UK work permit cap to 'negatively impact' London labour market

13 Dec 2010 | Posted by Carl Thomas

Senior executives have suggested that the capital's jobs market will be put at risk by the UK immigration cap.

Research conducted before the confirmation of the work permit cap, by accountancy firm KPMG and the Confederation of British Industry (CBI), has revealed that 69 per cent of senior executives believe the cap will "negatively impact on their ability to recruit from overseas".

Meanwhile, 56 per cent of businesses claimed that the biggest threat to London's jobs market is a lack of transferable skills, a problem which could be eased by allowing for the global movement of skills through immigration.

This latest research is not the only study to suggest that businesses are concerned about the effects of the work permit cap, announced in November by home secretary Theresa May.

Indeed, a report from PwC found that 53 per cent of UK firms believe skills shortages are the biggest challenge when expanding their workforce.

PwC's head of HR services Michael Rendell noted that the UK immigration cap has meant that firms are "particularly challenged" in this area.

Despite the possible setbacks, KPMG's survey confirmed that 45 per cent of London companies are planning to return to normal hiring patterns over the next six months after a "recruitment freeze" gripped the capital during the global financial crisis.

Indeed, in 2009 just 11 per cent were intending to return to normal practice.

Sara Parker, London regional director at the CBI, warned that this new "cautious optimism" is still affected by economic uncertainty.

"Companies also voice specific concerns about the increasing burden of regulation, especially employment rules," she added.

"The government must work with businesses to find the right balance between maintaining essential legislation and cutting unnecessary red tape."