Visa overhaul ‘needed to tackle skills shortage’

Official labour market figures published on Tuesday have led to renewed calls from two of the UK's largest business organisations for further relaxations in immigration rules to help overcome the nation's skills shortage.

visa overhaul
Although data from the Office for National Statistics (ONS) showed a slight decline in the record number of vacancies between May and July - a 19,800 drop to 1.274 million - the total was still almost a million higher than it was when the Covid-19 pandemic arrived in the spring of 2020.

The sectors experiencing the greatest labour shortages were hospitality, tech and financial services, according to the ONS.

In the wake of publication of the figures, both the Confederation of British Industry (CBI) and the British Chambers of Commerce (BCC) issued calls to the government for more skills to be added to the Shortage Occupation List (SOL), the immigration system that makes it easier for foreigners with specific skills to be granted visas.

Matthew Percival, director of employment at the CBI, said: “Speaking to employers it’s clear that filling roles remains a primary concern and is proving a handbrake on the UK’s economic prospects.

“The incoming government will need to add greater flexibility to the apprenticeship levy, review the Shortage Occupation List and aligning skills gaps with education and training.”

Jane Gratton, BCC's head of people policy, described the tight labour market as "a ticking timebomb for firms up and down the country".

She said that despite the 160,000 increase in the number of people in employment between April and June, the number of vacancies was still one of the highest on record and that competition for labour continued to drive up wage costs.

“Skills and labour shortages have reached crisis point for many firms," Ms Gratton added. The impact is being felt on their ability to meet customer demand and forcing some to turn away new business, because they simply do not have the human resource. This is restricting growth and business confidence. It’s a serious and urgent problem.

“The government can help ease the growing pressure in the labour market at no extra cost to the Exchequer. We need an immediate review and reform of the Shortage Occupation List to include more jobs at all skill levels.

"This will give firms breathing space to train and upskill their workforce. We have over a million more job vacancies than people available to work, so the sooner we start the SOL review, the better."

In fact, ONS figures showed the number of non-UK nationals either working or looking for a job in the UK increased by 248,000 year-on-year in the second quarter of this year Q2. The increase was almost entirely due to non-EU workers, with the number of EU nationals working in the UK falling by more than six per cent compared to 2019.

Samuel Tombs, chief UK economist at Pantheon Macroeconomics, said: "The rebound in the workforce has been driven by an increase in immigration, now that Covid no longer is influencing migration decisions and more UK businesses now have sponsor licences which mean they can lawfully employ non-UK nationals.

"This year’s combination of increasing UK wages but stable minimum salary thresholds for UK visas suggests that immigration will continue to pick up. Meanwhile, we think domestic labour supply will continue to pick up, as it has done during prior real wage squeezes, as households attempt to preserve their standard of living."

Neil Carberry, chief executive of the Recruitment & Employment Confederation, said the jobs market was "still positive for those looking for work or to change jobs to raise their pay" and warned that staff shortages would "constrain growth and drive inflation".

Jonathan Boys, labour market economist for the Chartered Institute of Personnel and Development (CIPD), the professional body for the HR industry, said the labour market remained incredibly tight with strong labour demand and candidates in short supply.

"The immediate problem for businesses is labour shortages," he said. "For now, there remains strong demand for their goods and services and staff are needed to deliver these. The redundancy rate remains near record lows showing that businesses are focusing as much on retention as they are recruitment to meet staffing needs."
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