Review of shortage occupation immigration list asks Home Secretary to rethink removing 20% discount

The Migration Advisory Committee has delivered its rapid review of the Immigration Salary List which replaces the Shortage Occupation List in April. (Very rapid – as the Home Secretary James Cleverly only commissioned the review just over five weeks ago.)

This is a list of roles deemed by the UK Government to be in short supply within the UK resident labour market, so that when employers sponsor non-resident workers on it they are allowed to pay 20% less than the usual minimum salary (a threshold to prevent resident workers being undercut) and lower application fees for work visa applications.

Replacing the Shortage Occupation List and increasing the salaries employers will have to pay to sponsor Skilled Workers are two of the major pillars of measures the Home Secretary has announced to reduce legal migration from this spring.

The Migration Advisory Committee (MAC) has delivered its review, with a fuller review, which will be able to consider stakeholders’ evidence to be delivered later this year after the new Immigration Salary List (ISL) replaces the Shortage Occupation List (SOL) on 4 April 2024.

For this Rapid Review the MAC only looked at the 51 occupations currently on the SOL and the 10 occupations it recently recommended for the list in its last 2023 review (six of which were already on it). Their recommendations on which should remain on the list and their rationale is below.

Importantly (for many industries and regions about to find it more expensive to sponsor migrant workers) the review asks the Home Secretary to reconsider ending a 20% discount for the minimum going rate salary for occupations with dire skills shortages so affected businesses can continue to source the talent they need. The committee had previously recommended removing the 20% discount on going rates when they were set at the 25th percentile of UK salaries and there was a danger of undercutting most workers. There isn’t any danger of that now that going rates are being ratcheted up to the 50th percentile from April so that sponsored Skilled Workers will have to be paid more than most in their profession.

The review asks the government to specify any benefits of being on the list now. With minimum salaries employers will have to pay to sponsor non-resident skilled staff set to leap up in April and the Home Secretary removing the 20% discount on the going rate for shortage occupations, there is little point in having a list that will make no difference for bodies that employ most of the 55 shortage skillsets the review looked at. Only 21 occupations make it onto the new list as for the rest it makes no sense.

Whether the government understood the devastating effect that the measures announced last December without any consultation would have on UK organisations facing labour shortages is debatable. This review by the expert committee that advises the government on migration issues includes the pessimistic warning: “the new general threshold in effect will mean that the [Skilled Worker] route becomes unavailable for many occupations.”

Background: April hike of minimum salaries for Skilled Workers

Employers sponsoring anyone on a Skilled Worker visa must ensure the position pays whichever is the highest out of the general salary threshold for the visa, whatever the UK government determine is the occupation-specific going rate for a particular occupation code, plus usually the hourly rate of £10.75.

The general salary threshold for sponsoring a Skilled Worker is set to increase from £26,200 to £38,700 on 4 April. The UK government currently prescribes specific going rates for occupations periodically using the 25th percentile of salaries for that role according to the Annual Survey of Hours and Earnings (ASHE) carried out by the Office of National Statistics.

From 4 April, the 50th percentile (median) of the 2023 ASHE will be used to set going rates. So, for example, human resource managers and directors would currently have to be paid £36,500 – the present going rate, but the median going rate according to the provisional ASHE 2023 data we have would be £49,409, which sponsoring employers would have to match as it’s a higher figure than the new £38,700 salary threshold.

While the new general salary threshold for non-shortage/ISL Skilled Workers will be the £38,700 that James Cleverly announced last December, Health and Care workers not on a pay scale (such as care workers and senior care workers) will have a lower general threshold of £29,000. What the government terms “pay scale” workers (teacher / NHS type public sector roles with national pay scales that appear in Table 2 of the UK Immigration Rule’s Appendix Skilled Occupations) will have an even lower general threshold of £23,200.

For shortage occupations on the ISL, the government have decided the general threshold will drop from £38,700 to £30,960 while both Health and Care worker and “pay scale” roles must have a general salary threshold of at least £23,200.

Unlike other Skilled Worker visas, the going rate for Health and Care workers will stay at the 25th percentile and pay scale workers need to be paid according to the national pay scale (so no big going rate hike either in April).

The MAC has not included pay scale occupations on its recommendations for the ISL inclusion, explaining that there is no point them being on the list “as their occupation-specific thresholds are in all cases above the £23,200 general threshold that applies to all pay scale occupations.” Similarly many Health and Care worker roles have been removed.

But other jobs on the ISL, like most skilled occupations, will need to be paid at the median/50th percentile of salaries for those jobs – which has led the MAC to ask the Home Secretary to reconsider what the benefit of being on the ISL is for most roles if there can be no 20% going rate discount.

