The impact “No visas for low-skilled workers” will have on the Care Sector

The post-Brexit ban on visas for “Low Skilled Workers” will benefit carers already in the UK, hurt people in need of care and will force employers to adapt or die.

Putting aside the argument about whether care work is a “low skilled” occupation, it is certainly “low paid”, as defined by the government. And putting to one-side the current level of government spending and any possible changes to policy; so holding everything else constant.

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The points-based immigration scheme will prevent some, if not all care-job seekers, outside of the UK on the 31st December 2020, from entering the market. However, the impact this will have depends on whether the government decides to list “Care” as a “shortage occupation”. The table below shows this clearly:

Until we know otherwise, we should assume that the Migration Advisory Committee (MAC) will not designate care as a shortage occupation. Even if they do allow for immigrant care workers, the analysis holds true, only to a lesser extent as not all employers will be on the list and private workers will no longer have access.

Carers already here are big winners:

The carers here already, which include native carers, and those with settled status and pre-settled status, arriving before the end of 2020 should see their wages rise. Faced with a severe shortage, employers will simply have no choice but to put wages up and give carers more consistent hours.

Rising demand for care services, as our population ages, and supply is constrained, as no more immigrant workers will be allowed in, wages will be forced up. This will happen until either more native and settled carers enter the market, or hourly rates hit £12-£13ph at which point immigrant care workers regain access.

The impact on live-in care is worth looking at separately. Live-in carers, working privately or as self-employed, will also benefit, as migratory workers in a similar position will no longer be able to work in the UK, unless they are employed by an agency. Currently, most are not and most agencies charge far more than private carers. This will give private live-in carers, still in the UK, scope to raise their prices.

Patients and their families will lose:

There are two types of customer in the care market, the government (local authorities and the NHS) and private payers.

Private Payers: As wages rise, private paying patients and their families will be forced to pay more for care or cut the amount of care they receive or be forced to go without. Some families will have to deliver the care themselves, forcing them to take more time off work or quit entirely, the ramifications of this are laid out in “Take Care” by David Grayson.

The Government: They face the same rise, which will force them to spend more, per hour, on care services just to keep up. With millions already classed as underserved, this will likely lead to greater pressures on GPs, A&E and Social Services.

Alternatively, as mentioned earlier, the government could just designate “care” as a “shortage occupation” and avoid a large portion of the cost increases and staff shortages, but possibly not all.

Some employers will lose, and others will gain:

For employers, it is a mixed bag. Whist wages are likely to be forced up, the market is already extremely competitive which will mean most, if not all, of the additional costs, will pass through to the end customer (Private payers and the Government).

Care is one of those services that people can’t just switch off. Demand is probably inelastic, which means as prices rise, demand falls at a slower rate, which will grow the value of the market. In addition, the government has promised more spending on care, which will certainly grow the market. As the size of the market grows, existing and new care providers will see revenues rise.

However, the impact on profit is uncertain. Companies that can keep their other costs down will probably see profits rise, and so, some will gain whilst others will go lose out. Whatever happens, they are going to have to adapt to a new reality.

Summary

Carers win, patients lose and for employers, it is a mixed bag. However, the scale of the impact this will have is as yet unknown. It all depends on whether MAC designates “Care” as a “shortage occupation”.

I hope that you have enjoyed reading this relatively simple analysis, without agenda. It is a rather “Hot Take” and details will emerge over time to clarify what we don’t yet know.

Watch this space.