The post-Brexit immigration system

1. Section A deals with salary thresholds. Section B considers the use of the Australian, as well as other types of, points-based system (PBS). This paper makes four main points:

1. The general salary threshold of £30,000 for skilled work visas is justified and should be retained. Salary thresholds have previously been endorsed by the Migration Advisory Committee (MAC) and OECD as, respectively, a fair measure of an employee’s economic value and as a suitable proxy for skills. In the context of our immigration system, salary thresholds:
   1. curb the large fiscal cost of immigration
   2. place upward pressure on wages
   3. curtail undercutting of UK jobs
   4. act as a control on numbers (in line with the views of most Brits).
   Exceptions to the main threshold should be largely phased out; additional variations should not be introduced. See Annex A for our findings on the number of jobs that would be potentially affected if the previous White Paper proposals are implemented and the salary threshold is lowered. See Annex B for arguments for keeping the general £30,000 salary threshold in place.
2. Immigration reforms should strongly encourage employers and government to boost the skills of UK people, while improving wages, conditions and productivity growth. Ensuring effective control of skilled immigration and lessening employers’ propensity to turn overseas for labour, will help to tackle undercutting / displacement of UK applicants. It will also aid in the necessity of respecting the majority public view that skilled migration levels should not increase (YouGov, Ipsos), and that overall levels of immigration (particularly non-EU immigration) should decrease. Improvements should incorporate key components of the Australian (and other) immigration system(s), including:
   1. An overall cap on skilled work permits, set by Ministers, to ensure a transparent, responsive and democratic control on immigration.
   2. Applicants to the PBS should be qualified in an occupation that is listed on a designated skills list (as in Australia) and have a job offer that meets a minimum salary threshold. Entry should only be allowed when it genuinely benefits the UK; not only when it satisfies narrow employer interest.
   3. labour market testing should be retained (as in Australia, Canada, Austria and New Zealand) to protect UK recruits and to prevent a race to the bottom.
3. Government should take measures to ensure that, going forward, the majority of permanent migration derives in future from the skilled work route. Currently the family stream is the largest non-EU route leading to permanent residency in the UK.^[1] However, immigration into skilled and well-remunerated employment is more likely to boost the economy. As in Australia (and other countries), it should account for most migration leading to permanent settlement.
4. The system should be as streamlined and user-friendly as possible. As well as simplifying the immigration rules in line with eventual recommendations by the Law Commission^[2], post-Brexit immigration reforms should significantly reduce the time and cost required to complete visa applications.
5. Annual net migration (par. 5)
6. The resident workforce (par.10)
7. Migrant workers and the supply of labour (par. 19)
8. Public finances (par. 21)
9. The effect on the economy (par. 29)
10. Potential regional variation in salary thresholds (par. 30)
11. Potential exceptions to salary thresholds including for jobs on the Shortage Occupation List (par. 33)
12. How to deal with jobs of high public value but not high wages (par. 38)
13. What allowance to make for benefits and allowances and equity should be taken into account (par. 39)
14. What allowance, if any, to make for part-time workers (par. 40).
15. The cessation of previous inflows of EEA nationals to job below RQF3 or to higher-ranked jobs not meeting the salary threshold(s).
16. The increase in inflows of non-EEA nationals to jobs at RQF6 (or RQF4 where presently allowed) resulting from the removal of the cap.
17. The increase in inflows of non-EEA nationals resulting from the significant increase in the number of jobs open to them if the qualification level were reduced from RQF3.
18. Consequential changes in the number of dependants accompanying entrants for work.
19. An Australian-style cap on work visas is essential for ensuring real control going forward. Without this, employers would be free to engage without constraint on a global bonanza of hiring cheaper labour, from a huge potential pool of jobseekers from much larger and much poorer countries (at the expense of UK workers) without restraint. Numbers could spiral out of control.
20. Points-based calculations can be added along with other components:
    1. a job offer earning no less than £30,000 per year should be a pre-requisite.
    2. Overseas recruitment should be limited to those qualified for roles that are on a designated skills list, as in Australia.
