Are UK companies paying up to £100,000 in extra incentives to retain EU workers?

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Shocking new research has revealed that nearly 60% UK companies have paid up to £100,000 since Brexit in extra incentives for EU workers including pay rises, extra bonuses and even private schooling fees, in a desperate attempt to retain skills and labour from the EU which they heavily rely on.

According to latest ONS figures, net long term migration to the UK from the EU was 101,000 last year the lowest level since the year ending March 2013. Independent think tank, Global Future claims the fall in immigration since Brexit is already costing the UK more than £1bn a year.

One in five small businesses now rely on skills and labour from the EU, while organisations across all sectors have long been restricted from hiring outside the EU due to the Tier 2 visa cap– which will soon exclude NHS staff – all of which has led to a major shortage in skills across multiple UK industries.

This latest research by immigration law firm, Migrate UK, found that out of the 1,000 HR directors polled, 66% have struggled to find sufficient skills since the Brexit referendum, particularly within the banking (86%), finance (83%) and IT (79%) sectors.

Migrate UK’s study involved organisations who currently employ over 250 staff in the UK and was carried out the same time the Government unveiled its new, and much needed, EU Settlement process and planned residency rules to help EU citizens remain in the UK post Brexit.

Skills depleting 

More than a third (39%) of the organisations questioned said they had already lost EU workers because they are either returning home or leaving to work in another European country with Germany, Ireland, Sweden, Italy and France the top five most popular relocation destinations.

A combined 67% of HR directors reported that an uncertain future and unknown immigration legal requirements after an EU exit were the main reasons why workers were leaving the UK. 18% said their workers feel unwanted and 14% were being enticed away by more attractive employment packages overseas.

Incentivising workers to stay

To retain skills from the EU and compete against overseas rivals, companies have introduced the following perks and benefits: –

  • Nearly half (28%) of the 59% have given extra bonus payments and increased EU worker salaries since June 2016.
  • A third (19%) have introduced new medical insurance schemes
  • 22% now pay for EU worker accommodation, have increased holiday allowance and introduced company car schemes.
  • 12% pick up the bill for their EU workers’ national Permanent Residence(PR) and British Nationality Home Office fees, which cost £65 per person for EU PR applications and over £1,300 per person for British Naturalisation
  • 7% even pay to privately educate EU workers’ children

Costing companies dearly

The research found that a third (19%) have paid between £50,000 and £100,000 in extra benefits in the last two years. Over a third (20%) have paid between £20,000 and £50,000. 16% between £5,000 and £20,000 and 1% have even paid over £100,000.

Recruiting non-EU workers to fill gaps

Despite the current cap restriction on Tier 2 visa non-EU workers, the research also reveals that more than a third (37%) of the 1,000 UK organisations polled have resorted to hiring non-EU workers where EU skills are unobtainable.

Nearly one in three have either acquired a sponsor licence or applied for one to enable them to recruit outside the EU, costing them an additional £1476 for a four-year licence plus thousands in skills charges such as NHS charges, Certificate of Sponsorship and residence permit or visa fees.

Jonathan Beech, Managing Director at Migrate UK said: “Our research found that 24% of employers are affected by the Home Office’s tier 2 visa cap on non-EU workers.  Many are experiencing the knock-on effect of this cap, together with EU workers leaving Britain due to an uncertain future. The Government’s move to scrap the NHS Tier 2 visa cap is a good one as this should help free up the immigration cap in other sectors but we also need to ensure that skills from the EU remain in the UK which, as our research highlights, many companies heavily rely on to succeed.

“The Government’s recently proposed EU Settlement Scheme, granting settle status to EU citizens who have lived continuously in Britain for five years, will certainly help to stabilise the skills situation but, after two years of uncertainty, the Government needs to give some form of guarantee that the status of EU workers in the UK is legally binding and safeguarded against any threat of change in the future, otherwise EU workers will just continue to leave.

“Despite the Government’s recent proposed changes to the UK’s immigration rules, companies should have a sponsor licence in place as it’s likely organisations will need this in the future if EU citizens are brought under a sponsorship scheme.”

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