International recruitment and skills shortages: what can we expect from the Migration Advisory Committee’s review?

The Home Secretary commissioned the Migration Advisory Committee (MAC) on 6 August 2024 to begin investigating the use of international recruitment and immigration in particular sectors, starting with the information technology, telecommunications and engineering sectors, which are in the top 10 sectors that have been reliant on international recruitment. The Home Secretary indicated that this would be the first of similar sectoral reviews.

During and since the general election, the new Labour government has said that it wishes to “fix the foundation” of the UK’s economy to grow the economy while keeping taxes, inflation and mortgages low. This relies on businesses in the UK being able to grow, which relies in turn on access to workers and necessary skills in order to do so. 

Unfortunately, the Labour government has also insisted that it wishes to reduce immigration and employers’ reliance on immigrants, despite many sectors in the UK facing a shortage of key skills.

One obvious way employers can fill vacancies when there is a skills gap in the UK is to rely on international recruitment – in recent years following Brexit and the end of free movement of workers, this has led to huge increases in the number of skilled work visas being issued, particularly in the health and care sector. This led to the previous government hiking visa fees, the immigration health surcharge and minimum salaries for skilled workers in a bid to reduce net migration. This appears to be working, but at the cost of reduced numbers of workers to support struggling sectors.

In July the new government announced a bill to introduce a new body, Skills England, that would work alongside the MAC, Industrial Strategy Council, Department for Work and Pensions and others to develop a strategy to address skills shortages in the UK. 

The MAC’s role in this is to incorporate immigration into the strategy, including how international recruitment is used to fill those shortages while considering the needs of resident workers. 

What will the MAC be doing?

The MAC has been asked to advise the government on the reasons why key occupations rely on international recruitment and future demand in these sectors. As well as identifying key shortages, the MAC has been asked to consider to what extent training, pay and conditions have driven these shortages and how sectors have tried to adapt to these beyond recruiting from other countries, although the scope of the review is wide and not limited to these topics.

They have also been asked to consider a wide range of options by which the government may respond and develop its skills strategy, including whether approaches should vary depending on region and sector or other factors. 

In order to carry out a review of this size and scope by the proposed deadline of 6 May 2025, the MAC has requested additional staff as well as data from the Home Office and HMRC. They have confirmed that they will be planning “targeted stakeholder engagement”, although it’s not clear yet whether this will include a full public call for evidence and consultation.

What are some potential solutions?

A significant criticism of the current system, only compounded by the significant salary hikes in April, is that a one-size-fits-all system means that salaries based on national averages are dragged upwards by London and the southeast, leaving many areas of the UK unable to sponsor workers at all due to lower salaries. In previous years, the MAC and previous government have resisted calls for a regional approach to minimum salaries so this potential new approach is welcome, although it remains to be seen if the MAC will agree with such a sea change.

Not all employers have the luxury of being able to fund training to fill shortages or to pay the fees and salaries involved with international recruitment. Start-ups in particular, may struggle to invest the money or time in training as they grow their businesses in their early days.

Where entry-level training is not an option, an employer may be reliant on immigration to grow, but start-ups or small and medium sized enterprises may not be able to afford to pay the full market rates, particularly outside London and the southeast. For such businesses, it may be worth bringing back an old pre-Brexit sponsorship option.

In November 2015, the then government followed MAC’s recommendations by adding a number of digital technology roles to the shortage occupation list. However, not every sponsor was allowed to count these roles as shortage occupations – only a “qualifying company” was able to do so and employers had to apply for and be granted permission to do this. The criteria included the size of the company and limits on the number of people they would be sponsoring. 

Something similar could allow those smaller or younger businesses who may not be in a position to provide training or apprenticeships to access the skills that they need to grow, while preventing over-reliance on immigration. The option to provide the required “Digitech declaration” is even still listed as a supporting document option on the online sponsor licence application form, despite being scrapped in December 2020, so it wouldn’t even take much of an update.

Another option is to revisit the question of the discounted salary for shortage occupations. The reason the going rate discount for shortage occupations was discarded was that it was thought to be undercutting resident workers’ wages. 

However, when the MAC was commissioned to conduct a rapid review of the new immigration salary list that would replace the shortage occupation list, they pushed back. Although they had previously recommended scrapping the discount, the fact this had been introduced at the same time as the salary hike to the median rate “substantially weakens the rationale for not being able to pay below the occupation-specific threshold”, as the higher going rate meant undercutting wages was no longer considered a risk. Bringing back this discount would be one option, although the Labour government supported its removal and has given no indication that it is considering this.

The key issue for most employers in the UK is access to the workers and skills that they need. I would hazard that most employers would much prefer to recruit from the local labour market if the necessary skills were available – not least due to the cost. Sponsoring a non-British or Irish worker to fill a vacancy is extremely expensive and I can’t imagine any employer choosing to pay out government fees of £9,000 or even more for a non-resident worker if they had the choice to employ someone without those costs. 

On top of that, the changes in April mean that sponsored workers need to be paid more than the average British worker in the same role, meaning higher employment costs on an ongoing basis. Employers would therefore in many cases much rather recruit locally than internationally. However, unless and until the new government’s skills strategy can deliver the needed skills and workers, employers have no choice.

The new skills strategy will take time to develop and implement, with input from the MAC, Skills England, the Industrial Strategy Council and various other stakeholders down to local/devolved authorities, so it is likely to be a long time before progress is made in addressing skills shortages in the UK. Until then, immigration will continue to play an important part for business and growing the economy. Short-term strategies need to allow for this, rather than further stifling immigration to meet arbitrary targets.

What should employers be doing?

Employers in the information technology, telecommunications and engineering sectors and their representatives would be well advised to keep an eye out for updates on this MAC review. They have said they will carry out targeted engagement, so we would expect this to involve industry bodies at least, such as TechUK, and employers may wish to get in touch with bodies representing their industries to indicate their interest in contributing. There may also be a wider call for evidence in due course, where employers may be able to contribute directly. 

As the Home Secretary indicated that this may be the first of a series of reviews for different sectors, businesses in other sectors may wish to keep abreast of any further reviews that may be commissioned in the near future.