What does the government’s new immigration policy mean for merchants?

What does the government’s new immigration policy mean for merchants?
February 25, 2020 Adam Stead
~ read | In Hospitality
Priti Patel regards the camera in front of a shop

If you employ immigrants, the new immigration system has ramifications for your business. This blog will set out how you can react to the way in which the new policy will affect your business. 

What’s changing?

In February, the government announced, ‘we will … end free movement and not implement a route for lower-skilled workers’ to live and work in Britain. 

As of 1st of January 2021, to be eligible to apply to live permanently in the UK, an overseas citizen will need to secure 70 “points” as defined by the new system. Points are rewarded for different attributes that the UK immigration office regards as desirable. 

This is in addition to meeting “essential” requirements, which are that applicants speak English, and have a job offer from an employer prepared to sponsor them. Furthermore, that job needs to meet a minimum salary requirement and “skill level” of the work. These are traded off against each other, so, the more “skilled” the government deems a job to be, the lower the minimum salary threshold; and vice versa. The highest minimum salary bar is £25,600. 

The changes are not designed to affect people already in the UK, and EU migrants who are already employed and live here before 2021 do not need to meet the “points” requirements or the minimum salary threshold. However, they do need to apply to the EU resettlement scheme – and failure to do so could force them into the points-based application process.  

For your business, it means that you may see an acute shortage of part-time or casual labour in the coming years. This blog will cover how to manage that shortage among other things. 

How should I react to the changes?

There’s three things you should be doing. 

The first is to support employees who are affected by the new policies. To be clear, the policies are designed to affect new people trying to enter the UK, rather than people already here – but such processes are messy and it’s possible that you employ somebody who will discover new hurdles to remaining in the country legally. 

The second is to identify ways to replace the lack of new applicants for casual jobs. You probably know the proportion of your staff who come from the EU. As they churn, you may find you see fewer applicants from the EU immigrant cohort. It’s more difficult to come to the UK, take on casual work, and move on. You need to take action to plug that gap. 

The third is to identify labour-saving technology you can use to reduce your need for employees. As the labour you need begins to dry up, and new labour becomes more expensive, it can be worth thinking about labour-saving technology. The government has cited labour saving technology as one of the ways that merchants can react to the change. 

To be clear, the shortages of casual labour in hospitality and retail which could arise from this are expected to be acute. This could be a big deal for you and your business, and you need to think critically about how to solve it. 

The Labour Gap

Soon, you may find that you’re receiving fewer applications for part time or casual work. For immigrants arriving after January 2021, the system is not really set up to support people coming into Britain and doing casual work. Rather, it supports people with well-paid full-time offers.

You probably have a sense of what proportion of your frontline casual employees are migrants from the EU, and you know what your level of employee “churn” is – that should provide you with a rough guess of the level of shortage you could face. As casual work becomes available in your business, you’ll need to find British citizens to fill them, or you’ll need to structure your business in such a way that such roles are eliminated. 

If you struggle to attract British talent, you need to identify whether your jobs are failing to appeal to Brits, or whether there’s a problem around targeting and communication. 

Paying More

The economic consequences of a labour shortage could be quite straightforward – as labour becomes scarcer, it could be that we see the price of labour go up. In other words, in order to attract applicants, you may wish to consider setting your pay higher. This is the most obvious way in which you can get more applicants for your roles.

Obviously, this is an expensive approach. But this will be the big effect of the new policy. It is likely that upward salary pressure on labour will push prices up in shops and pubs – unless merchants can find a way to employ less labour. 

Reducing Churn 

One approach is to reduce your reliance on short-term work altogether. Instead of targeting people who want casual work for a short-period, you could target people who are interested in making a career out of that role.

As people stay in roles for longer, it would mean that you have to apply less effort to finding additional labour. However, this comes with trade-offs, such as the additional cost of full-time salaried professionals versus casual work. 

