‘Frustrated’ businesses seek staff abroad as Britons abandon work


Britons Work

Businesses have become “frustrated” with trying to hire British workers and are increasingly looking abroad to fill vacancies, the National Institute of Economic and Social Research (NIESR) has warned.

The number of firms registering to become sponsors to hire abroad has doubled in the past two years as hundreds of thousands of Britons abandon work.

More than 9 million people of working age have dropped out of the jobs market. The economically inactive population has increased by 884,000 since before the pandemic.

Big jumps in wages have not persuaded enough of them to take one of the more than 900,000 vacancies on offer.

Instead employers have been forced to look overseas for the vital staff they need, said Max Mosley, economist at the National Institute of Economic and Social Research.

He said: “International workers are basically propping up the labour market in many ways.

“It is very challenging for employers – the kind of tools they have at their disposal, to raise wages to try to compete, does not work any more.”

More than 5 million people are now on out-of-work benefits, up from 3.5 million back in 2015. The Office for National Statistics (ONS) has found 2.8 million who say they are neither in work nor looking for a job because of long-term sickness.

Claimants are typically spending longer on benefits, rather than snapping up the jobs on offer, according to NIESR, despite the 6.5pc increase in average pay in the year to November.

Home Office figures show the number of new work visas offered last year jumped to 169,000, up 50pc on pre-Covid levels.

The number of businesses registered to sponsor visas has more than doubled since 2021 to 76,310, as bosses struggle to find workers among those already in the UK.

Mr Mosley said: “That is why you might see them look towards international workers. Previously only around 30,000 companies had been registered.”

The sudden jump in businesses registering came “right at the point the supply of domestic workers got really tight, so over the pandemic in 2021”, he said, “reflecting firms potentially becoming frustrated”.

It comes after David Miles, an executive member of the Office for Budget Responsibility (OBR), said the Government must not rely on immigration to boost the economy and reduce Britain’s debts.

He warned that migration is not a solution to the country’s long-term financial problems, advising Rishi Sunak that slashing the benefits bill and getting more people into work instead would be “unambiguously beneficial” for the economy.

Net migration into the UK hit 672,000 in the 12 months to June 2023, according to the ONS, with the population expected to hit 70 million by the end of 2026.

In an effort to reduce the flow of migrants, the Government is raising the salary threshold for skilled workers moving to the UK.

The baseline minimum salary for sponsoring a visa is rising from £26,200 to £38,700 in April, though there are exemptions for health and care workers, and teachers.

Jeremy Hunt is under pressure to cut taxes to make work more attractive.

James Reed, chief executive of the recruiter Reed Jobs, said the Chancellor should unfreeze income tax thresholds to “make work pay” and get people back into the labour force.

Mr Reed said: “There are a lot of reasons why someone who wasn’t working might think of returning to work at the moment, and making work pay is a really important part of that.”

Income tax thresholds are normally raised in line with inflation, but the bands have been frozen since April 2022. This was first announced by Rishi Sunak when he was Chancellor in 2021 and then was extended by Chancellor Jeremy Hunt until 2028.

Soaring pay amid the cost of living crisis means more people are getting pulled into higher tax bands, in a stealth tax known as fiscal drag.

Mr Reed said: “We have been through a period of quite severe inflation. The people who are caught in those thresholds now are quite different to what was originally planned.

“The more people who are working who could be made free of income tax, the better, because it encourages work. That has been going in the opposite direction.”

By 2029, an extra 4 million people will be paying income tax compared to in 2023, according to the OBR. A further 3 million people will have moved into the higher rate tax band.

Jeremy Hunt’s National Insurance cut, which kicked in in January, has helped to increase people’s take-home pay, but the Chancellor should go further and readjust the tax bands to account for inflation, Mr Reed said.

“Anything that can give people some more of their hard-earned cash would be welcomed and the thresholds are a good place to start,” he said.

A Treasury spokesman said: “After borrowing £400bn to protect lives and livelihoods throughout the pandemic and Putin’s energy shock, we had to take some difficult decisions to help pay it back.

“However, with inflation more than halved and because of the progress we have made, we have cut taxes for hard working people, saving the average employee £450 a year, and our tax burden remains lower than any major European economy.”

A Department for Work and Pensions spokesman said: “We are clear that migration is not the long-term solution to growing the economy.

“Our welfare reforms are expected to reduce the number of people who would otherwise have been placed on the highest tier of health benefits by 370,000, and our Back to Work Plan will help over a million people start and stay in work.”