The rise to the minimum salary for skilled worker visas will have far-reaching effects on hospitality’s labour shortage. Emma Lake reports

 

From April, the government will increase the minimum salary required for a skilled worker visa in the UK by almost 50%, from £26,200 to £38,700.

 

With 95% of the visas issued to hospitality workers in the year to June 2023 falling short of the higher threshold, the move is expected to dramatically reduce the flow of overseas talent into the UK hospitality sector.

 

According to Caterer.com, the average hospitality salary in the second half of 2023 was £26,068, up from £25,126 in the previous six months. Consequently, the majority of the 7,000-odd vacancies on its jobs board are below the £38,700 threshold.

 

The figures reflect the message from operators, who report the most acute labour shortages are in entry- and junior-level roles on lower salaries.

 

Hannah Horler, managing director of Cartwheel Recruitment, said: “If we look at any of the job boards of our clients, it’s junior positions that form the bulk of the vacancies they’re trying to fill. They’re often hands-on roles, such as waiters, housekeepers, supervisors and assistant managers.

 

“If you look at general managers in contract catering or restaurant sites, you will probably see salaries of £38,000-£40,000. We recruit for roles from this entry management level to board level and we have not struggled to fill those vacancies to the point of looking overseas.

 

“It’s a pyramid – as you approach the top there are fewer roles and more applicants per role, whereas closer to the base there are more roles and not enough people to fill them, and there you have the need to recruit from overseas.”

 

The Migration Observatory reported that 1,046 visas were issued to restaurant and catering managers and 4,458 visas issued to chefs in the year ending June 2023. Its analysis showed that 75% of chefs sponsored through skilled worker visas during the year were employed on salaries of £28,000 or less.

 

Rik Campbell is co-founder of Kricket restaurant group, which has been increasing its use of skilled worker visas in the past two years as staffing difficulties have become more acute. The modern Indian restaurant group has three London sites, with a fourth in Canary Wharf set to open in May. Campbell estimated that around 50% of its chef teams have been recruited from India using skilled worker visas. He said: “Generally the level of the chefs we’re bringing over is around the current minimum salary [£26,200], which is the level at which we really struggle to recruit.

 

“The new threshold of £38,700 is more around junior sous chef or sous chef level, where we have fewer positions and find it easier to recruit.”

 

Campbell said the team would recruit “heavily” through the scheme in advance of the threshold being increased, but would have to “work it out from there”. He added: “It does feel like another mountain to climb.”

 

Government plans

 

The change to the threshold for those applying after April 2024 was announced by home secretary James Cleverly as part of a five-point plan to reduce migration. This will also see a reform of the Shortage Occupation List (SOL), which makes it easier for businesses to fill certain roles with overseas workers.

 

The Home Office said its intention is to “crack down on cut-price labour from overseas”, while encouraging employers to “look to British talent first and invest in their workforce”.

 

Horler said the move demonstrated that the government had “lost touch with what’s realistic”. She added: “You can’t just mandate that an industry pay higher salaries, because if the revenue and sales are not coming in, you can’t justify it.

 

“The hospitality industry has moved a long way from being low paid and long hours. The hourly pay rate today is a decent starting salary and, as we’ve always said, if you have the right work ethic and you’re ambitious, you can work your way up to a really well-paid job very easily and quickly, without needing years of qualifications.”

 

In October, data released by the Office for National Statistics showed vacancies in the accommodation and foodservice sectors had increased to 121,000, more than 30,000 above pre-pandemic levels.

 

Historically the SOL applied a 20% reduction to minimum salary requirements for roles the Migration Advisory Committee (MAC) deemed could be met by the domestic workforce.

 

The government has said the SOL will be replaced with an Immigration Salary List (ISL) in late spring, although it has not yet clarified what level of reduction this might bring.

 

As no hospitality roles are currently listed on the SOL and, given the government’s intention to reduce the number of occupations covered, it is unlikely any relief will be provided to the sector via this route. In March 2023, the MAC stated that vacancy rates in hospitality, while high compared to pre-pandemic levels, did not warrant inclusion on the SOL.

 

Advice for operators

 

Mandeep Khroud, immigration expert and senior associate at Irwin Mitchell, has advised clients worried about future recruitment to act now. She explained: “If you know in the next 12 months you are going to need to employ X number of general managers, for example, it’s best to employ them now under the lower rate and apply for a five-year skilled worker visa.”

 

Khroud said she knew of a large hospitality operator which had already decided it would not be financially viable to sponsor skilled worker visas under the new threshold and predicted there would be a “significant reduction” in their use.

 

UKHospitality chief executive Kate Nicholls said this would ultimately drain talent from a sector already grappling with challenges on multiple fronts.

 

She said: “The vast majority of hospitality jobs are filled by UK nationals, with just a quarter of the workforce filled by overseas workers living in the UK.

 

“The government’s decision to increase the minimum salary threshold for skilled worker migrants means that many hospitality businesses will struggle to recruit international talent, with ongoing labour shortages and the current economic climate already impacting venues of all sizes.

 

“Moreover, only a limited number of skilled worker visas have been allocated to hospitality roles, which will severely impact immigration into the sector and will certainly result in a loss of talent that brings essential skills and experience to help to make the UK’s hospitality experiences some of the best in the world.”

 

Julius Probst, European labour economist for Caterer.com, said that despite the change no dramatic increase in job vacancies rates should be anticipated in the short-term. Vacancy rates are currently on a downward trajectory in both accommodation and food service, with the labour market easing as the economy has weakened.

 

In the short-term, he anticipates this weakening will offset any increase in vacancy rates caused by the salary threshold increase. However, he said in the long-term it is possible the vacancy rate “might be structurally higher than it otherwise would have been”.

 

Operators on the likely effect of the rise

 

Madina Kazhimova (right), co-founder, Firebird restaurants

 

“The plans to tighten migrant entry requirements may trigger issues, especially for smaller companies with limited financial possibilities and stop them from recruiting employees from abroad. That could be detrimental to the industry as the London market at the moment cannot realistically satisfy companies’ needs in terms of skilled workers and employees.”

 

Huzefa Sajawal, founder director, Fatt Pundit and Capilungo restaurants

 

“The decision to raise the minimum salary threshold for visas carries profound implications for our sector, particularly concerning staffing and operational costs. In the short term, we foresee challenges in filling vital positions, given that the hospitality industry, especially after Brexit, depends on a global talent pool that may now find it more obstructive to secure work authorisation in the country. It may lead to a shortage of skilled workers, which is already a point of concern for many businesses within our industry.

 

“Moreover, this change could inadvertently escalate overall labour costs as employers will be compelled to increase wages to meet the requirements, affecting their budget allocations and potentially inflating the prices for end consumers.”

 

Stuart Procter, general manager, the Stafford London hotel

 

“It’s yet another kick for our industry and recruiting talent from Europe is once again going to be very hard.

 

“The most acute area of shortage across most properties is chefs at those levels where the starting point for salaries is around £26,000 to £34,000 and now another route to filling those vacancies has gone. “I’m fortunate to have three fabulous executive chefs who are super trainers, so we’re bringing in young apprentices and working hard to nurture and grow our own talent, but it’s not easy.”