🦜 PerchPulse - The UK Market Update August 2023 🦜

A warm welcome to the August issue of PerchPeek’s UK Market Monthly update!

‍

Here’s where you’ll find the hottest updates around employee relocation and international talent strategy, insights from our experts on housing and cost-of-living news affecting your staff, the latest trends in global mobility, and tips and tricks on ways to support your teams.

‍

A fly-by summary

●      Government announces significant visa fee increases, including a 66% rise for the Immigration Health Surcharge - what this means for global mobility strategy

●      Average rental prices in London have risen by 5.3% YoY, the highest annual increase since 2012 - latest stats for GM leaders and top tips on how to succeed in the market

●      52% of UK-based small business owners are in favour of relaxing visa rules to attract more migrant workers and fill skills gaps - insights on this trend for People leaders

●      Renters are most likely to feel the effects of living cost hikes, and food prices are still a whopping 17% higher than this time last year - key cost of living updates for GM leaders

‍

Talent strategy: Series of visa fee hikes announced, including 66% rise in cost of Immigration Health Surcharge - what this means for GM strategy

‍

‍

In a blow to both individuals looking to relocate and to global mobility leaders sourcing talent from overseas, the UK government has announced a number of significant hikes to immigration fees. Here we take a look at what’s changing, and what this means for GM strategy.

‍

On 13th July, the government announced that immigration fees will be rising (though as yet, no implementation date for the increases has formally been announced). Here are the details:

‍

●      Work and visit visa fees (which vary according to visa type) will rise by 15%

●      Student visa, certificate of sponsorship, settlement, citizenship, wider entry clearance, permission to stay and priority services will rise by at least 20%

●      The Immigration Health Surcharge - a fee that gives migrants access to healthcare through the NHS - will be rising by a whopping 66%, from £624 to £1,035

●      For reference, when the Immigration Health Surcharge was introduced in March 2015, it was just £200 per application; this therefore represents a 418% increase in eight years

‍

Why are immigration fees being increased?

‍

The UK government has been under pressure to raise an additional £2 billion per year to cover public sector salary increases. Teachers are to receive a 6.5% pay increase, while junior doctors will see a 6% rise and police officers’ salaries will increase by 7%. Ministers have decided to make up the deficit by increasing costs for migrants wishing to live and work in the UK.

‍

PerchPeek insights

‍

This hike in immigration fees comes at a time when skilled workers from overseas are needed more than ever, to fill severe skills shortages in the UK workforce. The Learning and Work Institute has predicted that if current trends continue, the UK will see a shortfall of 2.5 million highly skilled workers by 2030, which could cost the country £120 billion.

‍

Global mobility leaders will need to act to incorporate these changes into their current strategy and budgets. Here’s PerchPeek’s overview of the most pressing considerations:

‍

●      It’s recommended that GM teams get any pending applications submitted as soon as possible, with a view to having them processed before the changes take effect (no implementation date has yet been announced, but it’s best to be prepared!)

●      If employers are covering these costs as part of the employees’ relocation package, they will of course need to adjust budgets accordingly and potentially seek other cost-cutting initiatives to even out the balance sheet.

●      In any situation where immigration costs are usually passed on to the employee, it’s likely that increased fees may discourage candidates from applying for roles in the UK. It’s a good idea to review and see where these costs can be covered by the employer.

‍

Home-finding: London rental prices up 5.3% YoY, the highest annual increase since 2012 - how GM leaders can support home-hunting staff

‍

‍

To help global mobility leaders shape relocation strategies and support their teams, PerchPeek regularly shares the latest UK rental market trends. Read on for a summary of current rental prices and news stories affecting relocating employees looking to rent in the UK!

‍

UK rental market update

‍

Key insights at a glance (source: Office for National Statistics):

‍

●      Average rental prices rose by 5.1% in the 12 months to June 2023

●      This is the largest annual % change since the data series began in January 2016

●      In London, average rental prices increased by 5.3%

●      This is above average for England and its highest annual rate since September 2012

‍

Minimum rental costs - Q3 2023 (source: PerchPeek):

‍

‍

For rental cost data for other UK regions, give PerchPeek a shout here!

‍

In the news

‍

●      The average cost of renting a room in the UK has risen to more than £700 a month for the first time, according to data from the property website SpareRoom, which is 17% higher than the same period in 2022

●      According to Matt Hutchinson, director at SpareRoom: “The housing market simply isn’t working for anyone. Renters and homeowners are struggling and landlords are continuing to leave the market.”

‍

How to support home-hunting employees

‍

Rental prices in the UK are still climbing year-on-year, and right now it’s a particularly busy time in the market as many people choose the summer months to make their move.

‍

To support relocating employees looking for a home, offering guidance is key! As competition will be so high for the most reasonably priced properties, hopeful tenants will need to be armed with the tools and knowledge to stand out from the scores of other applicants. A few tips:

‍

●      Share information on setting up alerts on property platforms, to jump on new listings

●      Offer guidance on compiling a solid application letter and portfolio of supporting docs

●      Provide tips on what to ask (and not to ask!) at a property viewing

‍

Talent strategy: Over half of small business owners are in favour of relaxing visa rules to attract migrant workers - key insight for GM leaders

‍

A survey has revealed that over half of small business owners are in favour of more migrant workers coming to the UK, to help assuage labour shortages. Here’s the full lowdown on this key insight on attitudes around migration, to help global mobility leaders stay on top of trends.

