Memorandum submitted by Fragomen LLP
We write in response to the call for submissions
regarding the imposition of a cap on immigration as proposed by
the British government, specifically relating to Tier 1 and 2
entrants. The following submission centres on a survey conducted
by Fragomen LLP with businesses currently operating in the United
Kingdom. It is thus more suited to offer comment on the commercial
implications associated with restricting entry to the UK and offers
limited comment on the use of public services and the impact of
this proposal on wider society.
Fragomen is a legal practice that has a network of
thirty five offices throughout the world and it specialises in
immigration law. Our firm works with multinational, regionally
based and local businesses.
The following submission has several sections.
The first provides information about immigration policy in New
Zealand, Australia and the United State of America. We have examined
recent changes in those jurisdictions that could inform decision-making
in the UK. The second section provides information from the survey.
The responses were provided by businesses across different industry
sectors, including oil and gas, financial services, engineering,
construction, media, IT and fast moving consumer goods. The final
section comprises recommendations based upon the survey response
and discussions with businesses.
The overwhelming response to the survey was
that the cap will be problematic for businesses in the UK. The
respondents are users of the Points Based System and it is unsurprising
that they are concerned about the imposition of the cap. These
businesses, however, are significant employers of British nationals
and have a demonstrated their commitment to the recruitment and
training of local staff.
The survey shows that the filling of a role
by a non EU national in a business in the UK happens for many
different reasons. In many cases migration is the result of career
development programs for staff (including a policy to bring some
employees to experience headquarters in the UK), the establishment
of a new function in the UK that could be located in other jurisdictions
and for which some foreign staff are needed and skills transfer
requirements. This pattern is replicated throughout the world
where the greater movement of people on temporary assignment has
grown enormously over the last few years.
In conversations with some businesses we have
been told that some functions are being moved, commonly to offices
on the continent, because the risks to business planning and needs
could be compromised if the recruitment of people with the right
skill sets cannot be assured. We are also aware that this issue
has been brought to the attention of the Migration Advisory Committee
and the UK Border Agency.
Our concern is that a cap is being introduced
hastily with limited opportunity for detailed study. We are very
conscious that there are demographic, economic and social issues
at play in this important area of public policy. We are also conscious
that any immigration policy should have the confidence of the
host population. Nevertheless, we would hope that a cap on Tier
1 and 2 entrants would not be imposed without a sound understanding
of the implications of doing so. Based on discussions with business
there is a real risk that employment opportunities (and therefore
tax receipts) will be lost because of the possible changes.
FRAGOMEN LLP
Fragomen is the world's leading immigration
law firm which provides services for short- and long-term international
assignments, permanent transfers and the local hire of foreign
workers. Fragomen works with businesses across sectors from multinationals
to small business. It helps with visa applications, workforce
planning, audit and compliance support and review matters. It
has 35 offices globally and with co-counsel assists clients' entry
to 140 jurisdictions.
SUBMISSION
Section 1: Other Jurisdictions
— Economic imperatives are encouraging
other jurisdictions to use temporary entrants sponsored by business
to contribute to economic growth and inward investment. —
Immigration systems are being developed to ensure the profile
of entrants meets the needs of the domestic economy.
Section 2: Analysis
— Migrant numbers from businesses surveyed
indicated greater reliance on EEA nationals over non EEA nationals.
— Employment opportunities are created
by non EEA migrants.
— Reasons for international assignment
to the UK were for many reasons and should not simply be seen
as a person taking an existing role in the UK.
— Business should play a role in up-skilling
the resident labour force.
— Dependants are important for migrants
and should be allowed to accompany main applicants.
— The anticipated impact of a cap would
be to affect business adversely.
— The use of a first come first service
basis for Tier 2 is not supported.
— Strong view that no cap should be imposed
on Tier 2 entry.
Section 3: Concluding Remarks
— The use of the PBS for purposes for which
it was designed will naturally be compromised by a cap.
— The falls in sponsored entry under Tier
2 show the demand driven nature of the category—as the economy
improves it would be harmful to curtail access to skilled workers.
— The demographic pressures in the country
warrant further examination to assess the long-term value of migration
as one means of maintaining productive capacity.
— Decisions of restricting Tier 1 and Tier
2 should only follow study because the risk is to impose disproportionate
harm to the economy.
1. IMMIGRATION
LIMITS—EXPERIENCES
IN OTHER
JURISDICTIONS
New Zealand
1. New Zealand has historically capped certain
categories, to ensure that the overall integrity of the migration
programme is maintained and that it achieves its overriding aims.
Each year, the Government sets the target caps for each stream
within the migration programme, which together comprise the New
Zealand Residence Programme (NZRP). With Government approval,
numbers in an individual stream may be altered during the course
of a programme year (from 1 July to 30 June), though, large changes
are unusual. It is important to note that New Zealand does not
cap temporary categories, nor does it cap all permanent categories.
2. New Zealand distinguishes between skilled
migrants entering for the purpose of filling a temporary role
and those applying for permanent residence. Migrants can be granted
work permits to undertake skilled roles on the basis of intra-company
transfer (ICT) provisions, skill shortages and labour market tests.
Whilst work permits are temporary in nature and expire or have
to be renewed, in some categories they provide a route to permanent
residence. Those migrants who qualify and wish to obtain permanent
residence can apply under the Skilled Migrant Category or the
Residence from Work policy (for those with Work to Residence temporary
permits).
