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SMEs call for UK to open borders to fill labour shortages

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Over half (52%) of small and medium-sized businesses (SMEs) are in favour of opening the UK’s doors to overseas workers to plug vacancies.

New data from small business lender Iwoca found SMEs are bearing the brunt of labour shortages and want government to expand on working visas to attract staff.

One in two (48%) blamed Brexit for staff shortages, as the number of EU immigrants coming to the UK annually dropped by 54% to 151,000 between 2019 and 2022.

Overall net migration however hit a record high of 606,000 in 2022, according to the Office for National Statistics (ONS), but this has mainly been driven by non-EU workers.

SMEs had a total of 459,000 vacancies in May 2023, increasing by a quarter compared with the same period in 2019.


More on overseas workers:

Post-Brexit restrictions failing to plug low skilled vacancy gap

Skills gap: UK needs one million migrants per year

Employers face a growing rift in government on hiring talent from abroad

Work immigrations changes HR should be aware of


Micro businesses (companies with employees of 10 or fewer) have also been hit hard, reporting 143,000 vacancies last month.

In his budget speech in March 2023, chancellor Jeremy Hunt said Brexit represented a decision to change the UK’s economic model from “one based on unlimited low-skill migration to one based on high wages and high skills”.

Speaking to HR magazine, Mark Di-Toro, director at Iwoca said SMEs are facing increasing challenges. 

He said: “Small and medium-sized businesses are facing huge pressures right now.

“Soaring vacancies, the inability to raise wages, mixed with staff shortages all mean one of the most important parts of the economy is battling against huge headwinds.

“The implications for HR teams are clear: recruitment is becoming harder and each role is more and more competitive.

“When it comes to bringing international talent to the UK, HR teams can access support from the UK Visa and Immigration service, and register with their dedicated help desk for businesses.”

Wages are also taking a hit as SMEs struggle with high inflation rates.

Just 13% of SME owners increased their staff’s wages between summer 2022 and the end of the year, according to Iwoca, compared with 85% of businesses that did not increase their wage bill.

Speaking to HR magazine, Luke Hicks, regional sales director at HR software provider Cornerstone, said given the economic uncertainty for many SMEs, it makes sense for working visas to increase.

He said: “With pressure on costs and demands for more flexible and contingent work on both sides of the fence I believe working visas would provide a broader talent pool for SMEs, helping to fill critical roles more easily and offering much needed flexibility for strained employers in the current economic headwinds.”

Download HR magazine’s HR Focus podcast episode on SME talent here. 

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