The Economic Impact of Immigration. Driving Business Success and Expansion

With the new Labour Government now firmly positioned in the UK, speculation continues regarding how they will alter or keep Conservative immigration policy. However, there are currently no signs that Labour plans to make it easier for economic migrants to come into the country, whether that's students or foreign workers. Yet, economic migrants make a sizable positive contribution to Britain’s economy, as explored in this article.

If you are a UK business owner and want to bring foreign workers into the country to contribute to your workforce, you will need to make sure they are sponsored for the right visa. The UK Skilled Worker visa is common for high-value workers. 

Positive Economic Impact of Immigration

‘Economic migrants’ receive a sizable proportion of the total visas granted in the UK, currently sitting at 15%. Other common visa types include those for student and tourist visas, who contribute to the British economy in other ways. 

The primary positive economic impact economic immigrants have in the UK is income and council tax payments. Tax payments from migrants contribute to the public purse, helping to fund investment in infrastructure, healthcare, public services, welfare payments and defence. 

Through these contributions, migrants, on average, pay far more into the British public purse than they receive. EEA nationals currently make a combined net contribution of £22.4 billion each year, while non-EEA nationals’ contribution is £20 billion. A migrant’s contribution is often higher than a British person's, with the average EEA migrant paying £2,300 more into the treasury.

On top of this contribution, the vast majority of economic migrants in the UK also have to pay the healthcare surcharge to offset the costs of any NHS care they receive while in the country. When this article was written in August 2024, the surcharge was fixed at £1,035 annually per person. 

There is also a sizable economic contribution made by migrants who aren’t in the country to work with international students (22% of all UK visas), which is the most notable example. International students currently make a net contribution of £37.4 billion annually. This was set to decline under the Conservative government due to planned measures to make it harder for international students to bring their dependents, and it is currently unclear if Labour will continue this effort.

Helping Your Business Fill Skills Shortages

Businesses around the country deal with skills shortages in the domestic market. British workers are more likely to be monoglot with little knowledge of foreign markets. There are also bottlenecks in terms of the amount of domestic workers available that fit certain skill profiles. As a result, 38% of small businesses struggle to fill vacancies each year. 

Hiring foreign workers has two great advantages. Firstly, it makes it easier to fill vacancies for which you haven’t been able to find the right local workers. Secondly, foreign hires can use their unique skills, knowledge, and language capabilities to unlock new markets for your business. 

Driving Productive Demographic Growth

One of the most concerning difficulties currently facing the British economy is the aging population. More and more adults are reaching retirement age. This leads them to require increasing amounts of state support through pension payments and healthcare while not paying into the economy. The Centre for Aging Better has released concerning statistics that show 21 million people in the UK are aged 50 or over. This is 38% of the population who have already retired or are beginning to think about retirement.

Meanwhile, economic migrants tend to be young, skilled, and motivated to find high-value work. Such a demographic shift helps to swing the dependency ratio back towards the economically active, helping to support the UK’s growing retired population. 

Challenging Anti-Immigrant Sentiment

There are clear economic benefits to a diverse and more populated labour force in the UK. However, politicians and influential figures on the right of British politics continue to critique economic migration. They often make arguments that economic migrants reduce the amount of work available to British people and drive down wages. 

Recent studies by bodies such as the University of Oxford’s Migration Observatory have challenged these assertions. Such studies have found that migration has a near negligible negative impact on low-wage workers and an unequivocal positive impact on high-wage workers.  

Getting a Visa for Your Prospective Foreign Workers

You can access the benefits of foreign labour outlined in this article by hiring foreign workers. It is common for them to need a Skilled Worker visa, which will require you to give them a Certificate of Sponsorship (CoS). Approximately 130,000 Skilled Worker visas are granted each year.

Not all work qualifies as ‘skilled work’. The role will need to be listed as such by the Home Office. Usually, these roles are in managerial or director positions and also include highly skilled and experienced professionals.  

If you are hiring someone for an eligible role, you also need to make sure you will be paying them enough. In most cases, you must pay them over £38,700 or the ‘going rate’ for your sector and the role, whichever is higher. 

How Migrants Can Drive Success and Expansion in Your Business

Economic migrants offer clear indirect and direct benefits to your business. They can fill skills gaps, expanding your business’ potential to enter into new markets. Meanwhile, outside of your business, they are paying into a public purse that funds the infrastructure within which your business operates. Economic migrants can also be a high-earning customer base to target. 

If you decide to hire a foreign worker, you will need to make sure they have the right visa. You can work with an immigration lawyer or adviser to make the application process as smooth as possible.