The MAC asks in the report whether ISL roles will benefit from lower visa application fees, like current SOL occupations do. Though the MAC also suggests that the minor fee reduction for shortages is currently of minimal benefit, amounting to a discount of roughly £60 a year.

The independent committee chaired by Brian Bell, professor of economics at King’s College London has made a few significant recommendations in this review.

20% discount on the going rate for shortage occupations

The MAC has asked the Home Secretary to reconsider removing the 20% discount on the going rate for shortage occupations as it makes little sense to have such a shortage list in the light of proposals to increase going rates for all Skilled Worker visas.

The Rapid Review suggested James Cleverly rethink his proposal as he is set to increase all Skilled Worker going rates often by much more than 20% in April. For example, there is a current shortage of programmers and software developers in the UK. As they are on the SOL, they can be sponsored as Skilled Workers if they earn £27,200 (20% below the going rate for the job). Without the discount and with all Skilled Worker going rates worked out on the 50th percentile of the ONS survey of salaries rather than the 25th from 4 April, new programmers applying for a Skilled Worker visa would have to be paid at least £49,430. As that salary exceeds £37,800, the MAC has removed this occupation from the new ISL as there would be no benefit according to the government’s proposed formula so there is no point having the occupation on the ISL. The MAC have recommended other occupations, such as architects, engineers and veterinarians no longer need to be on the new list for similar reasons. For example, veterinary nurses which are not on a national pay scale, have a median salary of £24,400 and therefore, even if placed on the ISL, would struggle to be sponsored as Skilled Workers given the ISL threshold would be £30,960.

The MAC acknowledges that it previously recommended removing the 20% discount on going rates when they were set at the 25th percentile of UK salaries and there was a danger of undercutting most workers. The review makes clear that this is not an issue now that going rates are being ratcheted up to the 50th percentile from April so that sponsored Skilled Workers will have to be paid at least more than half their profession. The review therefore asks the Home Secretary to rethink his proposals to reduce legal migration, explaining that the hike in minimum salaries to the 50th percentile (or median) of salaries for each occupation “substantially weakens the rationale for not being able to pay below the occupation-specific threshold – as half of all workers in an occupation earn less than the median and this does not obviously lead to undercutting and exploitation.”

The review adds: “We encourage the government to consider this impact of the rule’s changes.”

Asylum Seekers

The MAC continues to recommend that asylum seekers who are granted the right to work should not be restricted to shortage roles as they have been with the outgoing SOL. Instead, they should be allowed to do any job and failing that, any Skilled Worker job.

However, despite studies suggesting a net benefit of billions in tax revenue, increased GDP and the massive savings of allowing more asylum seekers to work and off public funding, there is already pressure building up from the more anti-immigration voices in the Conservative Party to deny asylum seekers the ability to work at all, tipping more into tax-payer funded semi-destitution. It will be interesting to see whether the government takes on board the MAC’s suggestion and perhaps follows Ireland’s recent policy of allowing asylum seekers to apply for a work permit if they have waited over half a year for an initial decision.

The New Entrant discount

The MAC review confirmed that the government intends that for now the New Entrant discount available for those aged 26 and under will continue. In its current form, this visa allows youth plus some other graduate and postgraduate categories to be sponsored for up to four years with a 30% discount on the occupation-specific threshold and a 20% discount on the general salary threshold, the higher of which must be paid.

These thresholds will be rising, so the discount is important for UK firms that want to be able to hire the very best graduates, including international ones, on a graduate entrant level salary.

Yet the MAC review adds: “given the increased incentive to use the discount as a result of higher salary thresholds, we encourage the government to consider this impact of the rule changes on the use of new entrant discount.” – Hopefully this will not encourage the government to review the New Entrant discount.

Creative Worker visa

Creative Workers can be sponsored in shortage roles without considering the resident labour market in a temporary visa of up to 12 months (renewable). The MAC previously recommended that this exemption is removed and a minimum salary is attached to Creative Workers, to avoid this temporary immigration route being used to undercut skilled workers in the same jobs. They continue to recommend this and insist it is even more pertinent considering the new changes make salaries even higher to sponsor people for the same roles on the Skilled Worker route.

Warning on public sector worker exploitation

While acknowledging as they have done before the skills needs of the social care sector, the MAC remain concerned with the low pay that continues to be embedded further within the sector and complain that “the government have failed to respond to our 2022 review of the adult social care sector almost two years after publication.”

The MAC review adds: “the government appears to be exempting itself from any salary thresholds which would require an increase in pay for publicly funded workers and therefore an increase in funding for these public services. This widening divide poses an increased risk of exploitation for lower-paid occupations, such as care workers, as the gap between salary thresholds for private and publicly funded occupations becomes larger.

