The £41,700 Skilled Worker floor is one year old; the labour-market case has not arrived

Opinion | Immigration & Labour

What the policy did

The July 2025 reforms to the Skilled Worker visa were the largest shift in UK economic-migration policy since the introduction of the points-based system itself. Three changes mattered most. The general salary threshold went from £38,700 to £41,700. The required skill level went from RQF 3 (A-level equivalent) to RQF 6 (graduate-level). And, in December 2025, the Immigration Skills Charge rose by 32%, meaning a large employer sponsoring a five-year visa now pays £6,600 in ISC alone, on top of application fees and the Immigration Health Surcharge.

The 8 January 2026 lift in English-language requirements from CEFR B1 to B2 added a fourth change. The 8 April 2026 introduction of SW 14.3B, allowing UKVI to test salary compliance pay-period by pay-period (rather than against annual headline pay), added a fifth. The cumulative effect is that the cost and complexity of sponsoring a non-UK worker has roughly doubled in 18 months.

The stated policy goal was twofold. Reduce net migration, and lift British wages in the sectors that had grown reliant on overseas hiring under the previous rules.

What the data shows after twelve months

On the first goal, the policy is working. Sponsorship volumes have fallen sharply, with Home Office data showing Certificate of Sponsorship issuance down materially year on year through the second half of 2025 and into 2026. The Migration Advisory Committee's interim work indicates that the volume reduction is concentrated in the SOC codes that previously sat below £41,700, particularly in social care (where the route is now closed entirely to new overseas hires) and in some engineering, technical and IT support roles. Net migration figures, with the usual caveats about reporting lags, are moving in the direction the policy intended.

On the second goal, the picture is less helpful for the policy. ONS Average Weekly Earnings data, broken down by sector, shows no meaningful acceleration in wages in the SOC codes that previously sat below the new threshold. Social care wages, where the policy effect should be most direct, have continued their pre-reform trajectory rather than accelerating. Hospitality wages have moved in line with general wage inflation. Engineering and IT wages, where the threshold-versus-going-rate dynamic is most complex, have moved by roles and by region in ways that do not cleanly attribute lift to the policy.

The wage-acceleration channel the reform relied on was the textbook one. Cut off the cheaper overseas labour supply and employers must compete more aggressively for the available British labour. That is happening at the margin, but not at the scale the policy white paper assumed.

Where the policy effect is showing up instead

Three places, in declining order of clarity.

First, offshoring. Roles in IT support, financial services back office, customer service operations and parts of professional services have shifted, where they can, to third-country delivery models. A role at £42,000 that needed to be in the UK becomes a role at £18,000 in a near-shore or third-country location. The technology to support distributed work has matured, and the cost differential plus visa-system overhead is now wide enough to flip decisions that would previously have stayed in-country.

Second, role re-grading. The simplest response to a £41,700 floor is to re-define a role so it does not need to meet it. A mid-skill technical position that previously hired internationally at £36,000 might now be split into a senior role that hires internationally at £45,000 and a junior role that hires domestically at £28,000. The headline sponsorship number falls. The net imported labour cost rises. The British junior hired into the role earns less than the previous overseas hire and is supervised by a more expensive senior. This is what the SOC-code data appears to show in several sectors when read carefully.

Third, automation. The cost-benefit of replacing a marginal role with software or process automation has tightened materially. This is a positive economic outcome over a long horizon, but it is a substitution-out-of-labour outcome rather than the substitution-into-British-labour outcome the policy aimed for. The job is gone, not transferred.

Sectors with the clearest stress

Social care is the most obvious case. The route closure to new overseas applications from 22 July 2025, combined with the wider threshold rise, has created acute recruitment pressure in a sector where domestic supply was already inadequate. Vacancy rates in adult social care, already structurally high, have not improved on the implied policy logic. Costs to local authority commissioners and to private care providers have risen, with some of that cost flowing through to self-funders of care.

NHS recruitment, partially insulated by the separate Health and Care Worker visa with its £25,000 threshold, has nonetheless seen reduced inflow in non-clinical, professional and infrastructure roles. The B2 English-language uplift from 8 January 2026 has added friction to clinical recruitment in particular, with some applicants failing the writing component despite strong clinical and spoken-English competence.

