An IMGW News Report
Since leaving the European Union, the UK government has vigorously pursued a migration reduction agenda. The latest step in this strategy is raising the salary thresholds for skilled worker visas, a change now causing significant disruption not only in the finance sector, particularly for companies like HSBC and Deloitte, but also across other industries.
The Impact of New Visa Rules
Recently, according to a report in the Financial Times (FT), HSBC and Deloitte have withdrawn job offers to numerous foreign graduates. The stricter visa regulations have compelled these firms to reassess their hiring strategies. People familiar with the situation disclosed to the FT that these decisions are directly linked to the UK government’s increased salary thresholds for skilled worker visas. Effective April, the threshold has been raised from £26,200 to £38,700, and to £30,960 for those under 26. This policy change aims to reduce the record levels of legal migration into the country.
Specific Cases and Reactions
HSBC’s decision mainly affects graduates in its “digital innovation” program who were slated to work in Sheffield. These candidates had already participated in several preparatory events and had mentors assigned. One affected individual expressed frustration, stating, “I had three other offers that I rejected. Having spent £50,000 on attending university in the UK, I now have to go back to my home country.”
“These changes will significantly impact (also) tech industry salary requirements for sponsorship, especially outside London, potentially disqualifying some applicants.”
According to the Financial Times (FT), in response to the new visa eligibility criteria, HSBC enlisted consultancy firm EY to review individual cases and provide advice. Similarly, Deloitte has rescinded offers to about 35 graduates, representing roughly 3% of its autumn intake. As reported by FT, a spokesperson from Deloitte explained, “The new eligibility criteria mean that some of our roles no longer meet the requirements for sponsorship of skilled worker visas.”
Broader Implications for the Finance Sector
The finance sector, which heavily relies on a diverse talent pool, is experiencing significant repercussions. KPMG had already cancelled contracts for some foreign graduates last month due to the same visa constraints. These developments highlight companies’ challenges in complying with new regulations while maintaining their talent pipelines.
Advisory Warnings and Political Context
The UK’s Migration Advisory Committee recently cautioned the government against eliminating the graduate visa program, which permits overseas students to work in the UK for two years after graduation. With immigration a top issue for voters ahead of the next general election, the Conservative government’s tough stance on migration is seen as a bid to regain voter confidence as they trail behind Labour in the polls.
Corporate Responses and Future Outlook
The new skilled worker visa rules, announced in January, have left companies scrambling to address the fallout. HSBC informed affected graduates via an automated message, expressing regret and attributing the decision to the new regulatory environment. The bank is currently in discussions with those impacted to explore potential solutions.
FT reported that due to changes in the rules covering those seeking sponsored visas to work in the UK, HSBC can now not take forward a small number of offers to candidates as part of our graduate scheme this year. “While this is disappointing for both the candidates involved and for HSBC, we are required to follow the regulations of every market we operate in,” an HSBC spokesperson stated.
As the UK navigates its post-Brexit reality, the tension between controlling migration and fostering a robust, competitive finance sector continues to pose significant challenges. The recent visa policy changes underscore the complex dynamics at play and the potential long-term impact on the UK’s economic landscape.
New Salary Increments to Impact Skilled Migrant Workers, Including the Tech Sector
Alongside finance, the tech sector is a major UK employer, competing for top talent globally. However, it faces challenges from the global economic slowdown and new immigration changes aimed at reducing net migration.
The new Statement of Changes (SOC), published on 14 March 2024, increases salary thresholds for sponsoring Skilled Workers, effective from 4 April 2024. Under the Skilled Worker category, the baseline salary requirement rises from £26,200 to £38,700. ‘Going rates’ for specific occupations will now be based on median earnings rather than the 25th percentile. Additionally, the Immigration Salary List (ISL) will replace the Shortage Occupation List (SOL), removing the 20% discount previously applied to ‘going rate’ minimum salaries for listed roles, though the general threshold discount remains.
These changes will significantly impact tech industry salary requirements for sponsorship, especially outside London, potentially disqualifying some applicants. For instance, roles under occupation code 2136 (Programmers and software development professionals) will see a 45% salary increase, from £34,000 to £49,400.
Current Skilled Workers or those with a Certificate of Sponsorship (CoS) issued by 4 April 2024 will not be subject to the new salary provisions but must still meet updated ASHE 2023 data rates.
Additionally, the ISL, more restrictive than the SOL, will result in fewer employers benefiting from lower salary thresholds. Occupation codes like 2135 (IT business analysts) and 2136 (Programmers) will not receive salary discounts under the ISL.
New Entrant Rate
The new entrant discount (30% on occupation-specific thresholds and 20% on general thresholds) remains for those under 26 or meeting specific criteria. This discount is available for up to four years, after which full salary thresholds must be met.
More Challenging Times Ahead for Students Seeking UK Job Placements?
The increased salary thresholds may render some roles ineligible for sponsorship, limiting the number of non-British talent. Alternative visa routes based on individual attributes, such as Graduate visas, Ancestry, Youth Mobility, and Global Talent, may become more attractive.