- Vast majority of smaller employers cannot meet proposed future salary threshold, according to new Federation of Small Businesses (FSB) research
- Similar proportion say they cannot adjust pay to accommodate £30,000 requirement
- Previous FSB research shows one in five small employers rely on staff from the EU; 95% have never engaged with non-EU aspect of existing immigration system
New FSB figures published today lay bare the concerns of small employers regarding plans to extend the £30,000 salary threshold – currently applied to Tier 2 UK visas for non-EU workers – to all skilled non-UK nationals, including EU citizens, once the Brexit transition period has finished.
The proposal was originally put forward in a government white paper at the end of 2018, following a recommendation from the Migration Advisory Committee (MAC). A review of the proposals was ordered by the last government, with the MAC publishing a call for evidence in 2019 – the findings of which are set to be made public next week. It has previously described the threshold as ‘difficult… to meet for medium-skilled jobs’.
The threshold would apply to all those coming to work in the UK who are deemed to be at or above level 3 of the Regulated Qualifications Framework (RQF) – equivalent to A Level.
The fresh FSB research shows that the vast majority (80%) of small employers that hire staff who fall into the RQF 3, or ‘mid-skilled’, classification do so into roles with salaries less than £30,000. In the South West and Yorkshire & North East regions, the figure stands at 85% and 90% respectively.
Close to four in ten (35%) UK small employers that hire staff who are classed as ‘high-skilled’ according to the RQF do so into roles with salaries below £30,000.
More than eight in ten (81%) of these small businesses employing mid or high-skilled staff in roles with salaries below £30,000 say they could not raise salaries in order to recruit workers from overseas.
More than half (58%) of small employers agree that the threshold should be lowered in instances where workers already in the UK are struggling to fill a job – very few (17%) disagree with that principle.
FSB recommends dropping the threshold to £20,100 for skilled staff, a salary that has been shown to be much more typical of workers who fall into the RQF 3 category.
The majority of small firms were paying all staff above the hourly £8.21 National Living Wage rate prior to it taking effect in April last year.
FSB National Chairman Mike Cherry said: “Small businesses are usually ahead of the curve on pay, rewarding staff fairly for their efforts and providing flexible, supportive working environments.
“With overheads for small firms mounting – not least due to rising business rates, utility bills and wider staff costs – the extension of the £30,000 threshold threatens to cause serious disruption to a labour market already beset by skills shortages and limited vacancies. The first response of small business owners to rising wages is generally to cut their own pay – they can only cut so far though.
“The potential inflexibility of the threshold, coupled with a near total lack of familiarity with the Tier 2 aspect of the current system among small firms, will leave those who rely on international talent incredibly concerned for the future.
“The £30,000 figure has to be looked at again, and a more sensible threshold of £20,100 rolled-out for skilled workers. Certain sectors, not least construction, manufacturing and IT, will be hit particularly hard if the current proposals are implemented unchanged.
“A lot of firms will be concerned about the timetable for the new system. The Government promised that changes will be introduced in a ‘phased way’ to give small businesses time to prepare – now there are fears it will be sprung on us at the drop of a hat.
“We want to work with policymakers to create a new system that works for all businesses, not just big corporations. That starts with a salary threshold that is manageable for the small firms that make-up 99% of our business community.”
Ends
Note to Editors
1) FSB surveyed 1,083 small businesses in October 2019 – it will be publishing a report on its full findings in the coming weeks.
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About FSB
As the UK’s largest business support group, FSB is the voice of the UK’s small businesses and the self-employed. Established over 40 years ago to help its members succeed in business, FSB is a non-profit making and non-party political organisation that’s led by its members, for its members. As the UK’s leading business campaigner, FSB is focused on delivering change which supports smaller businesses to grow and succeed.
FSB offers members a wide range of vital business services, including access to finance, business banking, legal advice and support along with a powerful voice in Government. Each year FSB also runs the UK’s Celebrating Small Business Awards. More information is available at www.fsb.org.uk. You can follow us on twitter @fsb_policy and on Instagram @fsb_uk.