Hiring Proactively

It’s just as likely that the kind of person you think might be interested are simply not hearing about your roles. “Staff Wanted!” – it’s not enough. It reaches the people who are near your shop and use it – which is likely to be people who frequent city centres all the time. 

Think about your target market. If you’re looking for casual workers, until now, the flow of young EU people looking to get established living and working in London has fed your recruitment strategy. As you and other businesses start to look for scarcer home-grown demand for casual work, referrals are a valuable source of employees. People tend to know other people like themselves, and, where you have one fantastic employee, you might wish to deputise them to recruit their friends on your behalf. This is especially true of young people and students. 

Reducing Labour Friction

There is a surprising amount of friction in application processes. Part of the appeal of casual labour is that it should be easy to come by – so you need to make it easy.

“Friction” is anything that prevents you from taking an action easily, like getting hired. For example, you go to apply in-store and get told you need to apply online. You then go on the website and it requires you to enter your entire CV line by line into the only way the form can accept the information. At this point, wouldn’t you go somewhere else? 

That’s not just true of application processes, but of the process for adjusting the amount of work that staff takes on. Do you use staff management software which enables staff to quickly take on and swap shifts? How much hassle would that involve from your side? 

 

Where can I employ labour-saving technology?

There are a large number of labour-saving technologies on the market, and this is an opportunity to introduce them to your business. 

Such technologies are generally cheaper than employing people, and in some cases, such as the McDonald’s Self-Ordering checkout, they have been shown to increase the volumes of goods that people buy and improve customer journeys where customers don’t necessarily want a social experience with their purchase. 

Front-End

By far the most obvious labour-saving tech is what’s called a customer facing display. These started out as ways to summarise orders to customers as they ordered via a person – check out our dual bracket tablet stand to give you the idea – but now we see discrete tills which are set-up explicitly and solely for the purpose of ordering. 

This can be a standing wall, like the McDonald’s self-ordering kiosk, or it can be an on-table solution. If, for example, you’re a sit-down restaurant with the right kind of environment, it would not be difficult to set up an iPad-based menu on every table, on which customers can browse the menu and order at their own pace. 

This is a great choice for small-plate eating, like tapas, or sushi – and permanent availability of a menu and the ability to explore at one’s own pace has been shown to increase the number of orders. It means that you will need fewer front-of-house staff as the orders are routed through by the customers and all that’s required is to show the customer to their seats and bring them food. 

Self-checkouts are generally further ahead in hospitality than in retail, because retail brings with it challenges around theft. Enterprise self-checkout systems have been brought into major UK supermarkets and some pioneering outlets such as Decathlon. If you’re a small retailer, there’s not (yet) a mass market solution – but you can adapt some of the hospitality systems for a simple retail operation if you do want self-checkouts. 

Back-End 

People often think of automation as something which eliminates individual jobs – e.g. there was a driver, and subsequently there was a self-driving car. That’s very rarely how automation works. Rather, if you imagine a total list of things which you need to do in order for your business to work, one piece of technology is likely to simplify some bits, and eliminate other random bits, which don’t cohere into a single full “job”. You’ll find that your total need for labour is lower, without anybody’s job being “replaced”. 

If you’re not using modern cloud-based POS software, you will be spending more on labour than you need to be. Inventory management will half the time you spend counting stock, it will slash the time you spend organising deliveries and managing those deliveries.

But the other person you should aim to employ less is yourself. As a business owner, you will also be spending more time than you need to doing excessive work which a point-of-sale could do. The “reporting” functions will enable you to perceive what you need to do with your business clearly. Clock-in clock-out staff management functions will enable you to ensure that your staff are paid the correct amount without you needing to worry about it.

This, in turn, will enable you to spend your time thinking about the more important things in your business – like planning for the future, or making decisions. 

 

Supporting affected employees 

Finally, it’s important to support employees who are affected by the changes. 

Fortunately, most employees – including EU immigrants – will not need support. Remember, the new rules are not designed to target employees who are already in the country. 

