London bankers on visas confront new reality: "Stuck in jobs you hate"
As we reported last month, banks in London have become less willing to hire people who require visa sponsorship. Sponsoring a visa can be expensive, and with costs squeezed, banks are keen to avoid unnecessary spending wherever they can.
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Sponsorship squeamishness is particularly problematic for junior or low paying jobs, where visa costs are high as a proportion of compensation. However, it stands to become a problem higher up the banking hierarchy too.
As the Financial Times noted earlier this week, the UK government's immigration white paper proposes an increase in the wait to apply for "settled status" in the UK from five to ten years. If these proposals become reality, financial services professionals in London, who currently escape visa requirements after five years, will need to wait double that to be in the clear.
This is problematic to the extent that visas are expensive. Rajiv Naik, an immigration partner at law firm Fragomen in London, says most employers go for three year visas, which cost £7.5k ($10k) when the visa application fee, the immigration skills charge and the immigration health surcharge are added-in. "The maximum length of visa you can go for is five years," says Naik. That costs £10k.
£10k may not be a lot in the context of hiring a portfolio manager for a hedge fund, but it's enough to act as a deterrent for middle and back office hiring. And all things being equal, employers will always choose candidates without the extra hassle and cost. "Some companies will take the view that they will hire someone already settled in the UK," says Naik. "It avoids them having to pay and sustain visa costs, which may soon be required for a period of up to 10 years."
The proposal to make visas a necessity for a full decade means that overseas employees in UK financial services jobs will need to keep getting visas sponsored when they swap employers. There are already fears that this will restrict the jobs available to them. “This whole exercise would mean that you are forced to stay with one employer . . . If you hate your job, or you feel like you want to grow, you can’t do that in the UK,” one Indian economist told the FT.
Another Indian macro trader at a US bank in London tells us the proposed immigration changes will increase the likelihood of being stuck in an unfavourable job while trying to find a new sponsor. "The sponsorship process can be lengthy and bureaucratic, which leads many employers to avoid it whenever possible," he says. "That reduces the number of job opportunities available to immigrants who require visa sponsorship."
The danger is that London will become like Paris, where bankers complain of being "locked-in" to particular jobs by the tax regime, which gives expats a 30% tax-free allowance as long as they don't change employer.
"This isn’t just a challenge for immigrants, who can find themselves trapped and see their wages affected—it also impacts the broader UK talent pool," says the macro trader. "The shortage of high-quality talent is likely to worsen, as skilled immigrants may increasingly rank UK opportunities lower on their list." In time, that could impact the UK economy more broadly, he predicts.
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