As the UK’s major political parties continue to grapple with the issue of immigration policy, the potential impact on small and medium-sized enterprises (SMEs) is barely mentioned – but for business owners, it’s becoming increasingly worrying.
With restrictions that could limit access to skilled workers, particularly in sectors such as technology, healthcare and social care, SMEs may find themselves at a distinct disadvantage in an already precarious job market.
BizSpace, which provides flexible workspaces to hundreds of SMEs across a wide range of industries in the UK – warns the need for agility in hiring practices and the importance of a diverse talent pool must not be underestimated. They are emphasising how the proposed changes to immigration policy could stifle growth and innovation, highlighting the urgent need for a balanced approach that supports the diverse needs of SMEs while still ensuring a fair immigration system:
At BizSpace, we support hundreds of different SMEs, and we see first-hand every day how crucial adaptability is for businesses in this challenging landscape. With the Home Secretary Shabana Mahmood’s recent announcement regarding proposed immigration changes, it’s clear that these modifications could have significant implications for British SMEs across various sectors, many of which are already navigating a precarious job market.
The plan to double the qualifying period for permanent settlement from five to ten years could deter skilled workers who might otherwise see the UK as a viable destination. This extended timeline poses a risk to sectors like technology, healthcare, and engineering, where the competition for talent is fierce. Companies in these fields rely on a steady influx of skilled professionals to drive innovation and maintain operational efficiency. Stricter immigration policies such as those outlined by Mahmood could result in lost opportunities for SMEs who simply cannot afford to wait a decade for their employees to gain permanent residency.
The increased language requirements, raising the standard from B1 to B2, will further complicate the hiring landscape. Many SMEs – especially those requiring customer-facing roles – benefit from diverse teams that reflect the communities they serve. In imposing higher language standards, the government risks excluding talented individuals who could contribute significantly to businesses, but don’t yet meet these criteria. Such limitations could shrink the talent pool available to SMEs, forcing them to compromise on the diversity and skill sets that drive creativity and adaptability.
The decision to end overseas recruitment for social care workers, as highlighted in Mahmood’s speech, could have particularly dire consequences for a sector already strained to breaking point. Many SMEs in social care and adjacent industries depend heavily on international staff to fill essential roles, but this policy could exacerbate staffing shortages. The impact would not only affect service delivery but could also lead to increased workloads for existing employees, resulting in burnout and decreased job satisfaction, thus making it even harder for SMEs to attract and retain talent in an already competitive environment.
In the current precarious state of the UK job market, with rising inflation and economic uncertainty causing many businesses to hesitate in their hiring practices, the combination of stringent immigration policies and a challenging economic landscape could force SMEs to reassess their growth strategies. To build agility, businesses can adopt various measures such as embracing technology for remote collaboration, cross-training employees to handle multiple roles and implementing flexible work schedules that allow for rapid adaptation to changing demands. SMEs can also explore partnerships and collaborations to share resources and expertise, enabling them to respond more effectively to market shifts.
However, these strategies may not fully compensate for the talent shortages exacerbated by the new immigration restrictions. Without access to a diverse and skilled workforce, SMEs will struggle to innovate and grow, hindering their ability to compete in a global market. If SMEs are unable to secure the talent they need, innovation and growth will likely stagnate, further threatening the health of the UK economy.
As Mahmood herself noted, the Labour government must understand why many people feel the country doesn’t work for them: part of that understanding must come from recognising the vital role that skilled migrants play in supporting our economy. I strongly encourage business leaders and policymakers to advocate for a balanced approach that supports the diverse needs of SMEs while ensuring that our immigration system remains fair and effective. We need to work collaboratively to ensure that the UK remains a welcoming place for talent capable of contributing to a vibrant economy that benefits everyone.
