5 Shortages
Types of shortage
52. In the latest report of the Migration Advisory
Committee in April 2009 the Committee chair Professor David Metcalf
set out different types of possible labour shortage:
Labour shortages come in a variety of forms. It is
a mistake to think that all such shortages will be eliminated
by the upheaval in the labour market. Where a sector is badly
hit by recessionconstruction for exampleit is likely
that the severity of labour shortage will be reduced, or that
it will be eliminated altogether. But if a shortage is structuralcaused
for example by insufficient investment in skills or poor forward
planningit is likely to persist even during a recession.
And some shortages reflect Britain's position at the peak of a
global labour market for talent: examples include the culture,
media and arts industries. Finally, some shortages reflect constraints
on public expenditure; these need very careful monitoring because
immigration in such occupations may provide a short-term fix,
but also has the potential to inhibit necessary up-skilling and
to dampen pay.[45]
Our inquiry also discerned different types of labour
shortage, which could be summarised as follows.
HIGHLY SPECIALIST SKILLS NOT AVAILABLE
IN THE RESIDENT WORKFORCE
53. We heard examples of certain sectors in which
shortages were occurring because of a need for very specific skills
which employers could not find within the UK or EEA labour force.
For instance, The Law Society described certain specialist expertise
required by the legal sector. Des Hudson, Chief Executive of The
Law Society, pointed out that, though there were an estimated
2,500 solicitors made redundant in the UK in 2008, their skills
would not necessarily match the specialist skills required where
vacancies arose:
Let us talk about someone who comes from my office
in Shanghai to work in my London office. That may well be an individual
who has a particular set of skills in Chinese law. It is not something
I can do, even though I might want to use a displaced solicitor
working in a completely unrelated domestic environment. I understand
the pressures and the wish to see every possible solicitor who
wants to practise to be able to do so fully, but there is a different
range of skills and jobs.[46]
54. Another example was provided by Louise de
Winter of the National Campaign for the Arts, who pointed out
that "most [international artists]
are not displacing
British workers. After all, it is very hard to justify British
morris dancers dancing Hungarian folk dance, or even British circus
performers working for the Chinese State Circus".[47]
She added that "I do not agree that people coming in are
displacing British workers and British jobs".[48]
Malcolm Clay of the Association of Circus Proprietors of Great
Britain agreed that there was no demand within the performance
sector or artists' unions for "British clowns for British
circuses" and that there was no "pool of British unemployed
circus performers".[49]
55. The restaurant industry took a similar position
with regard to specialist skills needed to work in top end international
restaurants. Ranjit Mathrani of Masala World argued that:
Indian cuisines
are a product of 2,000 years
of culture, cross-culture, of cooking with a whole range of spices
and ingredients and cooking processes which are very complex
these
take years and years and years to learn
you are not going
to produce high-quality Indian or Chinese chefs out of British
soil.[50]
SHORTAGES DUE TO UNATTRACTIVE WAGES
OR CONDITIONS
56. Others told us that the principal cause of
shortages in their industry was the poor wages attracted by certain
jobs, and that vacancies existed but the British workforce were
not prepared to take them. This was particularly the case in the
care industry, and in the agricultural and horticultural sectors.
Mandy Thorn of the National Care Association told us that "we
are seeing not just a skills shortage but a shortage of the supply
of labour that is prepared to do what is an extremely difficult
job
people are not prepared or not able o do the very personal
intimate care that is needed, and that is particularly where wages
are lower than we would like to pay".[51]
57. Paul Temple of the National Farmers Union
and James Davies of HOPS Labour Solutions categorically stated
that, in the agriculture and horticulture industries, "job
opportunities are there and people do not choose to take them,
even in areas of high unemployment"[52].
