Cuts to migration, the impact on businesses in retail, hospitality and leisure

The Government have recently announced their new plans to cut net immigration. Coming into effect from Spring 2024, these measures will make significant changes, resulting in the country’s biggest ever reduction in net migration. This will seriously affect businesses in retail, hospitality and leisure due to the number of migrant workers in these sectors. In 2020, migrants were over-represented in hospitality, making up 28% of the sector’s workforce and 17% of the retail sector’s.

One of the most drastic changes announced is the near 50% increase in the minimum salary threshold. One of the requirements for obtaining a Skilled Worker visa is demonstrating that you will earn a minimum salary, with the current threshold sitting at £26,200 per annum and £10.75 per hour. As of Spring 2024, this minimum threshold will be increased to £38,700. To help contextualise this, according to Office for National Statistics, the median gross annual earnings for full-time employees in April 2023 was £34,963.

This means that a lot of workers at a junior management level and below would not qualify for a visa on this basis, significantly reducing the talent pool. As hospitality, retail and leisure are already facing sector wide issues with staff retention and filling vacancies, it is important to consider the impact this increased threshold will have on the number of available candidates and the recruitment process. To improve staff retention and to avoid staff shortages as a result of these new measures, employers may want to consider:

• Improving their benefits: whether this be pay increases, health coverage, additional family leave entitlements or gym memberships, etc.
• Provide training: further training and development can help employees feel as though they are growing with the business, encouraging them to stay. This can also mutually benefit the business by having more skilled workers.
• Focus on EDI: when employees feel safe, respected and important at work, they are much more likely to stay within the business. By developing your EDI, you can attract a wider range of candidates and help employees to feel more self-secure at work.
• Increase flexibility: by catering for flexibility at work, whether this be through hours or working from home when possible, it can attract a more diverse pool of candidates and can allow for employees to stay within the business when the personal lives/ circumstances change.

In addition to increasing the minimum salary threshold for migrants, the Government are also increasing the minimum salary a British or settled person must have in order to sponsor a partner. The current threshold sits at £18,600 per annum and will also be increased to £38,700. This will make it more difficult for a British or settled person to sponsor their overseas partner to move to the UK. This may have a detrimental emotional impact on current employees who were hoping to sponsor their partner to come across to the UK and employers should consider how they can support these employees. 

For further information on how these new measures may impact your business or for additional resources on how to improve staff retention, please do get in contact.