3. The UKBA's favoured proposed amendments
to Tier 1 (General) largely mirror the criteria and operation
of the Skilled Migrant Category. Under this category, applicants
must meet the minimum requirements. For those that do, they can
submit an Expression of Interest (EOI) in which they claim points
for skills, experience and other factors such as qualifications,
age and skilled employment in New Zealand. Those applicants who
score 100 or more points enter a pool. Fortnightly, the pool is
assessed and EOIs selected based on pre-determined selection criteria,
in descending order. This gives the Government the ability to
manage programme numbers for the skilled stream from fortnight
to fortnight. The top selection criterion is those who score 140
points or more, and these EOIs are automatically selected. The
second tier has also been consistently taken, which comprises
those EOIs scoring between 100 and 135 points and claiming points
for an offer of employment in New Zealand. Below these two tiers
are a series of smaller selection criteria which have been determined
by the Minister for Immigration, and give the Government further
flexibility to manage programme numbers. After preliminary checks
on all selected EOIs, applicants are sent an Invitation to Apply
for residence. It is at this point that a full assessment of the
application is made (based on documentation provided to support
the claims made in the EOI) and a decision reached. The selection
criteria are determined each year at the time the NZRP is set
by the Government. In reality, the selection points and criteria
have remained remarkably static over the years this system has
been in place.
4. The NZRP contains permanent residence
goals set by the Government on an annual basis. The current goal
is set at 45,000—50,000 approved places, of which 26,900-29,975
are preserved for the Skilled/Business stream (including the Skilled
Migrant category discussed above), some of which are capped. In
particular, the Partner and Dependent Child categories are not
capped but are given a number of places for planning purposes
only. Parents, Adult Child, Adult Sibling and some International/Humanitarian
categories are capped based on the numbers of people the Government
feels is appropriate to add to the New Zealand population for
the coming 12-month period.
5. Results for 2010-11 Year to 20 August
2010 (period starting 1 July 2010) showed that in the Skilled/Business
stream, there have been 1,284 applications approved, representing
2,892 people (of a total of 4,956 people approved overall in the
same period). There are an additional 7,279 applications on hand,
many of which will be those that were submitted in the 2009-10
programme year. The on-hand applications represent a total of
17,800 people within the Skilled/Business stream only.
6. In the last selection of EOIs, 22% were
made by Indian nationals and 13.3% were made by UK nationals,
this being the second highest percentage of EOI's by one nationality.
7. As entry for foreign nationals on work
permits is subject neither to a quota nor to a points test, businesses
in New Zealand are less impacted by the pool system and quota.
They benefit from the certainty of being able to secure the skills
required for their business under the work permit scheme in a
timely manner. If an individual elects to apply for permanent
residence, this is a personal choice which they can do whilst
they are already in New Zealand and therefore does not impact
the function of business.
Australia
8. After its election in 2008 and also with
the onset of the global financial crisis the Australian Labor
Government set about reforming aspects of the migration system
to deliver more focused outcomes and place much greater emphasis
on demands of the economy rather than the supply of unsponsored
migrants.
9. Australia has granted permanent resident
status for those entering as immigrants (as opposed to "temporary
residents"). The Australian Government has introduced capping
provisions in legislation for the immigration programme. These
provisions supplement some existing powers and relate to limiting
some entry for General Skilled Migration.[50]
Applications by people in specific occupations may be capped.
10. Priority processing requirements have
been introduced to facilitate processing applications for applicants
in certain occupations. Under these processing arrangements, migrants
nominated by a state and territory government will be processed
ahead of applications for independent (ie unsponsored) skilled
migration. The new arrangements also give first priority to skilled
migrants who have an offer of employment.
11. The overall size of the migration programme
(ie people entering as permanent residents) is set at 168,700
places. This comprises skilled migration increasing by 5,750 programme
places from the previous year. This includes an additional 9,150
programme places for sponsored by employers and a decrease of
3,600 places for unsponsored migrants. There is a reduction in
the level of family migration by 5,750 programme places. The emphasis
is thus being made on people sponsored by employers and those
unsponsored applicants in occupations in demand by states and
also those holding offers of employment.
12. In addition, entry through the unsponsored
General Skilled Migration route included a reduction in occupations
of eligibility: the new Skilled Occupation List totals 181 occupations,
which will be revised annually to ensure migration programme is
demand-driven rather than supply-driven. The old occupation list
contained more than 400 occupations.
13. The entry of workers on subclass 457
visas as temporary residents to work in business is subject neither
to a cap nor a points test. Worker protection laws, which came
into effect on 14 September 2009, were designed to ensure that
people entering in this category are sufficiently skilled and
are paid local market rates. Additional screening is needed for
entrants on 457 visas in trade occupations and chefs from 1 July
2009 to maintain the integrity of the scheme. Holders of subclass
457 visas generally qualify for permanent resident status by being
sponsored by employers through the Employer Nomination Scheme.
As mentioned above, the Australian Government is increasing the
numbers of places available to applicants in this category.
14. Approximately 26% of all primary visa
applications granted have been to citizens of the United Kingdom,
with 14% to citizens of India and 8% to US citizens.[51]
USA
The H-1B Visa Programme
15. An H-1B visa is the "standard"
work visa for professional workers sponsored by US employers.
