House of Commons - Managing Migration: The Points Based System

Managing Migration: The Points Based System - Home Affairs Committee Contents

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 recession—construction for example—it is likely that the severity of labour shortage will be reduced, or that it will be eliminated altogether. But if a shortage is structural—caused for example by insufficient investment in skills or poor forward planning—it 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 departments—the 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 exist—for a range of reasons—which 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 system—namely 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 recommendation—that the lists be reserved only for short term or cyclical shortages—the 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

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52 Q 196 Back

53 Q 197 [Mr Davies] Back

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55 Q 203 [Mr Davies] Back

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