesses like start-ups will not. These changes will therefore have an impact both on recruitment and recruitment costs, which will vastly increase. Overall, the UK Government policy and increased costs is likely to dissuade talent from moving to the UK. Employers may need to consider their options to encourage talent to join them or perhaps consider investment in graduate programmes to recruit new entrants to the labour market.   

Shoosmiths’ specialist immigration solicitors are on hand to advise any employers in the tech sector looking for more detailed advice on how the changes will impact their business or support with the sponsorship process.

Disclaimer

This information is for educational purposes only and does not constitute legal advice. It is recommended that specific professional advice is sought before acting on any of the information given. © Shoosmiths LLP 2024.

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