Engineering and construction, which had been the most balanced beneficiary of the previous lower threshold, has seen mixed effects. The Temporary Shortage List has kept some sub-£41,700 roles eligible, but the absence of family-dependant rights on TSL roles has reduced the practical attractiveness of UK-sponsored positions to mid-career engineers from EU and Commonwealth source countries.

The compliance overlay is doing real work

Beyond the wage and recruitment effects, the compliance overlay introduced by SW 14.3B and the 2026 sponsor-licence enforcement push has changed the operational risk profile of sponsorship itself. The Home Office revoked nearly 2,000 sponsor licences in 2025, on the published data. Some of those revocations were for clearly egregious behaviour; others reflect more granular interpretation of right-to-work documentation, reporting obligations and salary calculation than employers had previously been used to.

The practical effect is that mid-sized employers, those holding sponsor licences for a handful of roles, are increasingly deciding the sponsorship route is not worth the compliance cost. They drop the licence, do not hire overseas, and absorb the recruitment gap through other means (delayed hiring, sub-contracting, automation). The administrative burden achieves what the salary threshold by itself might not have done, but it does so at the cost of a chilling effect on legitimate sponsorship that the policy did not explicitly intend.

The honest one-year assessment

One year of data is not enough to call the policy a failure, and the political consensus required to reverse it is not present in any case. The honest assessment is narrower: the policy is achieving the volume-reduction goal it set, and is not yet achieving the wage-lift goal it advertised, and is producing larger displacement effects (offshoring, re-grading, automation) than the impact assessment anticipated.

The wage data needs another twelve to eighteen months to settle. If by Q2 2027 the affected SOC codes still show no acceleration on the trajectory, the policy will be in the position of having delivered the political price (smaller workforce, recruitment pressure, sectoral stress) without the economic outcome (rising British wages). The Migration Advisory Committee's full review, due in July 2026, will be the first formal assessment of this. The data it has to work with so far does not support the original case.

For employers, the operational implication is clear. The sponsorship route is now a specialist tool for higher-earning, harder-to-substitute roles. Treating it as a default solution for mid-skill recruitment shortfalls, the pre-2025 pattern, no longer works. For policymakers, the implication is that the next set of reforms, whenever they come, will need to address the wage-channel mechanism more directly than the current rules do. Cutting supply does not automatically raise the price of what is left.

FAQ

What is the current Skilled Worker visa salary threshold?

From 22 July 2025, the general threshold is £41,700 per year or 100% of the occupation's going rate, whichever is higher. There is also an hourly floor of £17.13, based on a standard 37.5-hour week up to a maximum of 48 paid hours.

What changed on 8 April 2026?

The new SW 14.3B rule allows UKVI to test salary compliance on a per-pay-period basis, not only against the annual headline figure. This affects how sponsors must structure regular payroll payments to remain compliant. The annual threshold and going-rate tests still apply alongside the new pay-period test.

Has net migration fallen because of these rules?

Sponsorship volumes have fallen materially since the July 2025 reforms, particularly in roles that previously sat below the new £41,700 threshold. Net migration figures move on a lag and depend on dependants, switchers and other routes alongside Skilled Worker, but the direction of travel is consistent with the policy intent.

Have British wages risen in affected sectors?

ONS Average Weekly Earnings data, broken down by sector, does not show measurable wage acceleration in the SOC codes most affected by the reforms over the first twelve months. Sector pay has continued its prior trajectory rather than reflecting a step change. The Migration Advisory Committee's July 2026 review will be the first formal assessment of the wage impact.

Which sectors are under the most pressure?

Adult social care (route closed to new overseas applications), parts of engineering and construction outside the Temporary Shortage List, and non-clinical NHS recruitment are the clearest stress points. Hospitality and lower-skill catering had already largely been outside the Skilled Worker route before the reforms.

Is the Temporary Shortage List a workaround?

Partially. The TSL keeps certain RQF 3-5 roles eligible for sponsorship at a £25,000 salary floor, but TSL roles do not carry dependant rights. This significantly reduces the practical attractiveness of TSL routes to mid-career applicants with families. TSL entries are currently scheduled to expire at end-December 2026, with the government reserving the right to bring that date forward.

Sources

• GOV.UK Skilled Worker visa rules
• Migration Advisory Committee publications
• ONS Average Weekly Earnings statistics
• Restoring Control Over the Immigration System white paper

Photo by Campaign Creators on Unsplash.