4 The Points Based System and the
current economic climate
Recession and employment
41. During the course of our inquiry the UK economy
officially entered a recession. From 1992 to 2007 the UK experienced
a continuous period of sustained economic growth, averaging real
growth of 2.8 per cent per annum. However, in 2008 growth fell
to 0.7 per cent, and in the third quarter of 2008 it was negative.
Negative growth in the last quarter of 2008 implies an official
recession by accepted definitions.[35]
42. The Office for National Statistics (ONS)
records that the employment rate for people of working age was
72.9 per cent for the three months to May 2009, down 0.9 from
the previous quarter and down 2.0 on the year. This is the largest
quarterly fall in the working age employment rate since comparable
records began in 1971. The total number of people in employment
for the three months to May 2009 was just under 29 million, down
269,000 over the quarter and down 543,000 over the year.[36]
43. Reduction in labour demand has led to a sharp
increase in the number of redundancies over 2008 and 2009. The
ONS records that the redundancies level for the three months to
May 2009 was 301,000, up 31,000 over the quarter and up 182,000
over the year. There were 429,000 job vacancies in the three months
to June 2009, down 35,000 over the previous quarter and down 222,000
over the year. This is the lowest figure since comparable records
began in 2001.[37] The
following graph shows the total vacancies in the UK, November—January
2007 to November—January 2009:
 Figure
6: Jobcentre vacancies by occupation, January 2008 and January
2009[38]
44. In its latest report (April 2009) the Migration
Advisory Committee noted that vacancies in lower-skilled occupations,
as well as the skilled trades and administrative occupations,
had fallen substantially, but that vacancies in the higher-skilled
occupations had not been affected in the same way. Managerial
and associate professional occupations both showed increases in
vacancies, and although they had fallen for professional occupations,
this had been at a slower rate than for the lower-skilled occupations.
The following table shows in which occupations the number of vacancies
increased, and in which they decreased, between January 2008 and
January 2009.
 Figure
7: Jobcentre vacancies by occupation, January 2008 and January
2009[39]
Adjusting the Points Based System
for economic circumstances
45. Concern amongst the public and politicians
about redundancies sparked debate about the extent to which migrants
should be allowed to work in the UK, and how much jobs could and
should be protected for UK residents. In this context the language
used by the Government about the Points Based System became tougher.
Launching the new system in February 2008, the then Home Secretary
Jacqui Smith MP stated:
The introduction of our Australian-style points based
system will ensure that only those with skills the country needs
can come. Migrants benefit this country economically, contributing
an estimated £6bn to our national output, as well as socially
and culturally, and it is right that we have a system which is
fair but firm, accessible but controlled.[40]
46. By February 2009, introducing changes to
tighten up the points criteria under Tiers 1 and 2, the language
had become stronger:
We have always said it is important to be selective
about who comes here to work, and we have already put a stop to
low-skilled labour entering the UK from outside Europe. Just as
in a growth period we needed migrants to support growth, it is
right in a downturn to be more selective about the skill levels
of those migrants, and to do more to put British workers first.
These measures are not about narrow protectionism—a flexible
immigration system, rather than an arbitrary cap, is better for
British business and the British economy.[41]
47. Freedom of movement within the European Union
means that citizens of other member states—excepting Romania
and Bulgaria, for whom restrictions still apply—are able
to live and work in the UK, in the same way that UK citizens can
live and work in other member states. Therefore the British Government
is not in a position to reserve jobs for British citizens, should
it wish to do so. This was noted by John Cridland of the Confederation
of British Industry, who told us that, whilst he was sympathetic
to the concerns of British workers facing possible job losses,
"it is important that people understand that all workers
in the European Union, unless there are transitional arrangements
as with some East European states, have the right to work here
if there are jobs to be done".[42]
48. The advent of a period of economic uncertainty
and higher unemployment, coupled with open EU labour markets,
arguably make it even more important to ensure that non-EEA nationals
coming to the UK to work only fill vacancies that cannot be met
from within the UK and EEA labour force. The Chair of the Government's
Migration Advisory Committee wrote in April 2009 that
All indicators point to the economic downturn impacting
on the labour market. Vacancies have fallen significantly in the
last year while unemployment and redundancies are sharply up.
In such circumstances it is entirely appropriate that the Points
Based System in general and the shortage occupation lists in particular,
are reviewed to assess what modifications are required to ensure
they operate to the benefit of UK citizens and workers.[43]
49. Several of our witnesses argued that a key
strength of the Points Based System was its ability to respond
flexibly to the state of the economy and labour market, allowing
a series of thresholds—such as the requirement for qualifications,
or the jobs listed as shortage occupations— to be raised
or lowered, as desired. The Government has recently altered some
of these thresholds. On 22 February 2009 the Home Secretary announced
changes to Tiers 1 and 2 to tighten up the points requirements.
From 1 April 2009 the minimum qualifications requirement for highly
skilled migrants under Tier 1 was raised to a Masters degree,
and the minimum salary to £20,000. In addition, the Government
stated that it was strengthening the Resident Labour Market Test
for Tier 2 skilled jobs so that employers would have to advertise
jobs to resident workers through JobCentre Plus before bringing
in a worker from outside Europe.[44]
50. There are arguments both for and against
a limit on the number of economic migrants, and about the impact
of migration, population growth and population density on resources
and public services. We do not, however, consider these arguments
in this Report, nor make any assessment of their relative merit,
since they fall outside the terms of reference of our inquiry.
51. In the context of the current economic
climate it is all the more important that the Points Based System
is able to respond flexibly to changing economic and labour market
needs, and that the process of assessing shortage and awarding
points for skill is accurate, fair and transparent. Given that
the number of job vacancies in the UK has reduced by a third over
the last year and currently stands at its lowest level since comparable
records began in 2001, it is obvious and right that employers
should seek to recruit first from the UK labour market. However,
where there are certain skills of which a genuine shortage exists,
recruitment from outside the EEA should be allowed if otherwise
the UK's global competitiveness could be harmed.
35 Migration Advisory Committee, Skilled, Shortage,
Sensible: First review of the recommended shortage occupation
lists for the UK and Scotland: Spring 2009, April 2009,
p.19 Back
36
Office for National Statistics, Employment headlines, Accessed
at http://www.statistics.gov.uk/cci/nugget.asp?id=12 on 15 July
2009 Back
37
Office for National Statistics, Employment headlines, Accessed
at http://www.statistics.gov.uk/cci/nugget.asp?id=12 on 15 July
2009 Back
38
Migration Advisory Committee, Skilled, Shortage, Sensible:
First review of the recommended shortage occupation lists for
the UK and Scotland: Spring 2009, April 2009, p.27 Back
39
Migration Advisory Committee, Skilled, Shortage, Sensible:
First review of the recommended shortage occupation lists for
the UK and Scotland: Spring 2009, April 2009, p.27 Back
40
UK Border Agency press release, Points-based immigration system
goes live, 29 February 2008 Back
41
UK Border Agency press release, Migrant workers face tougher
test to work in the United Kingdom, 22 February 2009 Back
42
Q 106 Back
43
Migration Advisory Committee, Skilled, Shortage, Sensible:
First review of the recommended shortage occupation lists for
the UK and Scotland: Spring 2009, April 2009, p.7 Back
44
UK Border Agency press release, Migrant workers face tougher
test to work in the United Kingdom, 22 February 2009 Back
|
