This month saw the cap on skilled migrant workers allowed to enter the UK under Tier 2 of the Points-Based System reached for the first time since its introduction in 2011.
This month there were 1,658 Certificates of Sponsorship available (an allocation of 1,650, plus eight rolled over from May). Under the cap system, if more applications are received than certificates available, those with more points will be given the certificates.
Points are awarded for a number of factors, such as the role being on the Shortage Occupation List, but the most common source of points is the applicant’s salary. Points are awarded within certain bands, for example, a salary of £32,000- £45,999 is worth 15 points, while one between £46,000- £74,999 is worth 20 points.
Until this month, provided an applicant had 32 points (the minimum number needed to apply under Tier 2) then a certificate was granted. However, as the number of applications for certificates exceeded the June cap, the minimum number of points required increased to 50, meaning applicants needed an annual salary of at least £46,000 to be granted a certificate – otherwise it was refused.
This has affected businesses of all sizes throughout the UK. The majority of applicants due to begin graduate programmes in July or August, with starting salaries under £46,000, have been refused. The organisations affected now need to decide whether to reapply in July and start an overseas graduate late, or withdraw the job offer. Some large employers are already considering moving their graduate programmes overseas, meaning fewer opportunities for British graduates. Smaller companies may find their ability to operate is directly affected by not being able to recruit non-EU employees.
Points being granted mostly on salary has a disproportionate effect. Professions such as nursing and engineering will be less able to recruit non-EU workers than, for example, banking where salaries are higher, and businesses based in London will be able to recruit more easily than other regions, where salaries are lower.
The good news is there is a higher number of allocations for July (2,049) as once the monthly cap is reached, all applicants with less than the minimum number of points are refused certificates, even if that means the allocation for that month has not fully been used. As all applicants with salaries under £46,000 were refused in June, approximately 300 unused certificates will roll over to July. The annual cap is 20,700.
The bad news is that the cap is likely to be reached again in July, because although it is not clear how many applicants were refused in June, we can assume that in addition to the growing number of applications received each month, these refused applicants will reapply. If the number of applicants is significantly higher in July, then a minimum salary of £75,000 is foreseeable, making the Tier 2 route available only to the highly paid, excluding most young people and potentially entire sectors.
This problem is unlikely to resolve itself. The Government has announced that it plans to reduce the number of skilled workers coming to the UK. However the numbers needed continue to grow, fuelled by a strong economy and low unemployment. It seems there is no government appetite for an increase in the cap. Even in the short-term this could potentially be damaging to British business, and risks companies simply moving overseas or being unable to operate.
The crisis might be resolved without having to increase the cap, for example, by taking graduates or intra-company transfers out of the numbers. But in the short-term, the government needs to address the inequality of the system and its disproportionate effect on sectors and applications outside London urgently. It could, for example, narrow the salary bands, to weight sectors or regions, or significantly increase the Shortage Occupation List.
Businesses are hopeful that June is a blip and that numbers will resolve themselves over the summer. However, if the cap is now reached on a monthly basis, this could quickly become a serious issue for employers and the UK economy as a whole.
