UK businesses unable to recruit non-EU skilled migrants as Tier 2 cap reached

This article looks at the impact on recruitment of skilled workers from outside the EU as a result of the Tier 2 cap being reached.

23 July 2015

In April 2011 the coalition government introduced an annual limit of 20,700 on Tier 2 (General) Visas, which is split into monthly limits. The quota for June was 1,650 visas, which was reportedly reached just 11 days into the month this year.

Restricted Certificates of Sponsorship apply to:

  • Tier 2 (General) migrants who are applying for permission to enter from outside the EU with an annual salary of less than £155,300 per annum; and
  • Points based system dependents under the Tier 4 (student) category

Those exempted from the cap include:

  • Migrants on Tier 2 Intra-Company Transfer visas
  • Migrants applying to extend their Tier 2 visas
  • Migrants already in the UK under a visa category that allows them to switch to a Tier 2 visa
  • Migrants filling vacancies paying £155,300 a year or more
  • Tier 2 Sports people and Ministers of Religion

The impact of the cap being reached
In June 2015, there were 1,658 Certificates of Sponsorship available under Tier 2 of the Points Based System.  Whether or not an applicant is eligible for a Certificate of Sponsorship is determined by a number of factors - such as the role being on the Shortage Occupation List - although the most common source of points is the applicant’s salary.  While 15 points are awarded to those applicants with a salary of £32,000-£45,999, 20 points are awarded if an applicant has a salary of £46,000-£74,999.  

The result of the over-subscription meant that instead of a minimum of 32 points, a June applicant had to reach a minimum of 50 points to be awarded a visa.  The main reason for applicants being rejected seems to be their salary, meaning those on lower pay packages have been disproportionately impacted.  Smaller businesses that rely on non-EU migration to operate suddenly face recruitment difficulties.  This has affected businesses of all sizes throughout the UK that employ non-EU skilled migrants, but it has particularly affected those with graduate schemes starting in July or August, most of whom have starting salaries well below £46,000. 

Looking to the future
The fact that hundreds of skilled graduates have been turned away from the UK may lead to calls for the new government to reassess the merits of the cap, which also sees professions like nursing and engineering being disproportionately affected compared to the likes of banking, where salaries are generally much higher.  The health sector in particular is in desperate need of nurses; the fact that non-EU nurses may not achieve the requisite number of points due to their comparatively lower salary will not help the situation.  A geographical disparity has also been created between high-salaried businesses in London and other regions where salaries are traditionally lower.

The rolling nature of the cap system means that there are now an extra 300 certificates available for July.  Whether June was just an unusually busy month for applications or this is an indication of a growing number of skilled non-EU workers seeking to come to the UK remains to be seen.  The solid performance of the British economy and the low unemployment rate may serve to attract more migrants, creating a clash with the government’s plan to reduce the number of foreign skilled workers coming to the UK.

The government is sticking to its guns and stresses the need to train British workers, instead of having to rely on foreign migrants.  Immigration minister James Brokenshire commented recently: “In the past, it has been too easy for some businesses to bring in workers from overseas rather than to take the long-term decision to train our own workforce here at home.  We need to do more to change that, which means reducing the demand for migrant labour. We will continue to monitor Tier 2 take-up, but have no plans to change the limit.” 

Indeed, the independent Migration Advisory Committee will be advising the government on further reducing the levels of economic migration from outside the EU, with proposals including:

  • Restricting work visas to occupations with "genuine skills shortages" or for specialist experts;
  • Imposing a time limit on how long a sector can claim it has a skills shortage;
  • Introducing a "skills levy" on Tier 2 (Skilled Work) visas to increase funding for UK apprenticeships; and
  • Raising the salary thresholds for Tier 2 visas to prevent businesses from using foreign workers to undercut wages. This proposal will be fast-tracked and implemented later this year.

There are concerns that if the cap is repeatedly being reached and the government is looking to further reduce the number of non-EU skilled migrants moving to the UK, the economy will start to suffer.  Businesses have already signalled that they are looking at moving their graduate programmes overseas, resulting in potentially fewer opportunities for British graduates.  UK businesses may also be impacted if they are unable to recruit the talent they need, with Mark Hilton, head of immigration policy at influential business membership organisation London First, telling the BBC: “Every skilled migrant we turn away as a result of this cap will hit jobs and growth”.  It would certainly be prudent for businesses involved in recruiting non-EU migrants to keep an eye on the Tier 2 figures over the summer.