Although they argued that "most of our clients are paying
quite well above the minimum wage",[53]
they acknowledged that, at a rate of £5.74 per hour for a
grade 1 standard worker, the pay was not high. Mr Temple told
us that "quite simply, it is the economic situation. The
work rates and employment rates that go into agriculture are out
of sync with many other industries".[54]
Mr Temple and Mr Davies argued that the ability to recruit EU
nationals to fill vacancies in agriculture and horticulture was
waning with the falling value of the pound:
Candidates that we were managing to find in countries
such as Poland and Slovakia are now looking to go into Germany
or Spain. If they want to pluck fruit then they can go to Spain
and earn 5 an hour, which is not a massive difference from
the £6 or £7 we are paying here.[55]
58. However, they discerned the beginnings of
a change in attitudes amongst British workers, noting that the
same economic downturn that was driving away workers from Eastern
Europe was starting to draw in some British workers to vacancies
in occupations previously considered unattractive. Mr Davies said
that he had heard anecdotally about one farm which had "a
total requirement of 350 people through their calendar year
of
those, six people are British, and they have just had eight people
return to them having lost their jobs in other sectors".[56]
59. With regard to shortages which existed because
of low wages or unattractive working conditions, Sir Andrew Green
of Migration Watch UK considered that there was no good case for
filling such shortages with migrants:
Do we not have to ask ourselves whether it is right
to import what, without being offensive, you might call a kind
of underclass of foreign workers who are prepared to work in conditions
that British people are not prepared to accept?...Access to cheap
labour of this kind reduces employers' incentives to look at other
options, particularly changing production methods.[57]
SHORTAGES DUE TO INSUFFICIENT INVESTMENT
IN SKILLS
60. Several of our witnesses considered that
shortages had occurred due to insufficient investment in skills
training over time, and that much could be done to alleviate these
shortages through retraining of the British population. For instance,
the catering and restaurant industries argued that there was a
complete absence of professional skills training available in
the UK, which meant that skilled chefs had to be imported. Mr
Lam of the Chinese Immigration Concern Committee told us that:
there are no Chinese catering or professional cookery
courses in this country, People First, which is the Sector Skills
Council for the hospitality sector, have done research on the
knowledge and skills required for entry into a vocation of catering
and found that there is no elementary level of training in this
country for either Asian or Chinese catering.[58]
61. One profession in which retraining programmes
have recently borne fruit in tackling shortages is that of medical
doctors. Alastair Henderson of NHS Employers told us that, although
"historically, since the NHS began, we have relied on overseas-trained
doctors",[59] over
the past 10 years there had been "very substantially higher
numbers coming out of medical school and through training, so
the numbers of UK-trained doctors has grown very considerably".[60]
He informed us that the number of UK-qualified doctors had increased
from 66, 660 in 1997 to 83, 313 in 2007.[61]
62. In fact, as a result of increased training
of UK nationals as doctors, in 2008 the Government implemented
restrictions on non-EEA nationals accessing postgraduate medical
training in the UK. Mr Henderson told us that, on the whole, "hospitals
really welcomed some of the changes and have found it a lot easier
to fill posts where they were having difficulty",[62]
and that the effect had been to move UK graduates into medical
specialties which had traditionally been hard to fill:
One of the purposes of the new training programme
was that people did not mill around in the senior house officer
grade. If people cannot do that they do have to make other choices
about other specialties so we ought to be able to move people
into the less attractive specialties, which I think is a benefit.[63]
63. Paul Temple of the National Farmers' Union
agreed that the economic climate offered a good opportunity to
re-train people to address shortages in the British agricultural
and horticultural sectors, although he warned that re-training
would take time:
In today's recessionary backdrop, it offers a new
opportunity thorough the new skills training or the land-based
diplomas to put in front of students and young people what happens
in horticulture and agriculture and the opportunities for skilled,
unskilled and semi-skilled workers in the future. But that will
not bear fruit for several years to come.[64]
64. Migration Watch UK also considered that retraining
