As Prime Minister Sir Keir Starmer visits Brussels to face the EU’s demands on migration, the UK hospitality sector is approaching a critical juncture, about to be caught in a staffing crisis exacerbated by the increased salary threshold for skilled overseas workers that came into force in April this year.
According to Home Office figures, the impact is already visible, with overseas worker visa applications dropping by a third in July compared to the same period last year. The new Labour Government must urgently reverse this policy to protect an industry that heavily relies on migrant workers.
The Prime Minister recently assured businesses, saying, “I’m not going to chop your legs off by saying you can’t have the workers you need now.” Yet, despite these assurances, the Government has not taken action to address the salary threshold increase from earlier this year, leaving businesses deeply concerned about their futures.
This inaction is particularly frustrating given the UK’s post-Brexit immigration landscape. Stricter immigration policies, coupled with the raised salary threshold, are making it significantly harder for businesses to fill essential roles. Migrant workers and small businesses, who are widely acknowledged as the backbone of the hospitality sector, are indeed the most affected by such barriers.
This trend is alarming for the hospitality sector, where migrants make up 15 percent of the workforce nationally and a staggering 58 percent in London. The decision to maintain the higher salary threshold is putting enormous pressure on business owners, further straining hospitality businesses at a time when the sector is already struggling.
UKHospitality estimates that 95 percent of sponsored visas for chefs and managers in 2022 would not meet the new salary criteria that came into effect in 2024. This presents an unsustainable situation, especially for businesses already dealing with high staff turnover and tight margins.
Reversing the salary band increase would allow businesses to more easily attract overseas talent without the burden of unrealistic wage requirements.
While Labour remains committed to reducing net migration and promoting domestic skills, there simply isn’t enough local talent to fill these staffing gaps. Nor is there much demand from said local talent to take up these roles. As a result, the current immigration policies risk destabilising this vital industry.
The reality is that those in the hospitality sector simply cannot afford to universally raise wages to meet these high thresholds, leaving them in a persistent cycle of concern about their viability. If we did, it would be the consumers that face the costs.
Adding to the uncertainty is the lack of clarity from the Government. Minister for Migration and Citizenship Seema Malhotra has yet to provide clear direction on the future of the salary threshold, and confusion lingers around the potential implementation of a European youth mobility scheme.
The scheme itself presents a unique opportunity to alleviate recruitment challenges currently faced by UK businesses in key sectors, and address skill shortages in industries such as hospitality, which have struggled to fill positions post-Brexit.
But the scheme appears to be political a ‘hot potato’ the Government is unwilling to hold on to, resulting in EU officials being rightly frustrated and perplexed by the mixed messages.
The reaction to Starmer’s visit to Brussels, and the very suggestion of him considering some sort of freedom of movement, albeit much more limited, is yet another example of how politics continues to obstruct businesses from recruiting in a financially sustainable way.
Without immediate action to reverse the salary threshold increase and openness to some freedom of movement, the future of the UK hospitality sector looks bleak. Migrants are essential to the industry’s success, and Labour must reconsider its stance to ensure the sector’s survival. With the industry in limbo, decisive action is urgently needed.
