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Analysis: Labour pains grow with new salary rules

Chloe RyanBy Chloe RyanApril 29, 20247 Mins Read
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The government’s decision to raise minimum salaries for overseas skilled labour to £38,700 has rocked the industry. Michael Barker reports

It sometimes feel like, for poultry producers, a new labour crisis isn’t far away. Whether it’s securing enough seasonal worker visas to meet farmers’ needs, tackling rapid National Minimum Wage increases, or attracting Brits into an unfashionable industry, there’s always something complicated to think about.

Now, the government has thrown a new spanner into the works in the shape of swingeing increases in immigrant salaries, which farming industry leaders fear will have a highly damaging impact across rural businesses.

Home Secretary James Cleverly announced in December that a shakeup of the immigration system related to the Skilled Worker route would kick in from April 2024. Fundamentally, it sees minimum salaries for overseas labour raised from £26,200 to £38,700 – a 48% increase.

In a blow to the farming industry, agriculture was not included on the original Shortage Occupation List (SOL) – which is now known as the Immigration Salary List – and in a Migration Advisory Review in October last year the government again recommended against adding it. The review concluded: “We suggest stakeholders could strengthen the case for [agriculture] being added to the SOL in future reviews by providing further evidence on the long-term strategy to address training and wages in this occupation.”

Farming bodies have long argued that their industry should be deemed among the most essential for the fabric of society, alongside the likes of medicine and social care. Richard Griffiths, chief executive of the British Poultry Council, stresses that a secure workforce is key to a sustainable food system – one that feeds people, tackles inequalities with quality and affordable food, and ensures a liveable climate for all. And he says workers in the poultry meat supply chain play a vital role in driving these outcomes, noting the industry produces half the meat the nation eats.

Speaking to Poultry Business, Griffiths argued that securing a pipeline of domestic talent is imperative to securing the industry’s long-term future, and pointed out that producers are doing all they can by means of a raft of initiatives from boosting skills programmes to investing in automation.

However, none of that overpowers the essential need for overseas labour. “This insistence on putting ideology before outcomes means supply chains risk being hampered rather than optimised,” he says. “Instead of government looking at inputs alone (i.e. who is working in British poultry), maybe we should all be looking at what outcomes we want British poultry to achieve, then working together to allocate investment and resource accordingly.”

On the wider theme of industry recruitment, Griffiths says the BPC has welcomed previous emphasis on recruiting workers from overseas to support seasonal demand. “While there are improvements to be made to the Poultry Visa Scheme to ensure it is cost effective and ultimately fit for purpose, it is proof that good things can happen when industry and government work together,” he says, adding that the BPC would like to see the visa scheme extended beyond 2024 while poultry meat businesses continue to do all they can to invest in a domestic workforce.

Across the food sector, industry bodies have been having their say about the new salary rules, and the British Meat Processors Association (BMPA) in particular has pulled no punches. It described a “sense of desperation” among leading meat companies that rely on skilled overseas staff, stating that the government did not have “a proper understanding of the damage it will cause.”

The organisation has written to both Cleverly and minister for immigration Tom Pursglove to outline the scale of the problem and request a meeting so meat suppliers can “lay out the damaging consequences of this policy, including food inflation, withdrawal of investment, weakened domestic food security and lower economic growth.”

One of the major bones of contention surrounds the fact that there will now, in effect, be two different pay rates for the same role, with overseas workers earning more than their UK counterparts. That will leave businesses who need to fill certain roles with overseas workers having to either increase salaries across the board or, as the BMPA says is already happening, “stagnate their businesses due to the inability to source enough workers.”

“These recent changes to the skilled worker visa route will have a catastrophic effect on the ability of businesses to source labour and ultimately on their viability and competitiveness,” BMPA chief executive Nick Allen wrote in his letter to Cleverly. “Businesses have already budgeted for the new National Minimum Wage increase, and plan for ongoing inflationary rises. But an increase of 48% to the minimum salary threshold will curtail their ability to utilise the skilled worker visa route for butchers and will not support the challenges they face within the food production industry.”

The government’s move is certainly resulting in a packed mailbag for Cleverly, who has also been on the receiving end of a strongly worded letter from Scotland Food & Drink (SF&D). The body expressed deep concern over a strategy to reduce net UK migration by increasing salary thresholds for skilled workers, which it said is “the wrong approach and ignores the essential role that overseas workers play in our industry, and our society”.

“We need to secure a resilient, productive food supply chain operating across the UK,” the organisation wrote. “This requires a large, diverse workforce. Raising the minimum salary threshold for skilled workers from overseas at a time of existing labour shortages will increase the threat to the stability of the whole supply chain, from primary production through to manufacturers, retail, and hospitality providers.”

SF&D highlighted a range of national and international reports, facts and figures to back its argument. It cited its own industry survey from 2023, in which 92% of respondents said they are currently unable to find or attract enough suitable employees to meet their operational needs, leading many to explore recruiting skilled workers from overseas.

John Shropshire’s independent review into Labour Shortages in the Food Supply Chain last year concluded that “the domestic workforce is not large enough and does not have the required skills to make the English food supply chain self-sufficient in terms of labour supply,” SF&D noted, adding that the same situation applies in Scotland.

SF&D highlighted that the International Monetary Fund has written of the benefits of a positive approach to immigration, highlighting that an increase in immigration flows to advanced economies in the north seems desirable, as it would reduce population decline, keep the size of the labour force from shrinking, improve age dependency ratios and produce positive fiscal gains.

“Raising the skilled worker salary threshold to £38,700 will make the new minimum level higher than many of the vacant roles across the industry,” SF&D chief executive Iain Baxter said, urging a rethink. “This and the other changes planned will make it harder for businesses to recruit from overseas and for workers who might have considered applying. The impact will be worsened labour shortages, reduced profitability, higher prices and disruptions along the supply chain.”

Between the ongoing criticism of its new border rules and the new immigration salary requirements, it’s safe to say the government won’t be top of the farming industry’s Christmas card list unless some compromises are found.

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Chloe Ryan

Editor of Poultry Business, Chloe has spent the past decade writing about the food industry from farming, through manufacturing, retail and foodservice. When not working, dog walking and reading biographies are her favourite hobbies.

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