was key to meeting shortages: "the main effect of the [PBS]
will be to open the skilled section of our labour market to competition
from overseas, thus reducing the incentive for employers to train
British staff".[65]
65. Professor Metcalf of the Migration Advisory
Committee asserted that his committee was "very keen that
immigration is not seen as a substitute for up-skilling the British
workforce".[66]
He told us that areas of skills shortages identified by the MAC
were being used by the Government to target training:
Our occupation list is being used now by the new
commission and by DIUS[67]
in terms of guidance for the sector skills councils that these
are areas where they should put resources to make sure we get
some upskilling.[68]
66. We asked the Minister for Borders and Immigration,
Phil Woolas MP, how the Government could guarantee that its initiatives
to retrain and upskill the resident British population would produce
enough skilled candidates when employers needed them. The Minister
could not guarantee that they would, but agreed that "that
is the challenge" and told us that "efforts across government
departmentsthe work of the Learning and Skills Council,
the work of DIUS, the universities, and the various training councils"
were geared towards matching training with skills demand.[69]
He gave the example of the catering sector, agreeing that it was
difficult to understand why, for example, labour shortages in
South Asian or Chinese catering could not be filled by recruiting
and training from within those communities in the UK. He explained
that this would require better training in such skills within
the UK:
We are not putting into place strategies to provide
training in skilled cuisine for British people
Oldham College
of Catering has not provided specific training in the past in
those areas, and our argument is that perhaps it should do.[70]
67. Our inquiry discerned different types
of labour shortage. The three particular types thrown up by the
evidence we took across a range of sectors could be summarised
as: highly specialist skills not available in the resident workforce;
shortages due to unattractive wages or conditions; and shortages
due to insufficient investment in skills.
68. It seems that where genuine shortages
existfor a range of reasonswhich cannot be filled
from within the UK or EEA labour force, a combination of short-term
migration of non-EEA nationals with longer-term investment in
the retraining of the British population is justified. We note
that there is a case that the availability of migrant labour may
lessen the incentive for employers to recruit and train the resident
UK labour force. This makes it all the more important that the
points criteria be robust, the resident labour market test rigorously
enforced, and that priority be given to investment in retraining
the resident population.
69. We therefore conclude that the Government
needs to redouble its efforts to link skills shortages to training.
The very recent creation of a new Department for Business, Innovation
and Skills (BIS) from the previously separate Department for Business,
Enterprise and Regulatory Reform (BERR) and Department for Innovation,
Universities and Skills (DIUS) offers the chance to give fresh
impetus to linking training to the needs of the economy and skills
gaps in the resident population.
Assessing shortages
METHODOLOGY OF THE MIGRATION ADVISORY
COMMITTEE
70. The Migration Advisory Committee uses the
following indicators to measure skill and shortages:
When thinking about whether an occupation is skilled,
we plan to look at indicators including qualifications held by
people within that occupation and average earnings. When considering
whether an occupation is experiencing shortage we will
look at data on indicators including earning, vacancies and unemployment,
and skill survey data. When considering whether it is sensible
to fill a shortage with non-EEA migrant labour, the indicators
we will examine will include efforts that are being made to fill
the shortage by other means, including up-skilling the UK workforce
and attempts to recruit from within the EEA.[71]
As a result of analysing these data the Migration
Advisory Committee produces shortage occupation lists, one for
the UK and one for Scotland only, of those occupations it considers
to be both skilled and experiencing a shortage of labour, for
use alongside Tier 2. The most recent shortage occupation lists
were published in April 2009.
71. The Government does not have to accept the
Migration Advisory Committee's recommendation, although in practice
it has to date done so. We questioned the Chair, Professor David
Metcalf, about whether his Committee had come under any pressure
from Government to make particular recommendations. Professor
Metcalf considered not:
I can state unambiguously that nobody has put pressure
on whatsoever. For what it is worth I would not stand for it.
