The shortage occupation list (SOL), which loosens UK immigration rules to help plug chronic labour shortages, could be leaving workers vulnerable and exploited, the UK’s immigration advisers the MAC has warned.
The list was introduced to help fill vacant jobs by attracting workers from overseas and allows employers to hire international workers on 80 per cent of Britain’s “going rate” for the occupation, down to a minimum of £20,960 a year.
This is cheaper than under the main “skilled worker” visa route where employees must be paid at least £26,200 and the SOL also allows employers to pay lower visa fees.
But the MAC said this could be leading to exploitation while providing little value for money.
In a letter to home secretary Suella Braverman, Brian Bell, a professor of economics at King's College London and chair of the MAC, wrote: “No employer should be able to pay below the ‘going rate’ regardless of whether they are experiencing shortage.”
If the government were to scrap the discounted wage benefit allowed under the SOL, it would render the scheme ineffective as firms would only receive “negligible benefit” by vacancies being included.
The MAC review said: “The risk of exploitation in low-wage jobs, the likelihood that low-wage migrants will lead to a net fiscal cost for the UK and the administrative burden the skilled worker route places upon low-wage employers mean that we are not convinced the SOL provides a sensible immigration solution to shortage issues in low-wage sectors and so we recommend that it should be abolished going forward.”
MAC's alternative role?
The SOL may also be exacerbating gender pay gap discrepancies, it warned, as the analysis found women were around 7 per cent more likely than men to be paid below the going rate when an occupation is on the list.
Instead, it recommended that the MAC could be commissioned to examine individual occupations or sectors where labour shortages are particularly acute and said measures including wages, terms and conditions, training and education and investment in technology “are likely to be a more sustainable response" to worker shortages.
However, Karendeep Kaur, legal director at Migrate UK, said that this will not be an effective method to address the UK’s immediate labour issues.
She told People Management: “In the interim, businesses are struggling to recruit talent, with hospitality and agriculture continuing to be the hardest hit.
“It is unlikely that these sectors would benefit with the proposed idea to just invest in training and education. The addition of construction trades earlier this year was welcomed by those in the industry, therefore to pull the rug so soon would be unjustifiably harsh when there are few alternatives available.”
Allowing employers to offer 80 per cent of the going rate as a salary to employees “may look like exploitation”, but she noted it may be more complicated than this. “They must still pay a minimum £10.75 per hour in most circumstances,” she said, adding: “Instead of exploiting, we’re seeing many industries offering a competitive salary to retain their talent.”
Instead of abolishing the SOL, Kaur said consideration should be given to updating the blanket RQF-level structure it works on by removing job codes which “are clearly of no benefit and are likely to result in exploitation within specific industries”.
Worker shortages reached a record high of 1.3 million during 2022, which was among the reasons cited for shortages of food and other consumer crises.
The report noted “the end of freedom of movement and the Covid pandemic have had significant impacts on shortages across the economy and the economy is still adjusting to the shock”.
Jamie Cater, senior policy manager at Make UK, said the recommendations “will concern many manufacturers” who are seeing “growing evidence of critical shortages.
“While manufacturers do not believe that recruiting skilled workers from overseas is the long-term solution to these shortages, it is an important way to address urgent demand for skilled workers and the current system is hindering their ability to recruit.
“The inclusion of occupations on the SOL can be an effective way to ease some of those challenges. It is vital that the MAC is able to review the SOL more regularly going forward, and that this is used to inform the development of a wider skills policy.”
The MAC's recommendation comes after a CIPD report in May found that post-Brexit restrictions on migration for low-skilled jobs are failing to encourage enough firms to invest more in UK workers.
NFU urges for SOL expansion
NFU deputy president Tom Bradshaw said: “It’s disappointing that the evident shortages impacting the agriculture industry haven’t been recognised. We know farmers are having difficulty recruiting long-term for vital roles in their farm businesses."
It further added that without an immigration solution, labour shortages will continue to be a driving factor in the reduction of UK food production.