Full details of the cap have yet to be agreed but it is thought that it would result in the number of non-EEA workers being allowed into the UK being restricted to 'tens of thousands not hundreds of thousands'. Visas could be allocated on a first come-first served basis as opposed to being based solely on merit as they are currently under the points-based system.
There is a general feeling among many business managers that a cap would have a significant impact on their ability to fill vacant posts. The proposed changes to the current points-based system could restrict HR directors' abilities to use migrant labour to address skills shortages that exist in the British workforce. Many sectors, such as health, only recruit outside the EEA on occasions where staff are not available and posts remain unfilled. The Government's recent policy of recruiting junior doctors from India in order to meet NHS requirements is just one example of this. Under the new proposals such recruitment of highly skilled foreigners would presumably only be possible if there were enough visas still available for that particular year; the actual economic and business need of the situation would be irrelevant.
It has been pointed out that a cap is very inflexible and does not take into account the differences that take place in the economy during the year. Businesses may lose the ability to be flexible and hire skilled migrant workers as the year progresses due to the cap being reached. This would leave managers with the unappealing choice of either hiring a less skilled and unsuitable individual or doing without until the following year.
Another concern raised is that less reputable businesses may resort to sourcing migrant workers though illegal channels in order to fill gaps in their workforce.
Once details of plans are announced, businesses will need to make sure they plan their foreign worker requirements well in advance. This forward-thinking will be essential to avoid a situation where a skilled non-EEA hire is required and the position is unable to be filled because the quota has already been met for that year.
Multi-national companies originating outside the EEA will have to be prepared to source their workforce from the UK and EEA as opposed to their country of origin. There could be a significant restriction on being able to transfer non-EEA workers to UK sites regardless of how highly skilled they are. Under the current system such transfers are relatively routine for workers who meet the relevant criteria.
Businesses may find that they need to invest more resources into training existing staff or local hires in order to fill roles that in the past required skilled or highly skilled workers only found outside the EEA. This extra training may prove time-consuming and expensive and businesses should start making plans early to avoid a skills gap while the training occurs.
Finally, due to the age-old rules of supply and demand, a shortage of skilled workers is likely to lead to an increase in wages as businesses compete to attract the highly skilled migrants at the expense of their rivals. This in turn may lead to a comparable increase in wages for EEA workers as bosses try to avoid dissatisfaction among the workforce. The extra cost associated with this wage hike will need to be budgeted for by already stressed finance directors.
Before any cap is set, the Government needs to ensure it consults with businesses and takes into account their needs. Given the pressure on the Government to reduce the deficit one would hope that it will listen if businesses have concerns that proposals may damage their competitive position.
Josie Taylor is an employment associate with international law firm Pinsent Masons