I have spent ten years setting the minimum wage and there was
no political interference on that either. Also, my strong-minded
colleagues on the Migration Advisory Committee would not.[72]
He stated that, "on the two major reports that
we have done so far, the first on the Shortage Occupation List,
and the second on the restrictions on Romania and Bulgaria, pretty
much the Government accepted all of our recommendations in full".[73]
However, he did note that the Government had added social workers
to the November 2008 shortage occupation list.[74]
The Minister for Borders and Immigration, Phil Woolas MP, was
also adamant that no political pressure was brought to bear on
the Committee.[75]
72. Most of our witnesses considered the Migration
Advisory Committee to have done a good job to date. Sir Andrew
Green of Migration Watch UK told us "are the MAC the right
people? Yes, why not. They are quite small, but then I think small
organisations are nearly always better".[76]
Jabez Lam of the Chinese Immigration Concern Committee judged
that it "did a very good job" and particularly welcomed
that "they have actually visited four times Chinatown in
Liverpool and in London to observe how the Chinese catering outlets
are operating
and that is the bottom-line approach which
we appreciate very much". However, Mr Lam argued that the
Committee should include a social policy expert, to represent
the social aspects of migration.[77]
USE OF THE SHORTAGE OCCUPATION LISTS
73. We asked Professor Metcalf whether, in fast-changing
economic circumstances, the shortage occupation lists could be
kept up-to-date and could represent a fair reflection of actual
skills and jobs shortages. Professor Metcalf pointed out that
"not all of the shortages are actually of a cyclical nature;
some of the labour shortages are very different to that. So I
would not expect many of the occupations presently on the list
immediately to come off, even in a downturn".[78]
However, he agreed that other shortages were cyclical, and mentioned
in particular the construction-related industries, in which he
said "the labour market has changed profoundly very quickly".[79]
He also agreed "we have to keep the shortage lists under
very close review".[80]
The Minister for Borders and Immigration, Phil Woolas MP, and
his officials considered that the six-monthly review of the shortage
occupation lists provided "the right balance between creating
certainty for people but also keeping the list current".[81]
74. Professor Metcalf noted that "there
were quite a lot of occupations that we did not put on the list
where people say there is a skills shortage. The reasons that
we did not put them on was that in our judgment there were plenty
of British people to do those jobs".[82]
He also agreed that there were some occupations on the UK list
which resident workers were in the process of being trained to
do: "for example, we know that with (medical) consultants,
which are on the list presently, there are a lot of people being
trained and they will become consultants quite soon; electricity
linesmen are on the list and a lot of training is going on there".[83]
75. Regular reviews and changes to the lists
raise the question of whether the removal of occupations from
the list would be applied retrospectively. The Minister confirmed
to us that they would not: "no, the change is within the
tiers and there is no retrospection".[84]
THE RESIDENT LABOUR MARKET TEST
76. Under Tier 2 an employer wishing to bring
in a migrant for any job not on the shortage occupation lists,
or in certain creative sectors (or under intra-company transfer)
must first perform a resident labour market test. If a settled
worker applies for the job but does not have the necessary qualifications,
experience or skills, the employer cannot refuse to employ them
unless they specifically requested those qualifications, experience
or skills in the job advertisement. See paragraph 33 for further
detail on the operation of the test.
77. Witnesses had mixed views on the effectiveness
of the test. The Professional Contractors' Group (PCG) pointed
out that a similar test under the previous system had been a byword
for abuse: "[we are] aware of anecdotal evidence suggesting
employers were advertising jobs in obscure locations at low rates
which would never attract a skilled worker". However, the
PCG considered that the new system provided for a more robust
test: "by making sponsors advertise on a central portal such
as JobCentre Plus, other bodies will be able to monitor employers'
compliance with the rules more easily".[85]
The Immigration Law Practitioners' Association criticised the
appropriateness of a 'one size fits all' test: "an investment
bank recruiting MBA graduates or board level roles would be most
unlikely to use JobCentre Plus if genuinely seeking to attract
resident applicants, yet this is the one medium which is acceptable
for all sectors".[86]
78. The Confederation of British Industry considered
that the test added crucial flexibility to the system:
Firms can still hire where the MAC has not yet been
able to identify a shortage, but the firms can demonstrate that
one exists. This is vital to the system's flexibility.[87]
However, GlaxoSmithKline told us that it was concerned
that it posed unnecessary and irrelevant hurdles to international
companies wishing to offer training placements to international
chemistry postdoctoral fellows: "advertising these positions
on the resident labour market will defeat the purpose of GSK's
initiative, which is to provide training to overseas nationals
to enhance their long term career overseas".[88]
79. Some occupations on the shortage occupation
lists reflect areas of long term structural shortages, or exceptional
talent at the international level: these shortages are unlikely
to change quickly. The long term inclusion of occupations such
as skilled ballet dancer, for instance, appears to be to compensate
for poor design elsewhere in the systemnamely that it cannot
recognise the skills of this occupation through the points criteria.