Having its origins in the Immigration and Nationality Act of 1952,
which codified the H-1 category as a non-immigrant visa available
to foreign nationals of "distinguished merit and ability"
seeking to enter the United States for a temporary period to fill
a temporary position, the H-1B visa category is reserved for foreign
nationals who will work in the United States in a specialist occupation
that requires the theoretical and practical application of highly
specialised knowledge and the attainment of a bachelor's degree
or higher (or its equivalent). It was the Immigration Act of 1990
which imposed a quota on the H-1B category where previously there
had been no cap.
16. The H-1B programme has a current cap that
is set at 65,000, with an additional 20,000 for holders of advanced
degrees from US universities (with some exceptions for workers
at exempt organizations such as universities and colleges). The
first day an employer can file a new H-1B petition is 1 April
of each year, but the employee cannot begin work until the beginning
of the FY (FY), ie 1 October.
17. During the early years of this quota in the
early 1990s, this quota was rarely actually reached. By the mid-1990s,
however, the quota tended to be filled each year on a "first
come, first served" basis, resulting in new H-1Bs often being
denied or delayed because the annual quota was already filled.
In 1998 the quota was increased first to 115,000 and then, from
2001-03, to 195,000 visas per year. During the years the quota
was 195,000, it was never reached. In FY 2004, the quota reverted
to 90,000 when the temporary increase passed by Congress in 1999
expired. Since then, the quota is again filling up rapidly every
year, making H-1Bs again increasingly hard to obtain.
18. In the past couple of years, the high
demand for H-1B visas forced the US Citizenship and Immigration
Service (USCIS) to hand out visas via a random lottery for the
FYs 2008 and 2009.
19. For FY 2007, beginning on 1 October
2006, the entire quota of visas for the year was exhausted within
a span of less than 2 months on 26 May 2006, well before the beginning
of the FY concerned. The additional 20,000 Advanced Degree H-1B
visas were exhausted on 26 July.
20. For FY 2008, the entire quota was exhausted
before the end of the first day on which applications were accepted,
2 April. Under USCIS rules, the 123,480 petitions received on
2 and 3 April that were subject to the cap were pooled, and then
65,000 of these were selected at random for further processing.
The additional 20,000 Advanced Degree H-1B visas for FY 2008 were
exhausted on 30 April.
21. For FY 2009, USCIS announced on 8 April
2008 that the entire quota for visas for the year has been reached,
for both 20,000 Advanced and the 65,000 randomly selected quota.
USCIS would complete initial data entry for all filing received
during 1 to 7 April 2008 before running the lottery.
22. For FY 2010, USCIS announced on 21 December
2009 that enough petitions were received to reach the year quota.
Trend analysis indicates that the FY 2011 cap may be reached sometime
between early October and November since the economy is picking
up and the recession is easing.
23. The H-1B programme is perceived to have
had a negative impact on business. There is the initial issue
of having to file the H-1B petition on 1 April, six months before
the employee can actually begin work. In addition, in past years
the uncertainty of not being selected in the lottery, along with
the applicable fees—which of course are not refunded even
if the petition is not selected in the lottery, as the entire
petition would have been prepared in advance—have forced
employers to opt for other visa options, or particularly in the
case of India, to move operations overseas. A common scenario
finds failed H-1B applicants immigrating instead to Canada, which
has a less strict work visa scheme.
24. Accordingly, under the H-1B caps employers
are faced with the choice of filing a costly and uncertain petition
for their preferred (non-US) candidate, or the equally undesirable
option of simply hiring lesser-qualified candidates.
2. FRAGOMEN SURVEY
25. Fragomen undertook a detailed and widespread
survey of our clients to determine the true impact to businesses
of the proposed immigration limits.
26. Respondent companies had combined UK revenues
in excess of £25 billion and represented the following industries:
The relative company size of respondents is
broken down as follows:
Finally, the respondents also detailed the positioning
and importance of the UK market to their global operations. Of
those that answered the question:
— 36% ranked the UK as their primary market;
and
— 64% ranked the UK as their secondary
or tertiary market.
The ratio of EEA national workers (resident workers)
to non EEA nationals and their respective contribution to GDP
27. The data from the Survey responses set
out in tables A and B demonstrates that the overall percentage
of EEA nationals employed exceeds that of non EEA nationals.
Table A
Number of
Migrants per
Respondent
| % Tier 2 Intra
Company Transfer
per respondents
| % Tier 2 General—
Experienced Hires
per respondents
| % Tier 2 General—
Graduates
per respondents
|
| 0-50 | 78.6 | 77.78
| 100 |
| 51-100 | 4.35 | 5.58
| |
| 101-150 | 13.04 | 11.16
| |
| 151+ | 4.35 | 5.48
| |
Table B
% of Migrants that
constitutes total
UK employee
population
|
Tier 2 Intra
Company Transfer
|
Tier 2 General—
Experienced Hires
|
Tier 2 General—Graduates
|
| 0-25 | 90.48 | 90
| 80 |
| 26-50 | 4.76 | 10
| 20 |
| 51-75 | 4.76 |
| |
| 76-100 | |
| |
28. We would recommend that the committee, or at least further
analysis examine consider the ratio of EEA national to non-EEA
national workers and assesses their respective net contribution
to GDP. This assessment should factor in the revenue they generate
through additional job creation for settled workers, tax income
and salary expenditure. Consideration should also be given to
suggestion that any costs to pubic services incurred as a result
of migrant workers is outweighed by these benefits.
We expand upon these points below.
