British firms giving up on British workers

More businesses looking to hire abroad despite soaring numbers on benefits

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 has said.

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 nine 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 NIESR. He said: “International workers are basically propping up the labour market. 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 five million people are on out-of-work benefits, up from 3.5 million in 2015. The Office for National Statistics 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, according to NIESR, despite the 6.5 per cent 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 50 per cent 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 jump in businesses registering came “right at the point the supply of domestic workers got really tight, so over the pandemic in 2021,” Mr Mosley said, “reflecting firms potentially becoming frustrated”. It comes after David Miles, an executive member of the Office for Budget Responsibility, said the Government must not rely on immigration to boost the economy and reduce Britain’s debts. He advised Rishi Sunak that slashing the benefits bill and getting more people into work instead would be “unambiguously beneficial”.

Net migration 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 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 Mr Sunak when he was chancellor in 2021 and then extended by Mr Hunt until 2028.

Pay increases during the cost of living crisis mean more people are getting pulled into higher tax bands.

Mr Reed said: “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.”

A government spokesman said: “We are clear that migration is not the longterm 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.”