You can offer flexibility and empathy, provide documentation when required, and ensure your employees are applying for settled or pre-settled status if they’re a European migrant who’s already here. For new immigrants or non-EU immigrants, the criteria for entry are higher, and where appropriate, you may need to take specific actions in order to ensure they meet the requirements. 

Retaining casual EU employees  

If you have an employee from the EU, EEA, or Switzerland, who arrived before December 2020, they can apply to the EU settlement scheme. They need to apply even if they were born in the UK or married to a Brit if they don’t have British citizenship. They have until June 2021 to apply. 

What that means

Upon application, if they have five years’ continuous residence in the UK and/or a few less common circumstances which bolster their credentials, they are likely to be approved for “settled status”. Then, they can stay indefinitely, and apply for citizenship if they like. If they have children, those children will be UK citizens. The “points-based” system won’t kick in until January, and the government has said that when you apply could affect how you’re treated. So, the sooner the better.

If they achieve “pre-settled status”, they are still eligible to work, use the NHS, enrol in education, access pensions, and travel for up to two years at a time without losing their “pre-settled” status. Children born to pre-settled immigrants would be “pre-settled” rather than automatically given UK citizenship. To achieve “pre-settled status” status, you need to have lived in the UK at least one day of the last 6 months, and have a National Insurance number. Anybody working under your employ who is already here is very likely to be eligible for pre-settled status. 

The minimum salary threshold of £25,600 will not apply to either pre-settled or settled immigrants. 

How can I support them as an employer?

Your details maybe given to the government as their employer as part of their application, and it could be that you have to confirm details that they have submitted. Ensure that you do this promptly and accurately. You can also ensure that they’re applying – if they simply wait out the clock, they may find that they need to go through the newer stringent process with new arrivals. 

 

Retaining Non-EU Immigrant Employees 

Employees from outside the EU do not have access to the EU settlement scheme. 

The rules under which someone from outside the EU might have entered the UK are various, but pre-existing arrangements will remain in place for those who entered the country before the new rules come into effect. That is, if a work VISA has been granted, or leave to remain permanently has been granted, that will not change. 

Attracting New Immigrant Employees

From January 2021, EU and Worldwide immigrant applicants will be treated the same way by the Home Office. That’s the new “points-based” system. 

The system is not really designed to support people looking for casual labour, which is likely to be your acute labour need. However, if you’re looking to employ someone full time under the new system, they need to get 70 “points” in addition to meeting the minimum requirements.

The essential requirements are:

1)An offer of a job by an approved sponsor

2) a job at an appropriate skill level

3) speaks english at the required level

You will need to undergo the process to become an approved sponsor and then you will need to offer a job which pays more than £25,600 in order to retain an overseas immigrant after 2021, in addition to paying the taxes associated with employing immigrants. Those steps are complex and outside the scope of this article, but can be found here.

 

How will this change things? 

Until now, anybody in Europe could look for work in the UK. Now, radically fewer people will be able to. Large  This change therefore looks like it could be substantial. It’s not that the obstacles to employing people from Europe are now insurmountable; or that it would be unthinkable to offer a waiter you have met abroad £25,600. It’s that the possibility of un-organised arrival of large numbers of people has ended. Today, one can offer a short-term casual job advert and expect a certain number of applicants; tomorrow, depending on your sector, your number of applicants will be lower. This will result in upward wage pressure, which in turn, will squeeze margins in industries which already have low margins. 

In the policy document which accompanies this change, the government spells out that it aims to eliminate “lower skilled” immigration altogether. For employers, it says, ‘it is important that employers move away from a reliance on the UK’s immigration system as an alternative to investment in staff retention, productivity, and wider investment in technology and automation.’

It’s possible to find this flippant. For the government to create problems, be asked for solutions, and simply say, “invest in technology” – they have found a platitude of remarkable utility, which you can expect to keep hearing. But it happens that technology can do a lot to mitigate the challenges here. If you want to keep your costs down, you need to invest in technology. And if you’re not sure where to start, you can start by calling StoreKit. 

 

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What does the government’s new immigration policy mean for merchants?
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