Employment
29. Of the Survey respondents who elected to answer the
question, "How many UK nationals are employed as support
staff to your current ICT population in the UK?" 25% reported
0, 50% 0 to 20 and the remaining 25% 100 plus. Of those who provided
data concerning the number of existing resident workers (ie EEA
Nationals) they employ as a result of migrant employment in the
UK (eg Support Staff), responses ranged from a Financial Services
company suggesting that "all local staff are employed as
a result of the Tier 2 (ICT)s in our office" and two UK head
quartered companies suggested that it is likely to be "several
hundred fold" and "hundred if not thousands" respectively.
On the other end of the spectrum, one respondent suggested 5%
of their population where EEA nationals in support roles to migrants
and another suggested they had 12 such roles, all low skilled.
30. The employment of these migrant workers therefore
directly and indirectly generates more jobs and revenue for UK
businesses which in turn generates income for the economy. However,
the consequence of a limit to the number of Tier 1 and 2 entrants,
which would result in less recruitment of non EEA nationals, would
be that a number of resident workers currently employed to support
the migrant worker population would lose their jobs.
31. We submit that it would also be valuable to undertake
a study to assess the approximate number of settled workers employed
in UK as a direct result of migrant workers contribution to GDP.
We anticipate that this study would yield far-reaching conclusions
encompassing various different sectors and industries. For example,
the existence of a migrant population, particularly under Tiers
1 and 2, necessitate the relocation industry. If the numbers of
Tier 1 and Tier 2 are limited, this would have a negative impact
on the entire relocation industry and may result in job losses
for settled workers indirectly supporting migrant workers.
The Length of time migrants spend in the UK
32. Consideration should be given to the average length
of time migrants under Tiers 1 and 2 spend in the UK. The purpose
of this would be to understand the pattern of their movements
and whether they are transient in nature or whether there is a
preference towards long term stay and settlement in the UK. This
would enable the policy makers to assess what percentage of the
37% increase in the number of people settling indefinitely in
the UK, a figure recently released by the Office for National
Statistics, can be attributed to migrants under Tiers 1 and Tier
2.
33. We can confirm that amongst the respondents the Survey,
60% of migrants spent 3 years or less in the UK. For those operating
short term assignment policies, 31.25% limit assignments to up
to six months, 62.5% provide for assignments of between 12 to
24 months and only 6.25% allow for assignments of 24 months plus.
For those respondents who operate a long term assignment policy,
10.53% only allow for stay for up to one year, 15.79% for up to
two years, 15.73 for up to thre years, 10.53% for up to four years
and 47.37% for up to five years. Further, the Survey clearly shows
that the majority of all Tier 2 (ICT)s leave the UK at the end
of their assignments.
34. These figures indicate that, on the whole the migrant
population of UK employers is largely transient in nature and
the majority do not choose to settle in the UK. In considering
the average length of time migrants under Tiers 1 and 2 spend
in the UK.
Public cost versus contribution of migrants
35. It is a generally accepted notion that migration
can carry economic and social costs and therefore UK Government's
motivation to tackle "unlimited migration" which "places
unacceptable pressure on public services, school places, and the
provision of housing"[52]
is understandable. However, the migrant population under Tiers
1 and 2 supported by the respondents to the Survey have guaranteed
employment in the UK and do not contribute to such pressures.
Instead, it could be argued that they contribute more to the economy
than they cost the public purse. With the minimum income levels
earned by migrants set by the UKBA, they generate substantial
revenue for the UK economy through tax income and overall expenditure.
36. In addition, there is clearly a willingness on the
part of UK employers to mitigate any cost to public services,
in particular the NHS, caused by migrant workers by providing
health insurance to this population. In response to the question,
"Do you agree that employers should operate health insurance
schemes for non-EEA nationals that they sponsor and their dependants?",
approximately 70% of respondents agreed that employers should
operate health insurance schemes for non-EEA nationals and 60%
thought that the Government should add health insurance responsibility
to the existing list of sponsor responsibilities.
37. Given that the migrant population in Tiers 1 and
2 do not appear to be the migrants who place "unacceptable
pressure on public services", we suggest that the committee
should assess the public cost of hosting this migrant population
against their revenue contribution to the UK economy. This is
likely to demonstrate that the economic contribution of skilled
migrants entering the UK through Tiers 1 and 2 outweighs the public
costs and their impact on the provision and use of public services,
particularly in comparison to their EEA national colleagues.
Economic impact
38. Given that the majority of our client base is made
up of companies, it will come as no surprise that we recommend
that the economic impact of migration should be prioritised. However,
given our suggestions gleaned from the Survey findings in our
response to question 1 that the economic impact of migrants coming
to the UK under Tiers 1 and 2 is a positive one, we would argue
that this positive impact can be more easily balanced against
public services and social impact concerns.
Public service impact
39. The impact on public services can be mitigated by limiting
migrants' access to certain facilities. As demonstrated by the
data set out in response to Question 1 under the heading "Public
cost versus contribution of migrants", the majority consensus
amongst the respondents to the Survey was that it is reasonable
to expect employers to provide private health care for their migrant
population. Moreover, given the additional job creation (see Question
1) and revenue generated from tax and expenditure of migrants,
the impact of any utilisation of public services is likely to
be negative in comparison to their overall contribution to GDP.
Social impact
40. With respect to balancing social impacts, we appreciate
that there is a perception that migrant workers threaten the domestic
labour market. This can cause general ill feeling toward the migrant
population, particularly in times of economic hardship which can
ultimately lead to social unrest.
