Paul Venables, finance director at recruitment company Hays, is incredulous. “In a global, recovering economy, why would any government want to stop businesses hiring the best people? I just don’t understand it,” he says.
Venables’ ire is directed at the UK Border Agency’s recently established cap on the number of non-European Union (EU) workers entering the UK. From 7 April, just 20,700 visas will be granted each year to those coming into the UK under the skilled (Tier 2) route. Companies already report that this is taking recruitment decisions out of their hands.
The Chartered Institute of Personnel & Development (CIPD) found in April that 16 percent of employers say they have been prevented from hiring non-EU talent by the cap and its associated skills assessment process, which forces businesses to prove the skills cannot be found at home.
And it seems Venables is not alone in speaking out. Research by Robert Half International finds a quarter of finance directors across England think caps will have a negative impact on their business, rising to 39 percent for those in London.
“FDs are saying they do not want this problem on their patch, especially if it is yet another regulatory issue,” says Clive Davis, director of corporate accounts at Robert Half. “Well organised companies do not want uncertainty in their planning. When FDs are charged with improving shareholder return, anything that is an obstacle is a cause for concern.”
Venables says that a cap is “a philosophy we, in business, cannot understand: it is yet more red tape”, adding that “it makes our job harder. We already have to do a slug of work to verify international qualifications, and this will add to the pile and add cost to the business.”
According to Venables, Hays handles 5,000-10,000 international transfers each year. He argues his company’s clients will see international recruitment dry up. “We had 200 engineers ready to bring to the country for one client,” he adds. “Suddenly, we were unable to. It makes no sense at all.”
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Under the new rules, the basic 20,700 is immoveable. On top of this, 1,000 extra exceptional migrants will be allowed, and there will be no limit on those earning more than £150,000 a year.
The latter, argues the government, should assuage fears from the banking sector that high-performing talent will no longer be attracted to the UK. It also included another climb-down when intra-company transfers were excluded from the 20,700 limit – this would have severely affected business continuity because many talent pool programmes insist on overseas assignments. However, tinkering around the edges for intra-company movement – such as insisting that candidates are graduates and earn £40,000 per annum in order to stay more than a year (those on £24-£40,000 can only stay for 12 months) – means that some predict that there are still serious issues ahead.
“The ruling will affect thousands of businesses that rely on migrant employment,” says Martin Couchman, deputy chief executive of the British Hospitality Association (BHA). According to the BHA, 33 percent of restaurant and catering managers were born outside of the UK. People 1st, the sector skills council for the hospitality industry, finds that 35 percent of UK hotels and restaurants employ migrant workers, rising to 84 percent in London.
“We anticipated this,” says Martin-Christian Kent, People 1st’s research and policy director, “and we worked with hotels and restaurants to introduce training to teach foreign cuisine to UK workers. But there are still many hurdles, such as there being demand from employers to invest in training.”
There is a perception that hiring non-EU workers is cheaper than training UK staff, which is why FDs may also be panicking, but QHotels, Premier Inn and Travelodge all declined to be interviewed about how they saw caps affecting them and whether they were seeking more UK talent instead. The problem, says Venables, is that FDs “do not want to hire people who are productive in four years’ time; they want suitable people now”, which is why he disputes apprenticeships.
But how worried should FDs really be? The 20,700 figure is only a five percent reduction on non-EU immigration from the previous year. Recent figures for April’s applications show that, of the 4,200 workers allowed for April, only 1,028 were granted, meaning 3,172 will be carried over to May’s cap of 4,672. Tom Ironside, the British Retail Consortium’s director of business, says that “though access to skilled would-be recruits is important for growth”, it is weak consumer confidence rather than a shortage of suitable people that is still the problem.
However, others are less certain. “The first month is not indicative, because there is still so much confusion,” says Julia Onslow-Cole, partner at PwC, who advises FDs on resourcing.
PwC’s own global sourcing leader, Charles Macleod, says 2,000 people in its employee network work outside their country of origin. About 200 of these are inbound employees in the UK business.
“The legislation was passed quickly. We lobbied against it, and I’m worried as we still have to find people who may come from other parts of the world,” he says.
Onslow-Cole adds that the 20,700 cap may not be a much lower absolute number, but it is based on 2009 immigration levels, which is bad news.
“This was at the height of the recession, when recruitment was at a standstill. As recruitment recovers, this cap will not be enough to meet FD demands for talent,” she says. “FDs across the board should be very worried about this. It is all very well that the government is saying we should use UK people and pay them more, but this takes time, and extra training cost causes a sharp shock on the business’s shape.”
Onslow-Cole also says that the fact FDs will pay up to three times the cost of hiring a non-EU worker proves that demand for skills is still there. “The race for talent is on,” she says.
According to the CIPD, other sectors affected include engineering and nursing. In the latter, a third of NHS employers say their ability to recruit doctors, nurses and other skilled non-EU workers is being restricted by the cap. Karen Charman, head of employment services at NHS Employers, says that “exemptions still need to be provided for any trusts” whose ability to maintain quality patient care relies on a number of migrant workers who could not be recruited within the cap.
Utility company Centrica is also worried about the caps. It brings in talent from all over the globe, and group HR director Anne Minto says: “We made our representations to the government during the consultation exercise, but it is too early to say what impact the limits may have.”
As a member of the National Employment Partnership, which aims to get UK unemployed back into work, Minto says the business strategy is to increase net UK jobs, but admits it will be “retention and development of talent that will be key to achieving this growth”.
So is there any other answer? “FDs will have to be clever,” says Venables. “If a UK office of a multinational wants to hire someone from, say, South Africa, they’ll have to get their South African office to hire them there first, then do an intra-company transfer, which isn’t restricted. It’s a long way round, but it just underlines how mad these regulations are.”