Immigration Gap - Home Affairs Committee Contents


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
0-5078.677.78 100
51-1004.355.58
101-15013.0411.16
151+4.355.48


Table B
% of Migrants that
constitutes total
UK employee
population


Tier 2 Intra
Company Transfer


Tier 2 General—
Experienced Hires


Tier 2 General—Graduates
0-2590.4890 80
26-504.7610 20
51-754.76
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.

    2. Project based.

    3. Career Development.

    4. Training.

    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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