41. We recommend that the additional job creation caused directly
by the employment of migrant workers and indirectly by economic
growth resulting from the net contribution of migrant workers
to GDP should be balanced against a perceived threat to the resident
labour market. In addition, consideration should be given to the
existing programmes to train and up-skill the resident labour
market through international assignments and domestic programmes.
We elaborate on the respondents training and up-skilling activities
in response to question 4 below.
42. We accept, however, that it is in the interest of
the country for the economic benefits of migration to be articulated
in order to build confidence in the role of immigration and the
administration of the system. We would be pleased to discuss how
this issue could be approached.
Alternatives to employing Tier 1 and Tier 2 Migrants—Training
and Up-skilling Resident Workers
43. Tier 1 and, in particular, Tier 2 are demand-driven
immigration categories. To provide a framework within which to
consider what alternatives employers have to utilising Tier 1
and Tier 2 Migrants, we must first set out the nature of the employer
demand.
44. The vast majority (89%) of respondents to the Survey
confirmed that international experience is seen as beneficial
in their company and nearly 68% run international management or
graduate programmes that incorporate an international move. 64%
confirmed that the UK was classed as a "centre of excellence"
in particular areas.
45. Respondents to the Survey were asked to rank ten
reasons why a UK assignment would occur in their company. The
following were the top five reasons provided in order:
1. Transfer specialist knowledge.
5. UK Headquartered Experience.
46. Based on the findings that the transfer of specialist
knowledge was ranked as the top reason for employing migrant workers,
there is a need to dispel the "British jobs for British workers"
myth which assumes that all roles currently performed by migrant
workers in the UK could be filled by resident workers. The three
assumptions endemic within the structure of this often quoted
mantra (there is a vacancy; the vacancy is British; and there
is a UK national with the skill set to take the position) are
all flawed.
47. On the first point, a number of roles undertaken
by migrants, particularly under Tier 2 are short-term project
or knowledge transfer based roles which cannot be classed as vacancies
because of their very nature. To enhance efficiencies and leverage
existing company knowledge and skills, employers will often employ
project teams or individuals whose role it is to move from geographical
location to geographical location to implement processes within
an international organisation or who will undertake a period of
knowledge transfer in the UK to facilitate the long term fulfilment
of their role overseas. In both cases, the employment of resident
workers would not be viable.
48. Given the temporary nature of such roles and their
international make-up, they can also not readily be classified
as British vacancies as, in fact, the role is ordinarily based
overseas with a temporary posting in the UK. In this respect,
also, employment of resident workers would not be appropriate
without being able to additionally fill the role's permanent location
overseas.
49. The third assumption, that there is a resident worker
that would be able to fill the role if it were offered to the
resident worker, can also not be assumed to be automatically correct.
Given the above facts that the role is not British and only temporary
in nature, the resident workforce would ordinarily be neither
willing nor able to undertake the duties inherent in such positions.
In addition, 60% of Survey respondents advised that they have
roles in the UK which, although not on the Shortage Occupation
list, are difficult to fill in the UK. Examples given include
US qualified lawyers, Nuclear Engineers, Chinese trained doctors
and Turbine designers and engineers. 65% of these confirmed that
they were taking specific steps to source or up-skill British
workers to fill these roles in the future.
50. The respondents were also asked whether, if the Government
introduced a quota on all Tier 2 applications and the quota was
reached, they would be able to fill all positions currently filled
by migrant workers from resident labour. Only 21% said they would.
Respondents were later asked to estimate the number of Tier 2
(ICT)s positions they could fill with resident workers in the
event a quota is reached and to provide comment.
51. Of the respondents who offered a percentage figure,
the majority said zero, but several did think it might be possible
to fill some of these positions. Estimates varied considerably
from less than 5% to up to 75% in one case, the average being
less than 50%. The main reasons cited were that Tier 2 (ICT) is
used for knowledge transfer roles and specific skills. In one
case, the respondent acknowledged that they would always be able
to fill roles with resident workers, however, "this would
not always mean that the best people were in those roles and would
seriously impact the service we could deliver to our clients.
An international company operating across the world needs an international
team at its centre".
52. From all responses, it was clear this can only occur
with the investment of costs and time necessary to train and replace
any Tier 2 (ICT) migrants. This could not be achieved overnight
without a significant impact on business operations for nearly
all those utilizing the ICT route for skilled employee transfers.
More than that, the labour market demands are dynamic and the
role of immigration is to facilitate obtaining skills and experience.
In any case, there is no empirical evidence available to us to
show that training opportunities by responsible businesses suffer
as a result of migration.[53]
Training and Up-skilling—Employer's Responsibility?
53. Whilst there are certain roles for which it would
not be appropriate for resident workers to be trained and up-skilled
in the UK, respondents to the Survey showed a degree of recognition
that the employer should shoulder some of the responsibility for
up-skilling the workforce and training those from the resident
labour market.
54. 83% of the respondents agreed that employers should demonstrate
a practical commitment to up-skilling British workers and 52%
thought that, in the current economic climate, the Government
should add this responsibility to the existing list of sponsor
responsibilities. However, for the larger employers—and
in particular those that are UK based—it is clear that there
was an expectation from business of Government recognition of
the steps they already have in place to recruit, train and up-skill
from the resident labour market. In some cases these include highly
sophisticated management and leadership training programmes. Accordingly,
while the Survey shows support for the idea that businesses should
bear responsibility, together with the Government, for training
and up-skilling their employees, it would be mistaken to translate
this into a belief that employers agree to the imposition of additional
obligations in this respect. Indeed, 73% of respondents believed
that the primary responsibility for up-skilling British workers
lies with the Government through its education policy and training
opportunities.
