The number of non-UK nationals in the UK workforce is at an all-time high
At 4.49m in Q4 2023, the number of non-UK nationals in the UK workforce was at an all-time high. Moreover, the number of non-EU nationals exceeded EU-national numbers for the first time since Q2 2010.
Q4 2023 non-EU national numbers were …
… higher than Q1 2020
… whilst EU national numbers were ...
… lower than Q1 2020
… this translates to a net increase of ...
... across all non-UK nationals over the period
The pandemic and Brexit both triggered changes, leading to shifts in demographics. These changes were quite significant. Compared to the first quarter of 2020, the number of non-EU nationals increased by 56% (821k) by the fourth quarter of 2023, while the number of EU nationals decreased by 9% (216k). Overall, there was a net increase of 15% (605k) in the total number of non-UK nationals during this period.
Non-UK nationals in the workforce (000's)
Source: Matchtech analysis of ONS data
Since the changes to the immigration system due to Brexit in January 2021, the government has introduced additional initiatives. These initiatives have led to changes in both the types of jobs given new work visas and the countries where workers come from. Notably, in February 2022, 'Care Workers and Home Carers' became eligible for the 'Skilled Worker - Health and Care' visa, following a recommendation by the Migration Advisory Committee. This change has contributed significantly to the increase in numbers of non-EU nationals.
Turning to the activity surrounding the securing of non-UK national STEM talent during this period of significant change: initially, there was an expectation that work visa grants would increase, particularly with the extension of this requirement to EU nationals newly interested in working in the UK. It was also anticipated that the number of STEM professionals entering the country would continue to rise in line with the overall growth trajectory for all occupations. However, recent sentiment from Matchtech’s STEM professionals’ survey respondents suggests otherwise. In fact, one in five (20%) IT & Digital professionals, 12% of Engineering Technology professionals, and 12% of Manufacturing professionals cited the UK immigration rules as the key cause of the UK skills shortage within their professions.
Key cited reason for the skills shortage in their profession: UK immigration system
20% IT & Digital
12% Engineering & Technology
12% Manufacturing
8% Engineering
8% Business Support
7% Project Support
Source: Matchtech analysis of ONS data
IT & Telecoms professions worker visas 2023 were …
… lower than 2022
And their hunch around the tightening of STEM talent availability was right. The number of Worker visas granted to main applicants within IT & Telecoms professions rose through 2021, peaked in Q3 2022 before declining sharply through 2023. Moreover, at 16,558, calendar year (CY) 2023 numbers were 42% lower than in CY 2022.
And amongst Engineering professionals, the number granted to main applicants similarly increased in 2021, peaked in Q3 2022 before declining through 2023. Whilst, at 6,389, CY 2023 numbers were marginally higher than CY 2022 (6,357) the Q4 2023 figure was 21% lower than in the same period in 2022.
Engineering professionals worker visas Q4 2023 were …
… lower than Q4 2022
Grants for Worker visa: IT & Telecoms professionals
Q1
Q2
Q3
Q4
Grants for Worker visa: Engineering professionals
Q1
Q2
Q3
Q4
Source: Matchtech analysis of ONS data
From an EU-national perspective, across all occupations, just 7% (23.4k) all work-related visas for main applicants were granted to workers entering from these countries in CY23. And from a STEM perspective:
- IT & Telecoms professionals: just 6% (1,066) of all Worker visas granted to main applicants (16,558) were to people from the EU – the same percentage as in 2022.
- Engineering: an encouraging 25% (1616) of the total of 6,389 Worker visas granted were to EU nationals. Moreover, this was the same percentage as in 2022.
Grants for main applicant Worker visa: IT & Telecoms - EU nationals
Q1
Q2
Q3
Q4
Grants for Worker visa: Engineering - EU nationals
Q1
Q2
Q3
Q4
Source: Matchtech analysis of ONS data
In contrast to relatively low numbers of STEM professionals coming to work in the UK from the EU, much higher volumes have successfully migrated from South Asia – accounting for 74% (12,292) of IT & Telecoms and 38% (2,417) of Engineering main applicant professionals granted a Worker visa in 2023. As with the declining trend amongst EU nationals, however, the near-team peak for both professional cohorts of South Asian nationals were in Q3 2022, after which numbers have declined QoQ.
Worker visa grants for main applicant: IT & Telecoms - South Asia nationals
Q1
Q2
Q3
Q4
Worker visa grants for main applicant: Engineering - South Asia nationals
Q1
Q2
Q3
Q4
Source: Matchtech analysis of ONS data
As such, not only has the EU effectively dried up in terms of a new talent pipeline for STEM professionals, but volumes are also declining from other locations. With further changes introduced to UK immigration salary thresholds and occupational shortage lists in April 2024, there is potential that the number of STEM professionals granted work visas will further decline.
Key April 2024 changes include:
- The replacement of the Shortage Occupation List (SOL) with the Immigration Salary List (ISL).1
- The introduction of a new minimum new salary threshold (£38,700 - up from £26,200) for all occupations not highlighted as a shortage occupation.
- Those identified as a shortage occupation – which benefit from a lower minimum salary threshold requirement of £30,960 - now numbers just 21
- Most of the legacy STEM occupations on the SOL have been removed from the new list.
Additionally, the UK government has begun an official review of the Graduate Route 2, launched in July 2021, which currently allows international students to stay in the UK for two years after graduating (and 3 years for those with a PHD) - which is extremely popular with international STEM graduates. If reformed, this would have the further potential to impact the notable STEM talent pipeline that is comprised of international graduates staying in the UK, post studies, to work.
In terms of the scale of this talent pipeline, 25% (170k) of the 680k non-UK domiciled students enrolled in UK universities in 2021/22 were studying a STEM subject 3. Amongst all STEM students, international participants represented 32%, including 35% of Computing and 37% of Engineering & Technology students.
1. UK Government, Skilled Worker Visa - Immigration Salary List, 4 April 2024 https://www.gov.uk/government/publications/skilled-worker-visa-immigration-salary-list/skilled-worker-visa-immigration-salary-list
2. UK Government, MAC commissioned to review the Graduate Route, 23 March 2024: https://www.gov.uk/government/publications/mac-commissioned-to-review-the-graduate-route
3. HESA, student enrolment statistics 2021/22
Key takeaways and recommendations:
UK employers have long since been reliant upon the support of international workers in occupations in which it has a shortage. Reforms to the UK Immigration System in January 2021 – and subsequent additional reforms – have changed both the volume and nature of the work being undertaken by non-UK nationals and significantly altered the profile of the source countries of workers. This has included a deterioration, from a peak in Q3 2022, in the number of key IT, Telecoms and Engineering professionals obtaining work visas to enter the country to work.
Moreover, potential reforms to the Graduate Route, which currently enables UK employers to access vast numbers of international STEM students – those who wish to stay and work in the UK for a defined period after graduating - are pending.
Whilst some reduction in international workers number is doubtless due to declining UK demand, developing the capability and/or a preparedness to successfully source and support non-UK nationals to come to the UK to work – as well as honing a competitive value proposition - will increase in importance for UK plc. once the economy rebounds.