Skilled worker salary threshold increase likely to have negative economic impact, says global immigration firm Fragomen

Phil Black - PII Editor 04/04/2024

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The UK Government’s attempts to lower migration numbers are taking precedence over economic need, says global immigration firm Fragomen.

From 4 April manufacturing businesses wishing to hire overseas talent through the skilled worker visa will need to pay staff at least a minimum of £38,700. This represents an increase of almost 50% from the current salary threshold of £26,200 and far exceeds the average salary for large parts of the country.

At the same time, the going rate of pay for specific occupations will increase to the median pay. A production and process engineer applying under the old rules would need to be paid at least £25,600. Now they will need to be paid at least £43,700.

The new thresholds, says Fragomen, have the potential to negatively impact the UK economy with manufacturing businesses among hardest hit industries.

Louise Haycock, a Partner at Fragomen, the global immigration law firm, comments.

“This increase to the skilled worker salary threshold is quite staggering and raises concerns that the Government’s attempts to lower net migration figures are taking precedence over economic need.

“In many instances and particularly outside of London the £38,700 threshold exceeds the average annual wage and is simply unaffordable for many businesses. The UK immigration system is already one of the most expensive in the world, and this increase effectively closes overseas recruitment to UK industry for some businesses.

“Many sectors, particularly manufacturing, continue to rely on overseas workers, with businesses not yet having sufficient time to see the benefits of programmes they have in place to upskill the resident workforce. Businesses are also required to pay the high Immigration Skills Charge when sponsoring workers – greater transparency is needed in how the Government is spending this money to support sector training initiatives.”

Charlotte Wills, Partner at Fragomen, adds:

“The Migration Advisory Committee (MAC) conducted a Rapid Review earlier in 2024 and will later this year lead a wider review of immigration and the needs of industry. Its recommendations are likely be reflected in changes to the Immigration Salary List (ISL) which replaces the Shortage Occupation List. Roles that make it onto the ISL benefit from a 20% discount on the skilled worker salary threshold reducing it to £30,960.

“Whilst this will not negate the 4 April increases, it will help – but only for those roles and industries included on the ISL. However, under the rules, applicants in specific occupations need also meet the ‘going rate’ threshold. If it is above the minimum salary threshold, they will receive no benefit from the ISL discount.

“It is vital that businesses ensure their voice is heard directly or via the relevant trade bodies on what support their industry needs from the UK immigration system. Businesses should take encouragement that Government does listen to the recommendations made by MAC, often adopting them in full. The wider review expected later this year is a crucial opportunity to be heard and shape the system they are a user of.”