Points-based immigration: its impact on SMEs

The UK government is introducing a "firm and fair points-based system" for both EU and non-EU migrants looking to work in Britain following Brexit. Many small business owners are concerned about the impact these changes will have on their hiring practices and search for talent in a competitive job market.

The points-based immigration system

According to a recent government policy statement, the points-based system will prioritise a person's skills when applying to work in the UK. Priority candidates include "scientists, engineers, academics and other highly-skilled workers" with no general low-skilled or temporary work route. For EU citizens, this will replace the previous freedom of movement allowances.

The policy document also states a “need to shift the focus of our economy away from a reliance on cheap labour from Europe and instead concentrate on investment in technology and automation,” adding that “employers will need to adjust.” They further add that UK employers will need to stop relying on the UK’s immigration system as an “alternative to investment in staff retention [and] productivity.”

The effects of the new immigration system on small businesses

A recent survey conducted by the Federation of Small Businesses (FSB) found that half of the 1,083 small businesses they surveyed would be unable to afford the visa costs associated with hiring somebody from outside of the UK if these costs were extended to workers from the EU too (source).

The current price of a Tier 2 visa sponsorship exceeds £3000 - a price that many small businesses would be unable to afford if it were extended to workers coming from the EU. Consequently, 11% of the small businesses surveyed said they would have to radically change their business model or close altogether.

How can small businesses prepare for the upcoming changes?

Though the UK’s point-based immigration system isn’t set to become enforced until January 2021, employers can start preparing for it now.

As the government’s policy statement suggests, small businesses will need to put more resources into core HR activities such as staff retention and improving productivity. Owner-managers of small businesses can therefore start preparing for the changes by making tactical changes to their business strategy.

Improving productivity

There are multiple ways in which businesses can improve productivity, and how businesses best achieve an increase in productivity will depend on the specifics of their business (e.g. business size, the product/service they are selling, their competitors). One way to improve productivity which applies to all businesses is in reducing the amount of time employees spend on administrative tasks that could otherwise be spent on more profitable tasks.

Smaller businesses might be more reluctant to invest in technology on the grounds of cost. However, technology such as HR software that automates certain administrative tasks can free up the burden on employees who would usually be tasked with doing these activities, meaning that they can spend more time on profitable tasks. As a result, productivity goes up. Small businesses should consider whether the benefits of investing in this kind of software will outweigh the costs.

Learn more: What does HR software do?

Retaining staff

When businesses have a harder time recruiting staff, workers are more empowered to take their labour elsewhere, as jobs become more available and competition reduces. In such a climate, retaining staff becomes a priority for business.

In the context of the upcoming changes to immigration policies, small businesses can take steps towards retaining their current staff by ensuring that your business is following a best practice approach to ensuring that current employees feel valued at work.

Written by Kate Taylor

Kate is a Content Marketing Executive for myhrtoolkit. She is interested in SaaS platforms, automation tools for making HR easier, and strategies for keeping employees engaged.