“Relatedly, jobs within SOC codes that are eligible for the H&CW visa are generally only eligible for the visa if the job is with the NHS, a private provider working for the NHS, or in adult social care. This means that even if a SOC code is eligible for the H&CW visa, which threshold a specific job faces will depend on whether the job is eligible for the H&CW visa. For example, the NHS would be able to pay laboratory technicians (SOC 2020 code 3111) £23,200 or above whilst private sponsors would have to pay laboratory technicians £30,960 or above. This will result in a widening divide between jobs within the same occupation that are publicly funded and those that are in the private sector.”

Occupations on the ISL

The review has recommended 21 occupations be included on the ISL, which represents 8% of Skilled Worker roles instead of the current 30% on the SOL. The main reason for removing many occupations is the increase in the minimum going salaries from 4 April from when they are to be worked out on the 50th percentile – which pushes salaries above any general threshold discounts that come with being on the ISL.

Occupation codes that were on the SOL but will now have government set going rates of pay above £38,700 and therefore no salary discount from being on the ISL include all the engineering occupation codes, programmers and software developers, veterinarians and architects.

Many national pay scale occupations such as those in nursing, teaching and social work, with salaries over the minimum floor of £23,200 are also not on the ISL as there would be no salary discount if they were on the list.

The following non-Health and Care workers (H&CW) recommended in the MAC’s last SOL review stay on the ISL.

NB: included is the new ONS SOC 2020 code which the Home Office will be using from applications from April. The minimum salary is £30,960 and these apply UK-wide unless otherwise specified:

• 1212 Managers and proprietors in forestry, fishing and related services – add only “fishing boat masters” (Scotland only)
• 3111 Laboratory technicians – all non-H&CW eligible jobs (requires 3 years or more experience)
• 3212 Pharmaceutical technicians – all non-H&CW eligible jobs
• 5235 Boat and ship builders and repairers – all jobs (£34,100, Scotland only)
• 5312 Stonemasons and related trades – all jobs (£32,400)
• 5313 Bricklayers – all jobs
• 5314 Roofers, roof tilers and slaters – all jobs
• 5319 Construction and building trades not elsewhere classified – add only “retrofitters”
• 6129 Animal care services occupations not elsewhere classified – add only “racing grooms”, “stallion handlers”, “stud grooms”, “stud hands”, “stud handlers” and “work riders”
• 6135 Care workers and home carers – private households or individuals (other than sole traders sponsoring someone to work for their business) cannot sponsor Skilled Worker applicants in non-H&CW eligible jobs
• 6136 Senior care workers – all non-H&CW eligible jobs

The MAC also recommended these occupations for the ISL that they previously hadn’t due to April’s increased salary thresholds:

• 2111 Chemical scientists – only jobs in the nuclear industry (£35,200, Scotland only)
• 2112 Biological scientists – all non-H&CW eligible jobs (£37,100)
• 2115 Social and humanities scientists – only archaeologists (£36,400)
• 3411 Artists – all jobs (£32,800)
• 3414 Dancers and choreographers – only skilled classical ballet dancers or skilled contemporary dancers who meet the standard required by internationally recognised UK ballet or contemporary dance companies. The company must be endorsed as being internationally recognised by a UK industry body such as the Arts Councils of England, Scotland or Wales. (£31,200)
• 3415 Musicians – only skilled orchestral musicians who are leaders, principals, sub-principals or numbered string positions, and who meet the standard required by internationally recognised UK orchestras. The orchestra must be a full member of the Association of British Orchestras. (£35,300)
• 3416 Arts officers, producers and directors – all jobs (£37,500)
• 2142 Graphic and multimedia designers – all jobs
• 5213 Welding trades – only high integrity pipe welders, where the job requires 3 or more years related on-the-job experience. This experience must not have been gained through illegal working.
• (£31,700)
• 5316 Carpenters and joiners – all jobs
• The following Health and Care worker H&CW occupations have been recommended for the ISL:
• 3111 Laboratory technicians – all H&CW eligible jobs (requires 3 years or more experience) (£23,200)
• 3212 Pharmaceutical technicians – all H&CW eligible jobs (£23,400)
• 6135 Care workers and home carers – private households or individuals (other than sole traders sponsoring someone to work for their business) cannot sponsor Skilled Worker applicants in H&CW eligible jobs (£23,200)
• 6136 Senior care workers – all H&CW eligible jobs (£23,200)

Anyone keen to discuss any of the above changes or indeed any UK immigration law matters can contact us on 0207 033 9527 or at [email protected]. If it is regarding an application to be made before April, we would advise moving swiftly on it.