The UK government is recommended to allow start-ups to employ workers from outside Europe in developer and cyber security roles without trying to fill those roles domestically.
The UK is considering relaxing the rules under which IT-related roles can be offered to foreign workers.
The UK Migration Advisory Committee (MAC) is recommending that the government eases regulations on hiring non-European data scientists, senior developers, cyber security specialists and product managers. The MAC is an independent body that advises government on migration issues.
Rules would be loosened so employers no longer have to demonstrate they have tried to fill the job domestically before recruiting workers from outside the European Economic Area (EEA). Currently employers must prove they have advertised a job in the UK for 28 days and were unable to find a suitable worker.
However, the MAC recommends that only start-up companies should be able to recruit from abroad in this fashion, stating it failed to receive much evidence from large tech firms that they are suffering from a skills shortage.
"Any significant shortages within the sector, on the basis of the evidence we received, seem presently to mainly be confined to firms at the start-up/scale-up end," the report states, adding that start-ups lack the resources that larger firms use to recruit foreign workers.
"Given the nature of the industry, remuneration is often determined differently in start-ups: a lower basic wage will be offered but with a share of equity (in the hope of future success). Start-ups have therefore been losing out to bigger IT companies who can compete on basic salary."
The MAC was persuaded of the existence of a skills shortage after meeting small tech firms, rather than by written evidence, which the report said failed to provide compelling proof. For example, of more than 850 members of employer body techUK, only 33 companies responded to questions about whether they had difficulty filling "digital technology roles" - nine experienced no shortages, 18 had suffered shortages and six gave verbal feedback.
The MAC defines scale-up companies as "enterprises that experience over 20 percent more growth in employees or in turnover each year over a three-year period starting from 10 or more employees". However, it admits this definition might be hard to apply and suggests a simpler assessment based on turnover or employment might be preferable when enforcing the restriction.
The senior staff shortage
Start-ups argued they are struggling to recruit experienced staff who could train others and lead teams.
For that reason, the MAC recommends that the only individuals from outside the EEA with a minimum of five years' relevant experience and who have led a team should be eligible to fill UK roles without the Resident Labour Market Test checks.
"Employers estimated that it would take five to 10 years to develop enough UK workers with sufficient experience to fill these roles. If having relevant experience is the key factor in all these jobs then there is no short cut to the acquisition of this," according to the report.
Large offshoring firms such as TCS and Infosys should also not be able to take advantage of this route to employ foreign workers in the UK, the report said. It proposed they continue to bring in workers using the intra-company transfers (ICTs) route, which is both more costly and imposes a higher burden on the employer, as well as allowing for shorter periods of employment.
In the year to September 2014, about 30,000 non-EEA workers were employed in graduate level IT-related occupations in the UK, mostly via ICTs.
"The vast majority of IT workers come into the UK under the intra-company transfer route, where different, and arguably less favourable, conditions apply pre- and post-entry, and where there is no route to settlement in the UK," states the report.
"Our concern is that too liberal a description of the roles that are held to be in shortage could encourage large employers to switch staff presently being brought in under the intra-company transfer route to staff using the shortage route. Indeed some partners readily admitted the attractiveness of doing so."
The report accepts the job titles affected by the rule change are quite broad and attempts to specify the nature of each role:
- Product manager - someone who has oversight of the design and delivery of the product.
- Data scientist - someone who carries out analysis of big data sources: this covers other roles such as data engineer, big data specialist, data analyst, big data consultant.
- Senior developer - someone who can lead a team of developers: this encompasses other developers with skills in areas such as iOS, Andoid, Java and Drupal, as well as front-end and back-end developers.
- Cyber security specialist - someone who applies security measures to ensure the confidentiality, integrity and availability of data: this includes other roles such as security architect, information assurance consultant, security operational analyst and cyber security consultant.
The report says these titles are necessarily open to interpretation because "the digital technology area is fast moving and demand for skills can change at very short notice".
Not everyone the MAC spoke to agreed there is a digital skills shortage. The Association of Independent Professionals and the Self Employed said many jobs could be filled by workers on a contract basis, rather than by permanent employees.
"They considered that employers were not making full use of the existing Resident Labour Market test route to recruit from outside the EEA, nor were they drawing on existing skills."
The MAC report also questions some of the trends that appear to indicate a skills shortage, such as pay for Java developers rising as high as £55,000, as individuals chose careers as contractors over a company employee.
"It does beg the question to what extent are shortages actually the result of employers' reluctance to pay the higher wages commanded by contractors; and the extent to which they wish to avoid paying this by recruiting more directly employed staff," it said.
The MAC report is now with the UK government, which should make a decision on whether to accept the recommendations to add the roles to the Shortage Occupation List shortly.
Antony Walker, deputy CEO of techUK, said if the recommendations were accepted, they would play a role in "helping tech and digital start-ups and scale-ups grow more quickly, in turn creating more jobs and growth for the UK".