U.K. Skills Shortage Will Drive Demand for Immigration

By 2030, 7 million additional workers in the U.K. could be under skilled for their job requirements that would constitute about 20 percent of the labour market

A shortage of key skills in the United Kingdom, which has sparked surging demand for foreign workers, will probably persist in the foreseeable future and restrict the government’s ability to curb immigration in the near term.

Home Secretary Yvette Cooper ordered a review of a key immigration provision in July that attempts to tie foreign worker visas to local skills development as the Labour government moves to curb surging migration in the U.K.

Cooper asked the Migration Advisory Committee to evaluate the continuing reliance of key sectors, particularly information technology and engineering, to international recruitment. The two sectors have been included on shortage occupation lists for over a decade and relied on significant levels of international recruitment, she said.

The review is part of the Labour government’s strategy to not use immigration as an alternative to local training or tackling workforce problems in the U.K. The trebling of net migration in the U.K. since 2019, driven mainly by skilled workers, reflects a failure over many years to tackle skills shortages and other problems in the U.K. labour market. Too many sectors have remained reliant on international recruitment, instead of being able to source skills at home, Cooper said.

New foreign workers as a percentage of the workforce in information technology and engineering were in the top 10 of all occupational groups, she said.

Net migration, the number of people immigrating to the U.K. minus those emigrating, climbed to a record 764,000 in 2022, about three times the annual average before the pandemic. Net migration fell 10 percent in 2023 to 685,000, the Office of National Statistics has said, but was still well above pre-pandemic levels.

The Department for Education’s Employer Skills Survey 2019 and 2022 highlighted that nearly a third of all vacancies were skills shortage vacancies, which cannot be filled because the employer cannot find the skills they need, up from 22 percent in 2017.

Numbers of skills shortage vacancies doubled between 2017 and 2022 to 531,200. Skill-shortage vacancies were most prevalent in Health and Social Work, Business Services, and Wholesale and Retail, with Construction, Information and Communications, and Manufacturing sectors exhibiting higher proportions of skill-shortage vacancies relative to overall vacancies. Shortages are growing most sharply among employers with 250 or more workers.

The Industrial Strategy Council identified at least 2.1 million workers likely to be acutely underskilled in at least one core management area -- leadership, decision-making or advanced communication -- and 1.5 million likely to be acutely under-skilled in at least one STEM (science, technology, engineering and mathematics) workplace requirement. By 2030, 7 million additional workers could be under skilled for their job requirements – this would currently constitute about 20 percent of the labour market.

The Resolution Foundation notes that many roles in vital industries, such as transport and storage, manufacturing and domestic services, have proportionately relied on European Union workers who are mostly ineligible for a skilled worker visa under the new system.

To curb runaway immigration, the previous Conservative government made significant changes in visa policy. From March 11, 2024, social care workers from overseas were no longer allowed to bring dependants on their visa. Health and care workers have been one of the main drivers of the surge in migration to the U.K. But following the change, applications for health and care visas in January-August this year have dropped 61.5 percent from a year ago, according to Home Office data.

The government also raised the minimum m general salary to be able to apply for a Skilled Worker visa From 4 April 2024 to £38,700 a year from £26,200, while the ‘going rate’ minimum salary specific to each job has also been increased. Still, applications for Skilled Worker visas and their dependants rose 22.4 percent in January-August this year versus a year ago.