The arguments for and against scrapping the shortage occupation list

What does the recommendation to abandon the list mean for employers? Vikki Wiberg and Verusha Ishwar report

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The UK immigration world remains in a position of change. While UK employers are still digesting the not insignificant financial impact of the 15-20 per cent increase to most UK visa fees from 4 October 2023, and the proposed 65 per cent increase to the immigration health surcharge likely to be introduced from early 2024, the Migration Advisory Committee (MAC) has also recommended scrapping the shortage occupation list (SOL) in the face of submissions from various sectors and employer bodies facing workforce shortages.

The recommendation stems from concerns about the exploitation of migrant workers, the SOL decreasing wages and the fear of undercutting local workers. MAC considers that SOL was intended as a temporary fix for labour shortages and not a long-term solution.

The recommendation sits alongside suggestions from immigration minister Robert Jenrick that visa caps could be reintroduced and salary thresholds raised (reversing changes only made in January 2021). If correct, these would also have significant wider impacts on corporate sponsorship, particularly for employees beginning their careers. Proposed replacements could include targeted visa routes but no details have yet been released. 

If this recommendation is accepted, what would the impact be on corporates? The most substantive proposal is the MAC's view that no employer should pay a discounted visa fee and below market rate salary even in a shortage area.

SOL roles attract a lower minimum salary (£20,960 or 80 per cent of the occupation rate, rather than £26,200 or the occupation code salary if higher) and a reduction in the visa fee by around a third. This is a significant saving, especially when other fees are increasing. 

While the SOL includes roles in care homes, healthcare and construction, it also includes jobs where corporates face difficulties recruiting, particularly for IT experts and engineers.

Home Office statistics published on 13 October 2023 show that skilled worker sponsors account for more than 80 per cent of visas, while the other work routes account for the remaining 20 per cent. Where an occupation appears on the SOL list a sponsor can more easily justify the need to sponsor a visa. 

The MAC review does recommend eight occupations for inclusion in the 2023 UK-wide list (including care and construction workers) but these do not include IT roles, engineers or other professional roles where corporates regularly need to look overseas to fill labour shortages. This change, if accepted by the home secretary as many MAC recommendations are, will significantly impact employers' ability to recruit in areas the home secretary has recognised are already shortage areas.

Employers will not only be required to pay higher salaries for affected roles but also higher visa fees with even bigger rises, including the proposed increase in IHS fees next year.

The visa changes will also apply to dependents of sponsored workers. As a means of reducing hiring costs, many employers opt out of paying visa costs for dependents, meaning employees have no option but to pay these costs directly.

Abolishing the SOL and linked fee increases could deter sponsored workers keen to fill these occupation roles but who may simply not be able to afford the costs of having their families join them. This approach may lead to a more competitive hiring market where companies with deeper pockets and who are able to pick up Home Office fees are able to attract candidates in shortage occupation roles.

Consistency in hiring policies across departments, covering which fees are paid and how if at all they will be recouped, will remain critical to avoid potential claims from disgruntled potential hires. 

Vikki Wiberg is senior counsel and Verusha Ishwar an immigration adviser at Taylor Wessing