Shortages in construction and hospitality: The MAC’s interim review

The Migration Advisory Committee (MAC) has concluded an interim review of shortages across the construction and hospitality sectors with a report published on 15 March. This arrived following the government’s request for an expedited report on these specific key sectors, which it said should coincide with the Budget and precedes the MAC’s broader review of shortages, due for completion by June 2023. We reported on the MAC’s full review of the SoL on 1 March, and evidence for that commission must be submitted by 26 May.

The MAC’s review of the Shortage Occupation List (SoL)

The SoL is the official list of occupations assessed by the MAC to be in shortage in the UK. Crucially, not all occupations where shortages exist are on the SoL, but only those in which the shortage is "sensibly" addressed through the recruitment of overseas workers.

Where an occupation is on the SoL, visa application fees are reduced by 25-35%. Employers also benefit from a lower salary threshold – the higher of £20,960 or the going rate for the role compared with £26,200 for other applications (from 12 April). Currently, the going rate is reduced by 20% where a role is on the SoL, but the MAC will be recommending scrapping reductions to any going rates so as to avoid undercutting. 

This recommendation adds a further parameter for both the interim and full SoL reviews: only occupations with a going rate of less than £26,200 will be considered. Where an occupation has a going rate of that amount or more, no salary discount will apply. The material benefit of the SoL will be lost for those roles and, the MAC says, the SoL will therefore not be an answer to shortages in those fields.

The Construction and Hospitality Shortage Review is based on the evidence the MAC received and analysed during the narrow window they had to publish their findings. Their recommendations may change once the full review is completed. They were keen to stress the limitations of the interim review, and stakeholders are strongly encouraged to continue to submit evidence for the MAC’s full SoL review.

The report is set against a backdrop of wide economic uncertainty – a technical recession and decline in real wage growth, record high vacancies, relatively low unemployment but increased economic inactivity – all lead to a challenging labour market.

Recommendations in the construction sector

In 2014, 95% of the workforce in this sector was made up of British nationals. The number of non-British national employees has been on the rise. The biggest rise, including since the end of the Brexit transition period, has been of employees from the EEA.

While the construction sector makes up 6% of the UK’s jobs, it made up only 1% of visa applications between December 2020 and August 2022. Of those, most were carpenters, joiners, bricklayers and masons.

In its report, the MAC considered whether the low uptake of Skilled Worker visas across the construction industry negates the benefit of adding construction occupations to the SoL. If employers are not using the immigration system, then this change is not going to help. Fortunately, the MAC acknowledged there would still be a benefit to those employers who are relying on recruitment from abroad, and made the following recommendations:

• The following occupations should be added to the SoL:
  • 5312: Bricklayers and masons
  • 5313: Roofers, roof tilers and slaters
  • 5315: Carpenters and joiners
  • 5319: Those in construction and building trades not elsewhere classified
  • 5321: Plasterers

• Dryliners should be reclassified from their current occupation code (8149: Construction operatives not elsewhere classified) to 5321: Plasters.

Recommendations in the hospitality sector

The hospitality sector accounts for 7% of all jobs with 26% non-UK nationals having made up the workforce in 2014. The pandemic, of course, led to a fall in the number of employees, and although the numbers of UK and non-EEA nationals had largely recovered by June 2021, the numbers of EEA nationals had not. Vacancies have been on the rise, and are 72% higher now than in early 2020.

This being said, the MAC made no recommendations for adding hospitality roles to the SoL. They concluded:

• The evidence received does not prove existing shortages in the industry cannot be filled with domestic recruitment.
• The 2020 recommendation for the removal of chefs from the SoL should not be reversed.
• Further evidence and assessment would be needed to decide whether sommeliers should be reclassified as RQF level 3 (and become eligible for Skilled Worker sponsorship).

The MAC also points to other available immigration routes; most students are permitted to work part time during their studies and the Graduate route allows them to work for a further two or three years after completion of their studies. The Youth Mobility Scheme, it argues, could be very useful in this sector, especially if the Home Office extends its eligibility to more nationalities.

Call to action  

The interim report gives us some helpful clues about the MAC’s reasoning when determining whether immigration is a sensible solution to shortages. Arguments for the public interest and economy will likely carry weight, but only if they also agree that shortages cannot be solved through domestic recruitment. Both sectors will need to demonstrate the ways in which they have tried to address shortages using domestic recruitment and will really need to set out the significance of each occupation to the wider industry.

While the MAC’s interim report makes for an interesting read on the general landscape, it is clear that the evidence they have on construction and hospitality shortages is not enough. Certainly the MAC has not yet been compelled by any cases made for reclassifying RQF level 1 and 2 occupations to QQF level 3. Therefore, it is important for stakeholders across these sectors, as well as others, to engage with the full SoL review and provide full, data-backed responses wherever possible.

Need to know more?

For further information, please contact Senior Associate Kirsty Moore at [email protected]. Fragomen can help your business in its engagement with the MAC’s latest Call for Evidence, including by arranging consultation calls, advising more precisely on evidence, providing a complementary tool kit and other explanatory materials, preparing focused submissions and coordinating presentations within and across sectors all to maximise the opportunity and impact of engagement.

This blog was published on 24 March 2023, and due to the circumstances, there are frequent changes. To keep up to date with all the latest updates on global immigration, please visit our dedicated COVID-19 site, subscribe to our alerts and follow us on LinkedIn, Twitter, Facebook and Instagram.