American Passport

From 6th April any skilled workers who have immigrated to Britain from outside of the European Union and who have been living in the country for less than 10 years must earn at least £35,000 a year to allow them to remain in the UK. Some professions on the “shortage occupation list”, such as nurses, are exempt from these rules, but unfortunately these exempted professions won’t help SMEs. We look below at just how the new immigration laws will affect British SMEs.

 How Will It Affect British SMEs?

Many businesses, particularly SMEs, employ workers from overseas rather than take a longer-term and more expensive commitment to training British workers over what could potentially be a number of years. The government has introduced this policy specifically to change this, with a Home Office spokesman saying “We need to do more to change that, which means reducing the demand for migrant labour…These reforms will ensure that businesses are able to attract the skilled migrants they need, but we also want them to get far better at recruiting and training UK workers first.”

The implications for SMEs is clear. Small businesses typically do not have as much cash flow in their early years, and this can be the make or break factor in whether or not that business survives. Choosing to employ foreign talent is not always done to find workarounds to the British system, but is often necessary for survival. While it can be argued that this new policy is both beneficial and fair to British workers, and Britain as a whole, SMEs often don’t always have the luxury of committing both time and money to training up the British workforce.

There is of course also the risk that SMEs will now have a vastly reduced pool of talent from which to recruit and hire. Again, these businesses aren’t always hiring overseas to avoid hiring British workers, sometimes it is simply that the best talent is from overseas. Just as limited outflow of cash is crucial to a SMEs survival in its first few years, so is hiring the right talent. Recruiting and training up a worker in a particular field may take years, by which time the SME may have folded due to the lack of that particular skilled worker in the business. For example, the engineering sector currently has a shortage of skilled workers, and yet the average salary for a junior engineer is only £32,000, and so it is essential that businesses look overseas for the talent to keep their businesses afloat.

By Britain closing herself off from many foreign migrants, it will also have an impact on national relations. Jeffries Briginshaw, the CEO of BritishAmerican Business, said on the matter: “American companies are deeply entrenched in the UK economy and American citizens are part of UK society, whether this is in business, schools or families. Any restriction to the Tier 2 visa scheme will have a negative impact on the way American businesses operate in the UK and how American citizens can be part of the UK.” This too may harm the plans of any SMEs looking to expand their business abroad.

Unfortunately, at least in the short term, this new policy seems like it will only hinder SMEs, with 72% of recruiters stating that it will have a detrimental effect on business. The widening skill gap in the UK, alongside the introduction of this policy, is likely to increase staff turnover, create a new level of uncertainty and stunt business growth. SMEs will now be forced to think about new recruiting and training methods, greater staff retention and have a new emphasis on cost cutting and saving. While these are always vital factors in making any business work, this new level of pressure could be too much for a SME in its early years.

 How Will It Affect British Workers?

For British workers themselves, the implications seem beneficial It will mean there will now be a greater number of jobs available, as well as more chance to proceed down routes with new training and opportunities. Where before a position would have been filled by an overseas skilled worker, British workers will now have the chance to receive the training they need for that position.

A petition has been started on the policy, seen here, and has so far attracted over 100,000 signatures, resulting in the issue being debated upon in Parliament. However, the British government remains set on the fact that the policy is fair, having given individuals several years to prepare for this eventuality, first announcing the policy in 2011.

While the policy will help British citizens and help to curb the rising immigration rate, it could have a disastrous affect on businesses, particularly SMEs. While larger organisations can afford to take the hit and take time to train up new staff, SMEs don’t have this luxury; either in terms of time or money. Hiring skilled overseas workers not only helps them save a vital amount in costs, it is also sometimes simply the best option. While the British government are adamant that they will be enforcing the policy, those that have set up the petition against it have stated that they will continue to lobby and petition against the government regardless of the result.

Written by Anna Lemos