What's xenophobic about ensuring your company is following the law of the land?

I think he's saying it's the law itself that's an issue, not the company for following it.

Following the law is not xenophobic. It will be the fact that they will be questioning anyone with a foreign accent or more of a tan than normal that is xenophobic.

The article wasn't really concerned with employment as such. The main points were housing, healthcare/benefits and bank accounts.

Of all of those, banks accounts are, IMHO, the least likely to be a problem as there are already well established procedures for banks to check peoples identities before they are given access to banking facilities so extending those checks to include an individuals immigration status shouldn't be too hard. It will, however, result in an increase in the bureaucratic burden on the banks and I feel depressingly confident that they won't be the ones who ultimately shoulder the costs.

The potential problems arise from requiring agencies and individuals who have not previously had to perform extensive identity/eligibility checks having to do so. I guess the concern is that if 'unable to satisfactorily verify immigration status' becomes a viable reason for rejecting someone's application for housing or another service then is it easier for a landlord or whoever to simply reject anyone they have the slightest suspicion about than to jump through however many hoops are required to perform that verification.
Realistically it's not going to be big institutions that are going to be most affected, it's the private landlords, small service providers and charities that are most likely to be affected.

There is also the question of what sort of comeback someone who is incorrectly rejected for something has. I'm depressingly certain that at some point this will end up in a court, most likely on racial discrimination grounds. If there start being big payouts or even just substantial legal costs then that further incentivises people to try and avoid the issue entirely by trying to do crazy things like filter out people based on their name for example.

Donning the old tinfoil hat for a moment, this could also be a nice precursor to reviving the national identity card scheme. As our continental contributors have pointed out a comprehensive national ID card scheme simplifies the administration of these things dramatically if there is a single point of reference that everybody is required to have.

Every job application I see has a box that you tick to say that you can work in the UK legally & can prove it. It applies to everybody

In which case all they have to do is see personnel and ask to see the paperwork rather than question the staff and waste their time. Also the tax authorities could quite legitimately turn up to check any discrepancies over NI records, such as the person being dead etc. or on an emergency code for whatever reason. The chances are that if you are willing to break employment laws you are probably breaking a load of others which would come under the remit of the tax authorities or immigration.

I had to go through it here, because I am not a German citizen. As an EU citizen, showing my passport was enough and I could apply for the equivalent of an NI number. There is nothing xenophobic about it. The authorities have nothing against people legally in the country from working - on the contrary, they are encouraging qualified people to come to Germany. But they also have a huge problem with illegal immigrants, that is why companies have to prove that the people working for them are legally resident and legally allowed to work in Germany.

Asylum seekers are another problem, the camps are full to overflowing here, partly because the paperwork involved takes a long time to process, both on the UN side and the German side.

I thought the EU had pledged to give access to a bank account to everybody in the EU?

Personnel departments are few and far between in small companies and on building sites. It is usually unskilled labour, being paid cash in hand on building sites, in small restaurants or family run hotels that are the problem. Large organisations have more to lose, in terms of bad publicity, so they are often better than small business who run the risk of fines, if they are caught.

When I moved to the UK, I had two show 2 major ID documents and a proof of address before getting an account, even then, only Barclays would let me have one despite having a job with paychecks.

I agree on those points. But cash in hand work will always be appealing to employers who can avoid a lot of other taxes as a result, such as payroll taxes. Those groups are also the main offenders here. In small companies it is usually the boss who does all the recruitment. In Germany they are also actively recruiting graduates from across the EU periphery, plus providing language lessons for EU graduates willing to relocate.