    3. Language skills should be prioritised or should be a pre-requisite (as in Canada and New Zealand).
    4. Applicants should be able to gain and trade additional points on the following criteria: a) UK or global work experience b) qualifications c) partner’s skills / experience / language ability.
21. Labour market testing should be retained, in line with global best practice
22. Skilled work migration should account for most permanent immigration in future
23. Regional schemes in various countries have had limited success. It would be best not to deploy them in the UK.
24. planning ahead
25. investing in training and development
26. competing for labour on wages and terms and conditions
27. deciding on the location of new jobs in the UK based on where labour is available or encouraging mobility within the UK
28. Can additional flexibility be added to the operation of salary thresholds through the awarding of “points” to prospective migrants for the attributes that they possess?
29. Should points in one area should be “tradeable” to make up for a lack of points in another?
30. Which migrant characteristics should be prioritised within the immigration system in order to produce the most beneficial outcomes for the UK?
31. UK or global work experience
32. Educational qualifications
33. Partner’s (a) work experience (b) qualifications (c) language ability.
34. A pay threshold set at this level and applied to workers from the EEA as well as non-EEA countries should curb fiscal costs arising from immigration to low-paid jobs. As the MAC noted in September 2018, £30,000 is the average level of household income at which taxes exceed benefits for EEA migrants. All other things being equal, a threshold may be set at a level that is likely to ensure a net fiscal contribution. The government have in fact noted that they ‘agree with the MAC’s view that the salary thresholds [are] making a positive contribution to public finances’.
35. Retaining this threshold would help to place upward pressure on wages (as the MAC has made clear). The MAC argued, when recommending the £30,000 level in January 2016: ‘This is part of the point of increasing the thresholds – that there should be upward pressure on wages for the UK workforce’ (p.74). The MAC said in its September 2018 report on EEA migration (p.5) that a salary threshold set at this level would ‘place greater upward pressure on earnings’ in medium-skilled jobs.
36. This threshold should also help to constrain undercutting of jobs whose wage level is below the threshold. The MAC found that migrant nurses were paid less than the average salary for UK nurses of a similar age: “Migrants should be paid at least the comparable rate to UK workers in order to ensure that they are not used by employers as a cheaper source of labour.”
37. A better way of tackling skills shortages is to make jobs more attractive, including by raising wages and improving terms and conditions. In the MAC’s words: “Individual employers would almost always be able to recruit resident workers if they paid wages sufficiently above the going rate. This applies even if there are skills shortages at the national level – an individual employer should always be able to fill the job if a sufficiently high wage is offered.” ‘EEA-workers in the UK labour market: Interim Update’ (Par. 25, page 10).
38. Other European states have similar or higher pay thresholds for skilled workers from outside the EU– indeed, £30,000 is equivalent to or below thresholds required as part of similar schemes in EU member states e.g. the Republic of Ireland’s Critical Skills Permit. the Netherlands’ Kennismigrant permit; Austria’s Red-White-Red ‘Other Key Workers’ permit.
39. Given that nearly five million workers are low-paid (Resolution Foundation), the CBI should encourage employers to raise wages rather than lobbying for easy access to cheap labour. Despite this, the CBI has cited ‘wage inflation’ as one of the reasons for its opposition to restrictions on lower-skilled migration (p.11, CBI written evidence to MAC). We agree with MAC chairman Professor Alan Manning who said in early 2019 in evidence to Parliament that ‘employers should ‘be paying above the going rate for wages.’
40. Indeed, employers have already had three years since the Brexit vote to prepare for the end of free movement. Some businesses are setting a laudable example.
41. There are already exemptions to the primary threshold. “If you look at certificates of sponsorship used in the last fiscal year, including extensions, just under 20% of people had salaries of less than £30,000” (Migration Observatory). We believe case-by-case exemptions should be closed (and no more added). However, if they are retained, they should allow employers to fill vacancies while the UK retains a salary threshold that puts upward pressure on wages and ensures that immigration makes a fiscal contribution.