‍

In a survey of 500 business owners by small business lender iwoca:

●      52% of SMEs are in favour of opening the UK’s doors to more workers from abroad through the expansion of work visas

●      48% of SME owners blame Brexit for the sharp decline in available staff in the UK

‍

Key facts and figures

●      There is an increasing number of open roles that SMEs are struggling to fill

●      SMEs had a total of 459,000 vacancies in May 2023 (latest data published)

●      This represents an increase of 25% vs. the same period in 2019

‍

“SME owners believe that opening up the UK’s borders and expanding work visas are key for helping them to attract staff, and doing this will ease significant pressures on their businesses.”

-        Christoph Rieche, CEO & Co-Founder, iwoca

‍

While this survey focuses on small and medium-sized enterprises, the insights revealed are relevant to companies of all sizes, as worker shortages are being felt across the board.

‍

This just adds to the data we reported on in our May issue, which brought to light the changing attitudes among UK residents towards more people coming to the UK from abroad to work.

‍

According to that survey of 24 nations, the UK is now one of the most accepting countries for workers from abroad, in what the authors describe as “an extraordinary shift” in attitude.

‍

When asked if employers should prioritise citizens of this country over immigrants when jobs are scarce, here’s how people in the UK responded:

●      In 2009, 65% of respondents agreed that UK citizens should be prioritised

●      When asked the same question in 2022, just 29% of respondents agreed

‍

PerchPeek insights

‍

This growing support from UK business owners for migrant workers to address labour shortages signals a positive shift in public perception. If this starts to impact government decisions to allow more immigrants into the country, this will present HR and global mobility professionals with an opportunity to tap into a diverse talent pool, fostering inclusivity and enriching the workforce.

‍

Embracing this sentiment can lead to innovative recruitment strategies, promoting cross-cultural understanding, and ultimately enhancing productivity within the organisation. By recognising the value migrant workers bring, companies can not only meet their staffing needs but also contribute to building a more welcoming and prosperous work environment for everyone!

‍

Cost of living: New ONS data says renters are most likely to be hit by cost increases - how to help employees struggling with soaring prices

‍

‍

While inflation in the UK is finally starting to slow, living costs remain significantly elevated and new data from the Office for National Statistics shows that renters are those most likely to struggle to make ends meet. Here we delve into the latest stats and provide valuable insights for global mobility to help relocating employees navigate this tricky financial landscape.

‍

According to the Office for National Statistics (ONS):

●      Between February and May 2023, one in 20 adults reported running out of food and being unable to afford more as prices soared

●      Renters were most likely to be stretched by housing costs: 43% of tenants struggled to afford rent between February and May, vs. 28% of mortgage holders

●      58% of tenants said they were spending less on food shopping and essentials, vs. 48% of mortgage holders

‍

What’s the latest news around inflation?

‍

Consumer inflation

●      The UK consumer inflation rate fell to 7.9% in June 2023, down from 8.7% in May

●      This fall is largely due to a slump in fuel prices and is the lowest level since March 2022

●      The rate was at its highest in October 2022, at 11.1%

‍

Food inflation

●      The food inflation rate fell slightly in June 2023, down from 18.3% in May to 17.3%

●      However this is still an extremely high rate, and is in fact the highest in the G7

●      UK food inflation peaked in March 2023 at 19.1% - the highest rate in over 45 years

‍

It’s important to note that falling inflation doesn’t mean that prices are coming down; it means they’re still rising, just not as quickly as they have been over the past several months.

‍

PerchPeek insights

‍

It’s good news for UK consumers that inflation is slowing, but it’s clear that no relief in costs is being felt just yet, and that prices - especially for food - remain extremely elevated. It’s worth noting that in the latest InterNations Expat Insider survey, the UK was ranked as one of the worst countries for expats in terms of Personal Finance (51st out of 53 countries).

‍

Struggling with exorbitant housing and grocery costs undoubtedly makes for a highly stressful employee relocation experience; it’s therefore very much in GM professionals interests to keep up with the latest data and trends, and share tips for tackling these difficult conditions - such as:

●      Help relocating employees buddy up and explore cheaper shared housing options

●      Offer flexible working options and help employees locate housing in cheaper areas

●      Share guides for newcomers to the UK on low-cost food shopping - like this one!

‍

We hope you enjoyed this month’s update!

‍

If you have any feedback, comments or questions about what's happening in your location, feel free to reach out via the form at the bottom of this page.

‍

Thanks for reading, and see you next month!

‍

-------------------------------------------------------------------------------------------

Sign-Up for All of Our Future PerchPulse Updates!

We hope you found this update insightful! We’d love to hear your thoughts.

PS - if you’d like next month’s PerchPeek USA Market update delivered start to your inbox, you can signup here:

‍