It seems questionable whether the lists can at the same time be
both a short term flexible resource, and provide for long term
chronic shortages. We therefore recommend that long term and structural
shortages should be addressed by adapting the points criteria,
and not by inclusion on the lists. The shortage occupation lists
should instead be used only to provide a degree of flexibility
for short term or cyclical shortages in exceptional circumstances.
80. There appears to be some disparity between
Professor Metcalf's statement that, in certain industries which
experience cyclical shortages, the labour market changes "profoundly
very quickly" and the Government's assertion that the six-monthly
reviews of the shortage occupation lists would be frequent enough
to "keep the lists current". Bearing in mind that shortages
could emerge in a sector up to six months in advance of the next
list, and would inevitably take some weeks, if not months, following
the inclusion of that occupation on the list to fill, it is hard
to see how the lists can represent a flexible and speedy method
of responding to labour shortages. The converse is also true:
where changing economic circumstances mean that resident workers
are able to fill vacancies included on the lists, those occupations
may need to be removed more quickly. Given our previous recommendationthat
the lists be reserved only for short term or cyclical shortagesthe
Government should consider whether the lists need to be updated
on a more frequent, or rolling, basis.
81. A resident labour market test is in principle
a useful tool for assessing the skills of the resident population
before a migrant is considered for employment. However the current
test does not seem to command confidence amongst jobseekers, employers
or other commentators. It is vital that unscrupulous employers
are prevented from obeying merely the letter, and not the spirit,
of the test by advertising in obscure locations or at unrealistic
rates. To this end we recommend that the Government again review
the operation of the test to ensure that it is rigorously enforced,
including considering the introduction of some form of independent
inspection of its application. Use of a one-size-fits-all test,
in particular the requirement that all employers advertise through
JobCentre Plus, neither effectively targets the jobless resident
population, nor appeals to the right workforce to fill specialist
jobs.
82. If the Migration Advisory Committee were
to recommend that the resident labour market test and intra-company
transfer routes be closed, leaving the shortage occupation lists
as the only route for skilled migrants under Tier 2, it is very
difficult to imagine that political pressure would not be placed
on the Committee to include or exclude certain occupations. Whilst
we were concerned to hear of possible abuses of the resident labour
market test, we do not consider that restricting migration to
the shortage occupation lists alone would be an appropriate or
effective response.
45 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
46
Q 263 Back
47
Q 321 Back
48
Q 333 Back
49
Q 322 Back
50
Q 86; Q 103 Back
51
Q 192 Back
52
Q 196 Back
53
Q 197 [Mr Davies] Back
54
Q 218 Back
55
Q 203 [Mr Davies] Back
56
Q 204 Back
57
Q 18 Back
58
Q 89 Back
59
Q 163 Back
60
Q 176 Back
61
Ev 249-250 Back
62
Q 166 Back
63
Q 167 Back
64
Q 206 Back
65
Ev 84 Back
66
Q 353 Back
67
The Department for Innovation, Universities and Skills (DIUS).
Following a Cabinet reshuffle on 5 June 2009 now the Department
for Business, Innovation and Skills (BIS). Back
68
Q 382 Back
69
Q 430 Back
70
Q 433; Q 436 Back
71
Migration Advisory Committee, Identifying skilled occupations
where migration can sensibly help to fill labour shortages: Methods
of investigation and next steps for the Committee's first Shortage
Occupation List, February 2008, p.7 Back
72
Q 353 Back
73
Q 357 Back
74
Q 357 Back
75
Q 407 Back
76
Q 5 Back
77
Q 98 Back
78
Q 361 Back
79
Q 362 Back
80
Q 365 Back
81
Q 414 [Mr Coats] Back
82
Q 383 Back
83
Q 382 Back
84
Q 415 Back
85
Ev 81 Back
86
Ev 208 Back
87
Ev 211 Back
88
Ev 234 Back
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