42. MAC review of shortage occupation list, May 2019, p. 15, URL: https://assets.publishing.service.gov.uk/government/uploads/syste… ll_Review_SOL_Final_Report_1159.pdf
43. Law Commission, ‘Consultation on simplifying the immigration rules’, URL: https://www.lawcom.gov.uk/project/simplifying-the-immigration-rules/
44. Migration Watch UK, ‘Estimate of post-Brexit migration levels under the White Paper proposals’, April 2019. URL: https://migrationwatchuk.org/briefing-paper/461/estimate-of-p… els-under-the-white-paper-proposals
45. MAC, ‘Analysis of the Impacts of Migration’, January 2012, URL: https://assets.publishing.service.gov.uk/government/uploads/syste… /257235/analysis-of-the-impacts.pdf
46. Home Office, Impact assessment of proposed measures to tackle sham marriage. September 2013. P.14. URL: https://assets.publishing.service.gov.uk/government/uploads/syste… sham_marriage_impact_assessment.pdf
47. MAC, ‘Migrants in low-skilled work ‘, July 2014. URL: https://assets.publishing.service.gov.uk/government/uploads/syste… -skilled_work__Full_report_2014.pdf
48. Migration Watch UK, ‘The likely scale of underemployment in the UK’, May 2018, URL: https://migrationwatchuk.org/briefing-paper/446/the-likely-scale-of-underemployment-in-the-uk–
49. Migration Watch UK, ‘Immigration and productivity in the UK’, May 2019, URL: https://migrationwatchuk.org/briefing-paper/462/immigration-and-productivity-in-the-uk
50. Migration Watch UK, ‘The Fiscal Effects of Immigration to the UK 2014/15’, May 2016, URL: https://migrationwatchuk.org/briefing-paper/381/the-fiscal-ef… cts-of-immigration-to-the-uk-201415
51. Migration Watch UK, ‘Economic characteristics of migrants in the UK in 2014’, July 2015, URL: https://migrationwatchuk.org/briefing-paper/367/economic-char… stics-of-migrants-in-the-uk-in-2014
52. For the evidential basis of this figure, see Migration Watch UK, August 2019. URL: https://migrationwatchuk.org/briefing-paper/464/evidential-basis-for-mwuks-30-million-claim
53. ‘Work permits in Austria are subject to annual quota regulations (although only holders of some residence titles are in need of a work permit): the total number of work permits is capped (Federal State quotas) to the extent that the number of employed and unemployed foreigners does not exceed 7% of the total dependent labour supply (260,579 for 2013). In some special cases, work permits can be granted beyond this quota up to a limit of 9% of the labour supply’. European Commission document, ‘The application of quotas in EU Member States as a measure for managing labour migration from third countries’, URL: http://emn.lt/wp-content/uploads/2013/06/13.EMN-Inform_Applicatio… as-in-EU-Member-States_2013-Sep.pdf
54. UK in a Changing Europe, July 2019. URL: https://ukandeu.ac.uk/explainers/the-australian-points-based-syst… what-would-its-impact-be-in-the-uk/
55. Ibid.
56. Home Secretary, Oral statement to Parliament, November 2010, URL: https://www.gov.uk/government/speeches/immigration-limit-changes-oral-statement-by-theresa-may
57. Migration Policy Institute, May 2019. URL: https://www.migrationpolicy.org/article/merit-based-immigration-trump-proposal-immigrant-selection
58. New Zealand Cabinet Paper, ‘A New Approach To Employer-Assisted Work Visas And Regional Workforce Planning’, October 2019, URL: https://www.mbie.govt.nz/dmsdocument/7010-a-new-approach-to-emplo… te-of-decision-proactiverelease-pdf
59. MWUK paper on under-employment, May 2018.
60. Written evidence of House of Commons Public Bill Committee, February 2019, URL: https://publications.parliament.uk/pa/cm201719/cmpublic/Immigration/memo/ISSB29.htm
61. Home Secretary statement to Parliament, November 2010: https://www.gov.uk/government/speeches/immigration-limit-changes-oral-statement-by-theresa-may