Memorandum submitted by the Chartered
Institute of Personnel and Development (CIPD)
BACKGROUND
1. The CIPD's primary purpose is to boost
economic performance and improve the quality of working life with
productive workplaces. With more than 135, 000 HR professionals
who have responsibility for recruitment and skills development.
2. Our membership base is wide, with 60% of our
members working in private sector services and manufacturing,
33% working in the public sector and 7% in the not-for-profit
sector. In addition, 76% of the FTSE 100 companies have CIPD members
at director level. The CIPD is therefore ideally placed to comment
on the likely impact of the proposed cap on non-EU migration.
The impact a cap on non-EU economic migration
would have on the ability of UK business and industries to recruit
the skills and staff they require
3. A cap on non-EU economic migration could potentially
have a very damaging effect on the ability of UK organisations
to recruit the skilled staff they require. A recent survey of
almost 600 CIPD members shows that almost half (46%) of UK employers
have vacancies that are hard to fill. Of those employers that
have vacancies that are difficult to fill, engineering (21%),
IT (18%) and accountants/finance professionals (18%) have the
biggest problems. Public sector employers are more likely to report
hard-to-fill vacancies than those in the private sector. Nurses
and doctors remain the most difficult posts to fill in the public
sector (CIPD, 2010: p 7).[27]
The same research finds that almost one in five employers planned
to hire migrant workers in the third quarter of 2010. More than
one in five (21%) of these say they recruit migrant workers to
fill engineering vacancies. Other roles that migrant workers are
commonly recruited for are accounting/finance (18%), IT (18%),
doctors (14%) and nurses (13%); almost all of which feature highly
on the list of occupations that are hard to fill.
Table 2
INFLOWS RECORDED IN THE INTERNATIONAL PASSENGER
SURVEY (IPS) BY CITIZENSHIP AND REASON FOR MIGRATION, 2008
| Reason for | IPS inflows by citizenship (thousands)
|
| migration | British
| EU | Non-EU |
Total |
| Work | 41 | 99
| 67 | 207 |
| Study | 6 | 40
| 126 | 172 |
| Other reasons | 34 | 40
| 86 | 160 |
| Total | 82 | 178
| 278 | 538 |
Notes: Long-term migrants are defined as those inteding
to change their place of residence for one year or more. "Other
reasons" includes those coming to accompany or join relatives
and those giving another or no reason for migration. Figures derive
from the International Passenger Survey only and do not include
the other components and adjustments used to produce official
estimates of Long-term International Migration such as asylum.
Source: International Passenger Survey
4. As the International Passenger Survey figures show (Table
2), which are also cited in the current Migration Advisory Committee
consultation exercise, the number of people that entered the UK
to live and work from outside the EU in 2008 was 67, 000. However,
it should be emphasised that 2008 saw the biggest recession since
the 1930s, with recruitment freezes widely applied across the
whole economy. The CIPD is therefore very concerned about the
potential impact of a cap, particularly if it is introduced too
abruptly and at too low a level, at a time when the economy starts
to grow more strongly. What is more, this figure continues to
fall, which suggests that the current points-based system is working.
5. However, our concern is not confined to the smaller
pool of talent that would be available to employers. The CIPD
is also concerned about the possibility of jobs being offshored
if employers cannot access the skills they need in the UK. We
don't want to overplay this concern, but the qualitative interviews
with our members that have taken place alongside both the UK Border
Agency and Migration Advisory Committee's consultation exercises,
suggest that those organisations with global operations, particularly
in IT and finance, may offshore jobs via their "offshore
facilities" that exist in their organisations. Employers
say that they would be particularly attracted to countries such
as India if the labour supply from outside the EU were cut off
or reduced for their organisation. Indeed a number of respondents
reported being impressed by the drive and skills level of Indian
workers, particularly in finance.
