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Warnings over workers

Small firms want cost controls on new immigration rules


Firms require overseas workers to fill jobs

Small firms are expected to feel the brunt of the UK government’s new immigration rules unless costs are kept down and the new points-based system is made easy to use.

Close to four in ten (38%) small employers are already struggling to recruit the right staff over the past year.

More than a third (35%) of these say the unwillingness of UK citizens to work in their sector is a reason for this struggle, according to the latest study from FSB, published today. 

Concerns among small firms follow the release of a government policy paper confirming that the UK will move to a points-based immigration system from January 2021. 

Even so, the FSB believes a points-based immigration system can work if costs are kept down and systems are easy to navigate.

Half (48%) of small firms state that they would be unable to meet the immigration fees currently levied on employers when they hire non-EU staff should they be extended to all workers from around the world.

Previous FSB research shows that 95% of small firms have no experience of using the UK’s current immigration system. 

Across the UK four in ten (41%) small firms that operate in the professional, scientific and technical services sectors have engaged EU contractors. A similar share (35%) of small firms operating in the information and communication industries have done so. 

The new report finds that more than one in ten (11%) small firms will have to radically change their business model or close altogether if they struggle to recruit EU workers in future. This rises to one in five in Scotland.

As part of the new report, FSB recommends that the future points-based system: 

  • Keeps the cost of hiring EU and non-EU staff to below £1,000 for small businesses and exempts smaller firms from the Immigration Skills Charge (under the current system, the cost of a Tier 2 visa sponsorship to a small employer exceeds £3,000, a fee that would be unrealistic for the smallest firms).
  • Includes a special visa for social care workers to help address the severe personnel shortages in that sector – acknowledging the fact that it will take 15 years to train enough UK citizens to address that shortage – and pilots a visa for remote communities that struggle to recruit talent, including those within popular tourist destinations. 
  • Includes a Global Talent visa which allows the self-employed to come to the UK without a job offer; removes any unreasonable barriers to UK entry for overseas contractors who bring flexible access to sought after skillsets. 
  • Encompasses an urgent review of the Innovator Visa, which has been granted to just 14 individuals since its introduction last year. 
  • Is fully tested and is able to meet the needs of small firms before it goes live. 

FSB National Chairman Mike Cherry said: “A points-based model can work, provided costs are kept down and systems are easy to navigate for small firms – the overwhelming majority of which have no experience of hiring a non-EU worker. 

“Against a backdrop of weak economic growth, record employment and an ageing workforce, it’s critical that we get this new system right, particularly when timeframes are so tight. Otherwise, we risk business closures.”

FSB’s Scotland policy chairman, Andrew McRae, said: “There are now more than 100,000 EU workers in employment in cities, towns and villages across the country. Needless to say, the imminent introduction of a new way of hiring workers from outside the UK is a concerning prospect.

“Against a backdrop of weak economic growth, a buoyant labour market and an ageing population, it’s critical that we get the post-Brexit immigration system right. The tight timescales mean there’s no margin for error. Getting it wrong risks business closures.” 

Other findings are that 40% of Scottish small employers have at least one EU worker on the books – an increase of 14% since 2017. By comparison, the UK average is 26%, an increase of 5% over the same period.

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