55. The tendency to see this as an employer responsibility
is less prevalent with the smaller overseas employer. This may
be indicative of the need for a greater level of knowledge transfer
within smaller (more recently established) overseas based companies.
Risk to Reciprocity
56. UK companies provide training and up-skilling opportunities
to resident workers by sending them overseas on assignments for
the purpose of training and career development who then return
to the UK with improved skills. There is a risk that this reciprocity
of opportunity may be threatened if the UK where to limit the
number of non EEA nationals benefiting from the experience.
57. Part of this training is provided in "centres
of excellence" in particular areas which 61% of respondents
confirmed operated outside the UK. Other training opportunities
are provided through international management or graduate programmes
which are operated by 67% of respondents. 38% of respondents advised
that they had up to 30 people on assignment overseas, 24% confirmed
that they had up to 100 people on assignment overseas and 33%
confirmed they currently had over 100 people on assignment overseas.
58. From these data, it appears that the UK is a major
exporter of talent, with resident workers on assignment overseas.
A further indication of the outflow of talent is the high proportion
of skilled British nationals going to Australia and New Zealand
(see above). Should the UK Government take steps to protect the
domestic workforce through limiting entry to the UK via Tiers
1 and 2, this approach could result in a loss of training and
up-skilling opportunities available to settled workers as there
is some risk of other countries implementing retaliatory protectionist
policies as was threatened in the "visa war" between
the US and the EU in 2006.
New migration from outside the UK
59. Limiting the number of migrants entering from outside
the UK will mean that employers will be unable to ensure that
they have the skills and talent they need to operate and grow
their business. Whilst it may confidently be said that the majority
of UK employers are committed to up-skilling and training the
local resident labour market, the reality is that there are certain
key, often high revenue generating, roles which resident workers
cannot be trained to fulfil. This is either because they are not
"vacancies" in the UK but in reality are overseas roles,
or because they require specialist skills and experience that
cannot be developed in the UK. Moreover, at a macro level, the
inability to bring in migrant workers from overseas would frustrate
the operation of many companies' global business.
60. Not only would the impact on employers be severe,
but also it would run a serious risk of hampering overall economic
recovery and growth in the UK.
Extensions and switching between routes by migrants within
the UK
61. Equally concerning would be the consequences of limiting
migrants' ability to extend or switch their status in the UK to
a Tier 1 or 2 Migrant. This creates a high risk situation for
employers from an employment law perspective who may be forced
to terminate employment in the UK for no other reason than the
individual cannot extend or switch their immigration status. This
appears to be in conflict with the findings of the Employment
Tribunal in the case of Osborne Clarke Services v Purohit (EAT
2009) where the Tribunal found that employers must essentially
be blind to nationality and immigration requirements during their
recruitment processes.
62. On a macro level, the restriction on in-country applications
also increases an on-going risk of impacting economic recovery
and growth. It would discourage the "brightest and best"
from sharing their skills with the UK as they would elect to work
elsewhere where they are offered a more secure immigration future
(should they choose to take it). By this we mean the ability to
remain in the UK for sufficient time to successfully achieve their
desired career point, not necessarily the opportunity to settle.
63. This will apply to migrants with experience in the
work place, and to international students. The latter may be discouraged
from studying in the UK if post-graduation there is no defined
immigration path that enables them to pursue their careers in
the UK. This will also mean a loss of revenue into the UK from
tuition fees and expenditure.
Suggested approach
64. It is therefore essential that any reduction in migrant
workers be approached holistically and in a considered manner.
The focus should be on preserving the appropriate skills level
in the UK to facilitate and sustain economic growth. Decisions
on the levels of migration going forward must provide for a sensible
time frame to enact changes and must balance the Government's
political agenda with commercial necessities.
65. This balance can be supported by a more robust immigration
system in which skills levels required to enter the UK as a migrant
can be adjusted in accordance with the UK's skills needs and having
regard to the economic environment.
Dependants
66. Data from our respondents indicated that only a small
percentage of their migrant population are accompanied by dependants.
Accordingly, we submit that a reduction in the dependant population
would have a minimal impact on reducing net migration.
67. However, for those migrant assignees who are accompanied
by dependants (and this would often involve people at a more senior
level), the ability for their dependants to work in the UK is
a key influencing factor in the individual's decision to accept
an assignment in the UK. Whilst most companies do not track internally
the number of dependants who work or wish to retain the option
to work, an international survey carried out by Permits Foundation
found that 22% of current assignees had turned down an assignment,
and 7% had terminated an assignment early, because of concerns
about their partner's employment or career. The actual numbers
of individuals turning down assignments is likely to be much higher
given that only those on current assignments were questioned by
the Permits Foundation.
68. Accordingly, we submit that, to the extent that reductions
in migration under Tiers 1 and 2 must be effected, this should
not include dependants.