6. Findings from the latest CIPD/KPMG Labour Market Outlook
report also show that almost one in 10 (9%) private sector companies
plan to offshore jobs in the 12 months to June 2011 (9%). Among
those companies, four in ten IT companies plan to relocate jobs
to other countries while almost a fifth (19%) of financial, insurance
and real estate companies plan to offshore jobs in the 12 months
to June 2011. Of those planning to offshore UK jobs, two-thirds
(65%) intend to offshore to India, a third to China (36%)) and
three in ten to Eastern Europe (29%). The most common functions
offshored by employers include call centres (55%), IT (51%), and
finance (49%). Conversations with our members also suggest that
the offshoring phenomenon is spreading to professional roles;
a phenomenon which may spread further, irrespective of the policy
outcome of the cap.
7. The cap could therefore have a disproportionate impact
on the London economy given the prevalence of financial, legal
and IT companies with global operations.
8. The temporary cap on non-EU migration is already having
an impact on a small minority of our members. Some have had to
halt recruitment at an advanced stage of the recruitment process.
Others have had to stop recruiting migrant workers altogether
because they have already used up their VISA quota. Given that
the cap only affects skilled migrants, a permanent cap could have
a much bigger impact on the number of skilled migrants that can
live and work in the UK via the points-based system and on a larger
number of our members.
The impact and effectiveness of a "first come, first served"
or a pool system for highly skilled migrants under Tier 1; and
of a "first come, first served", a pool, or an auction,
system for skilled migrants under Tier 2
9. Given the restrictions the cap would impose on the
number of non-EU workers employers can hire, the CIPD favours
the pool system as this would be a better way of ensuring that
we attract the "brightest and the best".
Whether and how intra-company transfers should be included
in a cap
10. The CIPD does not agree that intra-company transfers should
be included in the cap. If the Intra-Company Transfer scheme were
included, even fewer skilled and highly skilled workers from outside
the EU would be able to live and work in the UK.
11. In-depth interviews with our members, which have been
restricted to those who have recruited non-EU workers in the past
year, suggest that a typical intra-company transfer placement
lasts for around two years. Almost all transferees return to their
respective countries at the end of the placement. The vast majority
of organisations who use ICT say that it would be damaging if
it is included in the cap. Those organisations with global operations
say that it would be particularly damaging from both a business
perspective—as it would close off the pipeline to emerging
and developed markets—and a resourcing and talent management
perspective.
12. The CIPD believes that if it is to be included, we
believe that a balanced option would be to exempt any intra-company
transferee coming for a period of less than three years.
The implications of merging the Resident Labour Market Test
and Shortage Occupation Lists
13. The CIPD agrees with the Migration Advisory Committee's
conclusion (Migration Advisory Committee, 2009: p 97)[28]
that "due in particular to the RLMT route in providing skilled
employment to key public services, and its ability to respond
more rapidly to changing needs of employers than the shortage
occupation route, our conclusion is that this route should be
retained." We conclude this on the basis that skills shortages
are likely to remain for highly skilled and skilled positions
in the public sector for a number of years, despite the impending
public sector cuts.
Whether dependents should be included in the cap, and the effect
of including them
14. Given the paucity of data on dependents, the CIPD does
not feel in a position to give an informed comment on this issue.
CONCLUSION
15. The CIPD shares the Government's ambition to bring
net migration down and match unskilled vacancies with the unemployed.
However, the reality is that employers have immense difficulty
recruiting for certain key highly skilled workers.
16. Employers would rather not hire labour from outside the
EU because it is costly and time-consuming, but many are forced
to because of the perceived skills shortage that still exist in
the UK. Training workers to plug the UK skills gap is a lengthy
task. The abrupt introduction of a radical cap would therefore
leave many employers with a bigger skills problem and tempt employers
with global operations to offshore jobs, where they can find the
skills.
August 2010
27
CIPD. (2010). Quarterly CIPD/KPMG Labour Market Outlook report:
Summer 2010. Back
28
Migration Advisory Committee. (2009). Skilled Shortage Sensible.
London: Central Office of Information. Back
| 
