Umbrella Companies | Concerns over affect of immigration cap

The REC is concerned that the government’s proposed immigration cap will lead to a greater skills shortage in certain sectors. However, this has annoyed some contractors who feel threatened by cheap labour from outside the EU.

Currently, just less than 8% of the UK working population holds non-British citizenship, according to the ONS, with the largest proportion, 660000, coming from India.

The coalition wants to reduce the number of immigrants entering the country from non EU states and yesterday they introduced a temporary limit of 24,100 non-EU migrants. A permanent cap will be introduced next April.

The new Home Secretary, Theresa May, said that the temporary cap will ensure that the number of working visas issued remains below last year’s levels and that further proposals will be implemented to help reduce the number of immigrants.

In the first three months of 2010, 6,685 people were granted tier-one visas. Multi-national companies who transfer staff internally will be exempt from the cap initially.

The Chief Executive of the REC, Kevin Green, pointed out that there were already severe skills shortages before the recession and in order for us to bounce back quickly we need skilled workers. There is an obvious need to train young people to fill these gaps but until they are trained the REC believes it will have an adverse affect on the recovery if the government imposes the immigration cap.

The REC has identified the hospitality industry as being one suffering from a serious shortage of skilled workers.

There are also concerns that a cap to reduce the number of foreign students could be devastating for the higher-education sector which relies on their fees.

Any measure could adversely affect umbrella companies, who many skilled immigrants chose to initially work through.

The Home Office is to announce a consultation over the permanent cap and this will include business leaders and universities.

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