Anticipated Impact of Cap
69. The impact of a reduction in Tier 1 (General) for
our client base will largely depend on restrictions introduced
on Tier 2 categories. The majority of our clients utilise Tier
2 routes wherever possible, given preferred linkage of immigration
status to themselves as the sponsoring business in the UK. Approximately
95% of our Survey respondents confirmed that they believed any
restrictions introduced on migrant numbers should focus on immigration
categories where there is no employer sponsor requirement. The
impact would though be highly significant if Tier 2 routes are
restricted, given that the skills and earnings levels for many
of our clients' migrant workers mean that they would qualify for
entry under Tier 1 and would seek to use this as an alternative.
70. It is accepted that, for certain individuals, particularly
those scoring at the high end of the spectrum for Tier 1 attributes,
an ability to hold self-sponsored independent immigration permission
is important. It can be pivotal to their decision to come to the
UK, given that it gives them the flexibility to maximise career
opportunity, profile and earnings. One impact of reduction on
Tier 1 (General) main migrants to enter the UK would be that it
may discourage such high calibre candidates coming to the UK.
Taking this one stage further, if a reduction in Tier 1 (General)
main migrants extends to in-country applicants, this may mean
that UK employers would stand less chance of being able to recruit
for very senior roles from a candidate pool already based within
the UK.
71. If Tier 1 (PSW) switches into Tier 1 (General) were
to be affected by the reduction in number of main migrants through
the Tier 1 (General) route in 2011-12, one impact might be to
discourage migrants studying for undergraduate degrees and postgraduate
degrees in the UK. Whilst young migrants today may anticipate
an international career spanning different locations, our experience
is that migrants considering where to study will take into account
the ability to remain in a country and pursue their career there
for the long term. The perceived benefits of Tier 1 (PSW) are
in jeopardy, if there is a restriction on the ability to convert
this into a Tier 1 (General) by the end of the permitted period.
Of course, this applies equally to Tier 1 (PSW) migrants switching
into Tier 2 (General), but this is addressed elsewhere in these
submissions.
72. More than 95% of our Survey respondents stated that
the introduction of a first come first served system within Tier
2 (therefore assuming a restriction on number of main migrants)
would negatively impact the way their business operates. We believe
that focussing on Tier 2 as a means to reduce migrant numbers
would have potentially very serious consequences on the UK at
this vulnerable point in its economic position and recovery strategy.
It is likely to mean that key job roles will move or be created
overseas, meaning less opportunity in the UK as people or teams
supporting such individuals will also be located overseas. This
in turn will impact the UK directly from an economic perspective
in terms of lost revenue through corporate and personal tax contributions
and personal expenditure of these individuals/teams.
Shortage Occupation
73. We would consider that the Shortage Occupation (SO)
categories and the Resident Labour Market Test fulfil different
functions. The SO list is designed to be assessed and maintained
with reference to periodic analysis. On the basis that the SO
list accurately reflects specific skills needs in very short supply
in the UK at any given time (which cannot be met by sourcing workers
within the EEA), we would submit that a reduction in the number
of main migrants under this category would be significant. That
said, at present our clients consider the list to be too limited
and the process of review a reactive one, lagging behind business
needs.
The Resident Labour Market Test
74. The impact of a restriction on the number of migrants
under this category would be highly significant. All (100%) of
our Survey respondents considered that the current means of assessing
the resident labour force is sufficient. If this process works
effectively then entry of migrant workers is only possible where
no resident worker can be sourced, meaning there is a clearly
demonstrated need for the relevant skills and experience. If despite
the RLMT being completed, restrictions on migrants under this
category remain, it will mean that key roles will move or be created
overseas. There will be no choice, given that it is not possible
to substitute resident workers who do not have the required skills
and experience to take up the role.
75. Another potential casualty of restricting the number
of migrants under this category, is the UK based global or European
graduate training programme. If businesses are not able to recruit
globally for these programmes, attracting the best global talent,
they will look to relocate these programmes to other jurisdictions
with more flexible immigration regulations.
Intra-Company Transfer
76. We would strongly recommend that the ICT category
be excluded from any restrictions on migrant workers entering
the UK under Tier 2, given they do not contribute to net migration.
The results of our Survey support this with our clients confirming
grave concerns about the imposition of a cap on such moves. Some
44% of clients responding confirmed that the first ranked purpose
of assignments is to transfer specialist knowledge with 27% ranking
this purpose second. 14% ranked first the requirement for the
individual to build on already acquired company knowledge by gaining
experience in the UK headquarters, with 10% citing the need to
fill project based short term skills gaps as being the primary
purpose for an ICT move. Given responses for second and third
ranked ICT assignment purposes, it is clear that transfer of knowledge,
requirement to gain experience of UK headquarters/career development
(in the context of working in a global marketplace), training
(again in context of developing all global employees, including
British and EEA nationals) and filling short-term skills gaps
accounts for the overwhelming majority of ICT moves into the UK.
77. We would consider this category being restricted
as having the most serious potential impact to the UK economy.
The proposed exclusion of those ICTs for less than 12 months will
not redress this issue as assignment lengths are often longer
than 12 months for legitimate reasons. To assume that all skills
transfer requirements needed for more than 12 months, could potentially
be met by training up UK and EEA nationals is to drastically underestimate
the skills and expertise involved and also the fundamental nature
of a globalised market in which it is imperative that British
workers can participate and benefit.
