While recruiting overseas workers has become harder in recent years, Suzanne Treen explains how employers facing skills gaps can still gain a competitive edge by using strategic immigration.
Following the election of the Labour government, a clear emphasis was placed on the need to tackle the growing UK skills gap to create much-needed economic growth. To achieve this, Sir Keir Starmer introduced a new body, Skills England, to lead a strategic review of the skills most lacking in the UK economy and address domestic skills shortages.
Crucially, at the forefront of the proposal, the government expressed its intention to curb legal migration and reduce reliance on overseas workers.
The first Skills England Report published in September presented an overview of the current state of the UK’s skills landscape, highlighting both the challenges and opportunities facing the UK.
Skills gaps and immigration
Sponsor licence numbers up 44% year on year
The report is sobering and indicates a growing mismatch between business demands and potential employee capabilities. If this trend continues, it could threaten the UK’s economic competitiveness and growth potential.
According to the report, the UK workforce is particularly underqualified compared to other countries.
It cited the OECD Skills for Jobs database, which indicates that 26% of the UK workforce is underqualified for their occupation, compared to an OECD average of 18%.
Skills England also referred to the OECD’s estimate that the UK has a shortage in 10 of the 14 groups of skills and knowledge analysed.
While domestic policy and initiatives to address these skills gaps are essential, they will take some time to formulate and even longer to have any meaningful impact. Many employers simply cannot wait for such policies to create the skills that they need to grow their business right now.
Although it may be politically difficult to advocate for the benefits of skilled immigration, it is clear that a more nuanced conversation and approach is required to meet the skills gap. It is therefore essential that the government listens carefully to employers on what tools they need to help them grow and upskill their workforces.
What is clear is that routes for strategic and skilled immigration remain an important tool for employers and also help to increase domestic skills development and drive economic growth.
Getting the balance right
Unfortunately, recruiting and retaining overseas workers has been made much harder in recent years in the aftermath of Brexit. Recent research by Indeed shows that the UK is falling behind other Western countries in attracting highly skilled overseas workers.
The reasons for this vary but it is clear that the increase to skilled worker salary thresholds introduced in the spring by the last government and retained by the new government has had a significant impact on overseas recruitment.
The overall number of people applying to come to the UK as skilled workers, healthcare professionals, or students has fallen this year in comparison to last year. Specifically, the monthly number of Skilled Worker visa applications fell to 4,700 in October 2024, compared with an average of 6,000 applications per month between January 2022 and March 2024.
The reduction in recruitment of overseas skilled workers could have a significant impact in sectors such as tech and engineering, which tend to rely more heavily on global business mobility and international talent to fill specialised roles.
Addressing the skills gaps in these sectors through domestic skills development will not happen overnight, but it does need attention and sensible solutions for both the short and medium term.
This has been recognised and many are advocating for a reduction in the cost and complexity of the visa process for highly skilled workers in key sectors. For example, in the tech sector, the AI Opportunities Action Plan intends to set out a roadmap for the government to capture the opportunities of AI to enhance growth and productivity. This could be a chance for the government to consider how best to encourage development using both home-grown and overseas talent.
With the rapid pace of technological advancement and industry transformation, if the skills shortages in the tech sector go unaddressed, the UK risks lagging behind competitors when it comes to the adoption of digital technologies and the potential for growth offered by AI.
With great power comes great responsibility
For those employers who are already sponsors or who have experience utilising other non-sponsored routes into the UK, they will know that our immigration rules are complex and not always easy to navigate.
That said, given the skills shortages employers face, it remains the case that obtaining and maintaining a sponsor licence can certainly give employers the strategic and competitive edge that they need to plug the skills gaps in their business.
However, getting it right is essential, particularly given the renewed emphasis placed on compliance by the government which outlined its intention to clamp down on existing sponsors to make sure they fulfil their obligations as sponsors.
Skills England’s report has highlighted the extent of the UK’s skills challenge. While we need to address the root causes of skills shortages within the UK for a sustainable economic future, there also needs to be a more nuanced conversation about the available solutions.
The marketplace is increasingly competitive, and global talent is needed more than ever. Attracting and retaining that talent hinges on a more pragmatic immigration system, which better balances the requirements of business and society.
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