A Government-commissioned review of the UK’s Shortage Occupation List which helps employers hire foreign workers in roles facing dire labour shortages has recommended scrapping the list altogether.

The influential Migration Advisory Committee (MAC) carries out periodic reviews of the UK’s Shortage Occupation List (SOL). After inexplicably putting the review on hold in August 2022, the Home Secretary asked the independent committee to hold a public consultation and review the list last February.

Having reviewed submissions from various sectors and employer bodies facing labour shortages, the MAC published conclusions on Tuesday which may disappoint many of the business bodies that responded to the public consultation.

What is the Shortage Occupation List?
The SOL is the UK government’s list of occupations in short supply. If a job is on the list, an employer can sponsor a migrant on a Skilled Worker visa for the job with a lower salary threshold than is generally needed to sponsor employees on the Skilled Worker immigration route that has become the main post-Brexit work visa route. Employers can sponsored staff from abroad on the SOL paying them at least £20,960 (the usual threshold is £26,200) or 80 per cent of the going rate for that occupation (whichever is higher).

Visa fees are reduced too for those sponsored on the SOL. After the visa fee hike Prime Minister Rishi Sunak announced recently, fees for Skilled Workers and their dependant family members now range from £719 to £1,500 while fees for SOL workers range from £551 for three years or less to £1,084 for over three years.

What has the Migration Advisory Committee Review actually recommended?
Despite employer bodies lobbying hard for the list to be extended to more occupations, the MAC warned that the list should not be used for anything more than a temporary fix for labour shortages. The committee insist that improving training, work conditions and job progression are the only real long-term solutions to skills shortages.

The scathing report criticises the current system saying it undercuts local workers, drives down wages and leaves migrants dependent on the employers sponsoring them open to exploitation.

The MAC argue that as employers still have to pay for bureaucratic costs such as a sponsor licence to hire migrants for shortage occupations, despite being able to pay lower wages, there are other costs preventing employers from filling skills shortages.

“We are not convinced that the SOL is an effective tool to address labour shortages across different occupations and sectors,” said MAC chair Brian Bell, a professor of economics at King’s Business School.

The MAC recommends scrapping the SOL and instead proposes that it could be asked by the Government to conduct periodic reviews of individual high vacancy sectors or job roles that would allow it to come up with more tailored immigration solutions for each one. They would be able to recommend solutions ranging from easier access to Skilled Workers – like the current SOL system to more tailored, bespoke immigration routes, as well as changes to pay and conditions, training and investment in technology for more sustainable solutions.

As jobs on the SOL are the only ones that asylum seekers waiting over 12 months for a decision can request the right to work for, the MAC also recommended that they should be able to work in any job, or at the very least if the SOL is scrapped in any Skilled Worker roles.

The MAC made clear that this review has been conducted on the basis of stopping employers using the SOL to pay 20 per cent less than the going rate. This now means most occupations currently on the SOL would be ineligible.

So the only occupations it recommends to the list are now ones which pay low enough that the going rate is below the general salary threshold of £26,200: just eight occupation codes for the whole of the UK and two that are specific only to shortages in Scotland.

For Scotland these were managers and proprietors in forestry, fishing and related services as well as boat and ship builders and repairers.

UK-wide, the only occupations left on the list are lab technicians; pharmaceutical technicians; bricklayers and masons; roofers, roof tilers and slaters; some other construction and building trades; some animal care occupations; senior care workers and care workers and home carers.

Care workers remain the only profession on the SOL where the usual skills criteria have been waived to plug a hiring crisis. – The resulting recruitment push abroad has meant that in the year up to June, care and senior care workers together accounted for half of all visas granted to skilled workers.

The MAC stressed that while the Government fails to come up with long-term solutions to shortages in the care sector, carers must remain on the SOL, though the committee said it was “increasingly concerned about the serious exploitation issues being reported within the care sector.”

Where does this leave sectors facing skills shortages?
The review said it conducted “extensive stakeholder engagement” across the private and public sector, consulting specific sectors such as construction, engineering, hospitality, fishing, food suppliers and personal care. The MAC heard from nationwide industry bodies such as the Confederation of British Industry and British Retail Consortium as well as those particular to Scotland and Northern Ireland.

Many will now be very concerned by this week’s headlines about the MAC’s conclusions and what the government’s response will now be. Especially with the noises coming from the Conservative Party Conference in Manchester.

At a fringe event organised by the Policy Exchange, Immigration Minister Robert Jenrick talked about actually cutting the number of care visas and family visas being offered to overseas workers. Like other ministers criticising their own party’s record at the party conference, the Immigration Minister attacked post-Brexit work immigration rules for allowing too many lower skilled workers. He even suggested the prospect of immigration caps and raising the salary threshold at which employers can hire anyone on a Skilled Worker visa.

None of this seems like it should be policy for a government whose main stated priority is to reduce inflation and therefore inflationary costs for businesses. Yet like his boss Home Secretary Suella Braverman, Jenrick appears keen to appease the more extreme fringes of the Conservative Party keen to cap immigration.

The Labour Party has also expressed concerns about UK workers’ salaries being undercut.

With over 170,000 asylum seekers and their dependants waiting in limbo the recommendation to  allow them to join the workforce would end a massive drain on the taxpayer and local authority resources as well as being an easy solution to filling many vacancies, with an estimated net gain to the country in tax revenue and GDP in the billions. However, with a government seemingly intent on fighting an election on appearing to discourage asylum seekers and a Labour Party reluctant to advocate for lifting a work ban, this seems unlikely.

While many sectors will be disappointed that the SOL hasn’t been expanded to include workers they urgently need, swapping it for more tailored immigration routes may indeed work out a better solution in the long-run – if, that is, the government of the day implements them. Though hopefully a pragmatic government will take heed of opinion polls which generally show the public is supportive of increased immigration to fill roles perceived as short of staff, particularly if this plugs important holes – such as cutting NHS waiting times and reducing food supply inflation.

The SOL’s blunt tool which just reduces salaries is never going to be a sustainable solution to stopping skills shortages for the MAC who argue that lower pay attracts fewer local workers.

The MAC has correctly identified that there are better ways of addressing a skills shortage than undercutting the going rate of pay. Hopefully the MAC and the UK government will remove other impediments to hiring shortage occupations from abroad – such as reducing the costs of visas and stopping the skills charge – which is in effect a tax on employers trying to fill a skills gap. If the government is indeed serious about reducing inflationary costs and boosting economic growth, then they need to implement such solutions soon and to start talking about immigration as a solution rather than always a problem.