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 Scottish seafood processing sector slams UK worker visa proposal

 Scottish seafood processing sector slams UK worker visa proposal

A Scottish seafood processing leader has slammed the UK Government for its proposed increase to the Skilled Worker Visa (SWV) salary threshold, which could have a devastating impact on the processing sector.

A recently published economic impact assessment of the proposal by Seafish stated that the seafood sector is heavily reliant on non-UK labour across both catching and processing sectors. Any changes to the cost and complexity of accessing non-UK labour would have an impact on operating costs, and on business profitability and viability. There would also be knock-on impacts to consumer prices, to the competitiveness of UK export trade, and to businesses that support the seafood sector.

Jimmy Buchan, chief executive of the Scottish Seafood Processors’ Association, told Fish Focus that the UK Ministers were simply not listening to seafood industry concerns, and with a forthcoming Westminster election, he predicted the Government would suffer at the ballot box.

“The seafood processing sector is finding hard enough to retain people, yet alone attract new entrants to the industry, and the Government Skilled Worker Visa proposal is completely incomprehensible,” he said.

“Much of the Scottish processing sector is involved in primary food production and simply can’t afford to pay the wages being proposed. It would impact upon business viability and increase food prices to the consumer. With the Government committed to reducing inflation, this would have the exact opposite effect, and  put us at a disadvantage with our international competitors.”

The problem is particularly acute for Scottish processors because of the large quantities of small haddock being landed, which are labour intensive to handle.

“Attracting labour has been a problem for us for several years, but it has become especially acute since Brexit. We now have good quotas for haddock, yet don’t have the capability to process the catch.  It is imperative the UK Government sees sense and announces a U-turn because the proposals are damaging to local communities and the overall national economy, as well as for food security.”

Seafish modelled analysis estimates that the impact of the change in the salary threshold would see a reduction in operating and net profit margins of 12 percentage points across the UK processing industry. The corresponding net profit margin (4-6%) could prove too low to provide a satisfactory return on investment. This could influence business operating decisions including the optimal location of their business, with some businesses already advising that this may not be within the UK.

There is a further concern that the increase in the SWV salary threshold would lead to higher wages across the board. This means:

  • It would not be possible to recruit non-UK factory workers on a salary of £38,700 and then continue to pay local workers who are doing the same job for the minimum wage salary of £23,500.
  • If the ‘factory floor’ salary needs to increase, then this is likely to drive higher salary expectations from staff in higher level/more skilled roles.

These changes further compound the situation for businesses who are adjusting to recent minimum wage increases, energy price rises, raw material price increases, and recent income tax increases in parts of the UK. Business have also already incurred costs to participate in the SWV.

Any price increases passed on to retailers would ultimately impact on consumers. UK food prices have already increased by 26% compared to pre-pandemic levels. For scampi, it is estimated that landing prices of nephrops (langoustines or prawns) could rise by 33% which in turn could see price increases of 15% passed across to food service businesses and retailers. These costs would be passed on to consumers in some form, or they could lead to businesses substituting product for lower cost alternatives.