To help fund the public sector pay deal, the government has announced its intention to raise several key immigration fees.

In a statement made last week, it was revealed that there will be a 15% increase in the cost of work (and visit) visas.  Study visas, credentials, sponsorship, and other items will see a 20% increase.

To date, many employers cover visa costs for their employees so it’s likely that they’ll be significant implications amid an already turbulent financial period.

So, what do employers need to know about the changes to the cost of skilled worker visas?  How might this affect the ability to attract talent from outside the UK?

What will change?

The proposed immigration fee changes are as follows:

• The Immigration Health Surcharge (IHS) is a health levy paid by visa holders who come to the UK for six months or more. This will increase from £624 to £1,035 per year.
• Work and visit visas will rise by 15%.
• Student visas, certificates of sponsorship, settlement, citizenship, entry clearance and leave to remain applications are to increase by at least 20%.

How will these changes affect employers?

Financial pressures.

While no date has been set for when these fee increases will begin, some immigration law experts predict they could be enforced as soon as the autumn.  As such, it’s predicted that the tail end of this year bring more financial pressures for both employers and individuals.  Not only will employers need to consider the employee themselves, but also their families and the duration of the sponsorship in the initial period.

Talent and recruitment.

Redundancies and organisational restructuring have resulted in an increase in the levels of available talent over recent months. Despite this, the labour market is still tight and skilled candidates are scarce.

Many organisations have turned to skilled overseas workers to fill the gap. These fee increases may also affect any ambitions these businesses have to employ talent from outside the UK in the future.

How will these changes affect the wider talent shortage?

Many economic theorists consider the country’s stringent immigration policies to only exacerbate the talent crisis.  These immigration fee hikes are likely to discourage overseas workers from considering the UK as a destination for relocation.

SMEs will lose the most.

The upcoming rises in immigration fees will affect everyone, but it’s likely to impact different organisations and sectors in varying ways.

SMEs in particular are expected to feel the impact. Many smaller organisations simply can’t afford the visa and its associated costs. This makes it prohibitive for smaller companies to reap the benefits of non-UK talent.

SME organisations are at a particular disadvantage and many are in a position that will see them lose out twice.

Not only are they unable to afford the sponsorship or visa costs for overseas workers, but they are now forced into a position where they offer “lesser” benefits and remuneration packages for their employees.

Furthermore, should employers have agreed to reimburse the cost of these surcharges to their employees as a perk, they’ll now have to consider whether they can continue to absorb this cost.  They’ll have to consider the financial implications vs. the impact of withdrawing this benefit.

Employers will fall under pressure from their employees to cover these fees. They are likely to lose out to competitors that are willing and able to shoulder the costs.

The immigration reforms in real terms.

Here is a real-time example of how a nominal benefit may impact employers.

The Immigration Health Surcharge (IHS).

Employers picking up the 66% increase in the IHS will go from paying £10,940 to £18,100 for a five-year visa for a family of four.
Of course, this isn’t a mandatory company fee. But if organisations want to attract the best talent in the future, they may find themselves under pressure to pick up this cost.

In sum.

Within recruitment, it’s widely believed that addressing the talent shortage requires a dual approach. One that combines prioritising upskilling and organisational learning with progressive immigration reform. We need a system that is flexible and agile; able to adapt quickly to the talent needs of the UK.

Proposed reforms such as these are regarded by many to be prohibitive to enabling innovation and economic growth. Our country’s SMEs are the driving force behind investment and innovation. Without the ability to access overseas talent amid shortages here, they are roadblocked in their efforts. Talent will migrate elsewhere, to countries without such severe financial costs and barriers to movement.

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