Changes in immigration rules could damage the UK economy

Legal experts fear upcoming changes in immigration rules will damage the UK economy. Kerry Garcia, senior associate and Adam Landy, associate, employment and immigration team at law firm Stevens & Bolton LLP, argue the point.

The phrase ‘British jobs for British workers’ has been frequently heard. By trying to ensure British and European Economic Area (EEA) nationals have priority for jobs, the government is making it harder for non-EEA migrants to come to the UK to work. Could this policy actually be harming the economy and UK plc?

Employers rely on being able to pick the best person for the job to ensure a skilled workforce and a successful business. Global businesses need flexibility to transfer employees from overseas companies to the UK, often at short notice. They and the economy at large need an immigration system to meet these requirements.

In November 2008, the work permit scheme was replaced with Tier 2 of the points-based system. Although many employers have registered as sponsors with the UK Border Agency (often reluctantly), they remain concerned by the onerous record keeping and reporting obligations and whether they are complying with the ever-changing guidance.

Large businesses have had to consider employing additional staff to administer the new system, and small businesses are frequently deterred by it. Anecdotally, companies with headquarters overseas and subsidiaries in the UK have been questioning whether, if further restrictions are put in place, they will continue to base themselves in the UK.

Migrants’ first impression of the UK is often of a complex, bureaucratic and inflexible system. This may deter skilled migrants from coming to the UK and affect the UK’s ability to attract global talent.

Further changes are to be made to Tier 2 in late 2009/early 2010. From 14 December 2009, companies wishing to hire overseas nationals who have not previously worked for a linked company overseas and who will not be filling a shortage occupation will have to advertise the position in Jobcentre Plus for four weeks, even if they have already undertaken an extensive recruitment search. This will cause further delays to the process, often at a time when employers need the person to start work urgently.

Global companies wishing to transfer employees from linked overseas companies to the UK will also face changes. Employees will have to have worked for the overseas company for a year, rather than six months, limiting the flexibility of global businesses to transfer skilled staff to the UK. These employees are unlikely to be able to come to the UK permanently and will have to leave after a specified period. This may deter skilled employees from transferring to the UK and uprooting families for a short period of time.

Smaller businesses, charities and those in lower-paid sectors, such as catering and hospitality, will also be affected by proposed changes to increase the earnings threshold before points will be awarded. Lower-salaried employees, no matter how skilled, are therefore less likely to be able to come to the UK. As a result, employers may have to increase salaries, potentially resulting in increased prices for services or goods and wage inflation.

Business immigration can benefit the economy. It assists in the filling of key skills gaps, boosts employment and, in turn, the growth of UK plc. The proposed changes may mean that employers have a smaller choice of employees from a narrower market. They may lose the ability to employ people with scarce or specialist knowledge, which is essential to the continued success of the business and to the growth of the economy. Forcing employers to take on British workers who may not be the best person for the position could therefore inadvertently damage both businesses and the economy.

Key points



  • From 14 December 2009, companies wishing to hire overseas nationals who have not previously worked for a linked company overseas and who will not be filling a shortage occupation will have to advertise the position in Jobcentre Plus for four weeks, even if they have already undertaken an extensive recruitment search.
  • To qualify under the intra-company transfer category, employees will have to have worked for a linked overseas company for a year, rather than six months.
  • Under proposals, employees coming to the UK under the intra-company transfer category will not be able to stay in the UK permanently.
  • Under proposed changes, the earnings threshold will increase and employees will have to earn at least £20,000 to be awarded any points for earnings under Tier 2.

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