The Significance of Migration in the UK Workforce
A Vital Economic Contributor
Migration stands as one of the UK’s prominent success stories, particularly in shaping the economy and workforce. A recent report from the Migration Observatory at the University of Oxford highlights just how entwined UK businesses are with overseas talent. As of December 2024, non-UK nationals held approximately 19 percent of employee jobs in the UK, translating to about 5.75 million roles. When considering those with multiple jobs, adult migrants constituting 20 percent of all employee positions illustrate their significant presence across various sectors.
Sectors Dependently Thriving on Migrant Workers
Certain industries show a heightened reliance on foreign workers. For example, the health care and hospitality sectors have become especially dependent on migrants, crucial for fulfilling roles that keep operations running smoothly. Data shows that by December 2024, 25 percent of non-EU migrants were engaged in health and care roles, a considerable rise from just 12 percent in February 2022. In total, 111,500 Skilled Worker visas were issued for care roles, a remarkable indicator of the growing demand for overseas professionals.
In metropolitan hubs such as London, the concentration of migrant workers is even more pronounced. A staggering 63 percent of hospitality jobs are occupied by non-UK nationals, significantly higher than the 42 percent observed across all sectors.
Employment Rates and Earnings: An Insightful Comparison
Interestingly, migrant males demonstrate a higher employment rate compared to their UK-born counterparts—83 percent versus 78 percent. Moreover, EU-born women have achieved employment rates reaching 80 percent, marking a noteworthy success in the labor market. Despite the apparent success, earnings among migrant workers present a nuanced picture. While overall earnings between non-UK and UK employees are comparable, it appears that EU-born migrant employees have a slight advantage regarding income.
The Shift Towards Stricter Immigration Policies
Following anxieties regarding unprecedented numbers of migrants, with net migration peaking at 906,000 by June 2023, the UK government initiated measures to tighten immigration policies. By 2024, net migration had significantly decreased to 431,000, a 52 percent reduction largely attributed to tightened regulations on work and study visas. However, even with reductions, the figures remain well above pre-pandemic levels, indicating a trend that could lead to further constraints as new policies unfold.
New Salary Thresholds and Visa Regulations
From April 2024 onwards, the UK government has instituted changes that raise the salary threshold for Skilled Worker visas—initially from £26,200 to £38,700, and then escalating to £41,700 for specific roles in July 2024. Additionally, the Immigration Salary List has been trimmed, further complicating access to skilled labor. Notably, the closure of the Care Worker visa route and reduction of the Graduate visa’s post-study period from two years to 18 months signal a strategic shift in the UK’s approach to migrant labor.
Employers: Navigating a Complex Landscape
These developments represent a tangled contradiction for employers. On one hand, the data demonstrates that migrant workers add immense value to the economy while successfully integrating into the workforce, with the Skilled Worker route remaining critical for hiring non-UK talent. Conversely, stricter regulations impose heavier burdens on businesses aiming to maintain access to international labor pools.
Migrant workers frequently bring skills that go underutilized in the UK job market. Overqualification is a common issue, with many highly educated individuals from regions like South Asia and the EU relegated to lower-skilled roles. A considerable portion of migrant employees is also subjected to insecure contracts, including zero-hour contracts, forcing them into less stable employment situations.
Challenges Around Compliance and Local Recruitment
As new regulations come into play, the financial and legal responsibilities facing employers will become more pronounced. The government appears poised to encourage local recruitment to reduce reliance on migrant labor, particularly in lower and mid-skilled roles. This transition will necessitate employers to demonstrate measures for training and developing domestic talent, potentially heralding the return of the Resident Labour Market Test (RLMT). This test, which demanded employers advertise positions to UK workers before considering migrant labor, existed until the introduction of the Skilled Worker route.
With many SMEs and sectors like education, hospitality, and charitable organizations struggling to meet the elevated salary thresholds, the implications for accessible recruitment remain grave. The care sector, in particular, confronts existential recruitment challenges. With a history of relying extensively on overseas workers, domestic recruitment efforts have consistently fallen short, placing additional strain on an industry forecasted to experience surging demand for labor.
Economic and Political Implications
While the political narrative surrounding migration may resonate positively with certain voter blocs advocating reduced immigration, the ramifications for businesses are undeniably complex. Stricter regulations threaten broader access to visa opportunities, especially for low-skilled roles, burdening companies with compliance costs while simultaneously pushing them to invest in domestic talent development.
Yet, the pressing question remains: can the domestic workforce meet the needs of businesses, and are there enough individuals willing to occupy the roles that migrants traditionally filled? As the labor market dynamics evolve, strategic action will be critical for employers to remain compliant and competitive.
Expert Contributor:
Yash Dubal is the director of AY&J Solicitors.
For further details on the evolution of immigration rules, consider reading the CIPD briefing here.