78. We can confirm that amongst the respondent population
to the Survey, 60% of migrants spent three years or less in the
UK. For those operating short term assignment policies, 31.25%
limit assignments to up to six months, 62.5% provide for assignments
of between 12 to 24 months and only 6.25% allow for assignments
of 24 months plus. For those respondents who operate a long term
assignment policy, 10.53% only allow for stay for up to one year,
15.79% for up to two years, 15.73 for up to three years, 10.53%
for up to four years and 47.3% for up to five years. Further,
the Survey clearly shows that the majority of all Tier 2 (ICT)s
leave the UK at the end of their assignments.
79. Theses figures demonstrate that, on the whole, the
migrant population of UK employers is largely transient in nature
and the majority do not choose to settle in the UK.
80. Businesses feel very strongly that they should have
the ability to move those employees with the required company
skills and knowledge around the world, to be able to compete in
the global marketplace. 25% of respondents to our Survey confirmed
that they presently have 100 or more British workers assigned
outside the UK. It is therefore clear that many British workers
benefit from reciprocal ability to undertaken an assignment in
another country.
81. Companies have candidly stated that a limit to ICT
moves makes the UK a far less appealing location in which to do
business. This in turn will make the UK less competitive and will
have a direct impact on the UK economy.
Reduction of Intake?
82. We consider that Tier 2 (General), Tier 2 (ICT Established
Staff) and Tier 2 (ICT Skills Transfer) should have a zero reduction.
Our clients would be less impacted by reductions in Tier 1 and
other Tier 2 routes and so if there are to be quotas, we would
suggest they should be focussed on these categories.
83. From a Tier 1 perspective we will be responding the UKBA
consultation with comments regarding possible ways to adjust the
points calculation to reflect the value of holding a UK job offer,
for example, and other potential contributions to/negative impacts
on the UK. It should be noted, however, that we do not believe
such reductions in Tier 1 and the remaining categories of Tier
2 would satisfy the Government's objective of reducing net migration
to the levels committed to.
84. Recent statistics released by Office of National
Statistics indicate that whilst there has been an increase in
net migration, this increase is caused by a fall in emigration
from the UK and an increase in the number of student visas being
issued and people obtaining ILR in the UK. It is not caused by
an increase in work authorisations, which in fact fell. In our
opinion, therefore, there are means to better manage and, where
appropriate, to lower net migration to the UK other than through
Tiers 1 and 2. These tiers should be preserved to facilitate the
entry to the UK of the migrants who make significant contributions
to the UK economy and wider society with minimal or no impact
on public services.
85. Examples of other options that could be considered
are young people coming into the UK under Tier 5 (Youth Mobility
Scheme), students coming into the UK under Tier 4 and by operating
a more robust immigration system through compliance measures in
general under the Points Based System and also employer participation
in a Highly Trusted Partner scheme. With respect to students,
a distinction should be made between those coming to the UK to
study for undergraduate and postgraduate degree courses at established
and appropriately recognised institutions, and those coming to
studying on other short term and English language courses.
3. CANCELLATION REMARKS
86. A starting point in the terms of reference has been
to seek input on the least harmful way that reductions in entry
by Tier 1 and/or 2 visa holders could be implemented. This is
a difficult starting point for business to address because, by
definition, the businesses providing responses to the Survey are
users of the PBS.
87. The consensus amongst the respondents to the Survey and
the underlying premise of the recommendations contained in this
response is that curtailing the entry of skilled migrants will
adversely affect their commercial performance. Accordingly, we
have suggested that the issues at stake are so significant that
they warrant further investigation. For example, in assessing
the impact of migration on the economy, the committee might consider
the ratio of EEA nationals to non-EEA nationals and their respective
contribution to the economy—including the additional GDP
per capita derived from immigration and the long-term consequences
for the economy of reducing the numbers of Tier 1 and/or Tier
2 migrants.
88. Recent statistics from the Office of National Statistics
suggest that migration through Tiers 1 and 2 fell in the recent
past. We believe that a further reduction in numbers comes at
the worst time as demand for skills must be met for the economy
to realise opportunities. In the absence of well-considered empirical
work from economists, demographers and other academics, the impact
of changing the current system once again to cap the number of
people entering at best will result in increasing uncertainty
in medium and large businesses and harm business planning.
89. In considering longer-term needs of the economy,
we also recommend some thought be given to demographic pressures.
While we understand the Government's concerns about the size of
the British population and the carrying capacity of the country,
there is a long-term population challenge. To sustain the current
levels of GDP and facilitate economic growth, at a time when 16%
of the population is over 65[54]
and hence either retired or facing imminent retirement, migration
may be a long-term economic tool for maintaining and increasing
the productive capacity of the economy in conjunction with the
training and development of British nationals. Reductions along
the lines of those being considered before such an analysis is
undertaken may prove harmful to the economy and adversely affect
employment in the UK—now and in the future.
September 2010
50
General Skilled Migration is a points tested category for either
unsponsored applicants or those sponsored by family members. It
includes a points test. It is the closest to a Tier One visa category
but the holders hold indefinite leave to remain upon entry. Back
51
Data from January 2010. Cf. http://www.minister.immi.gov.au/media/media-releases/2010/ce10002.htm Back
52
Home Secretary's Statement to the House of Commons on Immigration
Cap 28 June 2010. Back
53
Cf. M Baker and M Wooden, "Immigration and its impact on
the incidence of training in Australia." Australian Economic
Review. Vol. 25, 2, pp 39-53. Back
54
Data from Office of National Statistics-http://www.statistics.gov.uk/cci/nugget.asp?id=949 Back
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