Memorandum by the CBI
CBI evidence to House of Lords Economic Affairs
Committee: the economic impact of migration
1. The CBI is pleased to respond to the
Committee's request for evidence on the impact of migration. We
appreciate that the Committee has asked for short submissions
and in this response we have focussed on skills and employment
issues where the CBI has a unique insight. Other issues such as
the impact on public services, on regional policies and on data
capture are clearly also important—but are better addressed
by relevant experts.
2. In this response, we focus on the experience
of firms employing migrant workers in the UK. Feedback from our
members suggests that employers are employing migrants with a
range of skills across a range of sectors. Clearly some migrants
need support with languages and in accessing their employment
rights and this is an area where we think more can be done—by
Government and employers. We do not believe that migration is
a long-term answer to UK skills issues and we must ensure that
action is taken to address shortcomings in the education and training
systems. However, migration has undoubtedly brought economic benefit
to the UK although migration from outside the EU was in need of
reform before the advent of the points-based system.
Employers are employing migrants with a range
of skills . . .
3. CBI members report that the widespread
portrayal of migrant workers as lower-skilled and working in lower
paid jobs is overly simplistic. While it is the case that some
migrant workers have moved to work in areas where labour shortages
exist for lower skilled staff, the overall employment profile
of migrants to the UK is complex and reflects a range of demand
from employers for different levels of skills. The CBI's 2007
Employment Trends Survey shows that demand for skilled, managerial
and professional workers from abroad remains strong. Over two-thirds
(69%) of firms expect staff hired from the EU-15 to be skilled,
managerial or professional, as do 62% hiring from the new EU members.
4. Exhibit 1 set outs this data and maps
trends in demand since 2005. It clearly shows a broad mix of demand
across skill levels for all source countries. It also shows that
firms that require low-skilled labour are still sourcing workers
from abroad, most notably from within the expanded EU. While the
trend is clearly for an increase in the share of workers to fall
into the "skilled" and "professional" segments
of the workforce, a substantial percentage of migrants still fall
into the unskilled segment.
5. This survey data is borne out in the
anecdotal evidence received from CBI members, who have emphasised
the importance attached to a migration system that assesses demands
at all skill levels and takes account of this in the government's
migration planning.
Exhibit 1
PERCENTAGE OF FIRMS EMPLOYING MIGRANT WORKERS,
BY WORK FORCE SEGMENT AND IMMIGRATION STATUS (SOURCE: CBI EMPLOYMENT
TRENDS SURVEY)
. . . and across a range of sectors
6. This year's CBI Employment Trends Survey
also showed significant variations by sector in the employment
of migrants. This is to be expected, given the different needs
for skills and levels of demand in the different sectors. Among
the new EU members, for instance, the hospitality sector was most
likely to hire workers (46%), closely followed by construction
(36%).
7. Looking at the need for unskilled workers
in the future, demand is likely to be particularly concentrated
in sectors such as retail, transport and communication which have
been experiencing labour shortages—two thirds (65%) of migrant
workers from the EU15 to retail are expected to be unskilled with
a similar number seeking unskilled workers from the new EU states
(64%). In the transport and communication sector, equal numbers
(40%) of employers expect hires from the EU15 to be unskilled
compared to just over half from the new EU members.
8. Demand for labour from outside the EU
also remains: 15% of firms anticipate hiring from non-EU states
over the next year—over three quarters (77%) of demand for
migrant workers from outside the EU is for skilled, managerial
and professional staff. These migrants are particularly found
in the Financial and Professional sectors where over a quarter
(26%) of firms will take professional staff from outside the EU,
and over one fifth (24%) will take on skilled staff from non-EU
countries.
Some migrants need support with language training
. . .
9. English skills are a vital driver of
social integration as well as labour market integration and, while
many migrant workers from the new EU accession states arrive with
excellent English language skills, others need support. Employers
are playing their part with language training and are also committed
to promoting community integration. Many firms provide English
for their staff—over a quarter (28%) provide English language
training to their employees and/or signpost them to relevant courses
in the local area. It is also encouraging that one in six (16%)
employers is also providing practical information about life in
the UK to help ease the process of integration.
10. The Department for Innovation Universities
and Skills has been working to develop a new ESOL for Work qualification.
This is a new bite-sized, work-relevant programme which will be
of benefit to employers and their employees. The CBI and TUC are
currently working together (with DIUS support) on a good practice
guide for employers on English for Speakers of Other Languages
(ESOL). This will highlight the benefits to employers and employees
as the examples below demonstrate. It will also provide information
and guidance to employers in how best to respond to the language
challenges—and where to access the government support that
is available.
First Group, Bus Division and English language training
First Group is the largest surface passenger
transport company in the UK with a turnover of £3 billion.
The Bus Division's European Recruitment Programme has recruited
over 1,100 employees from Europe. For three months prior to employment,
applicants receive free English language training based on everyday
language, relevant for the workplace and linked with health and
safety. Applicants are only recruited once they are considered
to be able to communicate in English. Once in the UK, employees
are encouraged to continue their ESOL training, usually in their
own time, but through a local provider or with the support of
a Union Learning Representative in an onsite lifelong learning
centre. First Group, Bus Division also helps arrange bank accounts
for new employees and supports them in their search for rented
accommodation in the first sixth months after moving to the UK.
Such an approach has delivered real bottom line benefits—reducing
staff turnover and increasing profitability.
Cavaghan & Gray
Cavaghan & Gray are seafood manufacturers
with 1,000 staff based in the North West, have developed a comprehensive
strategy to support migrant workers. The firm offers ESOL courses
for employees before or after shifts for 2.5 hours a week for
nine weeks. New workers are assigned a buddy for the first few
weeks to ease their integration into the UK and the company. Their
buddy speaks their language and supports them through the health
and safety training. As a further support for new migrant workers,
all signage and paperwork, including the company handbook, is
multilingual and the structured induction is currently held in
a range of languages. The company has also set up a Diversity
Forum expressly to monitor the integration of migrant workers,
and to identify any future needs they may have. Employees from
every nationality and community are encouraged to contribute to
the firm's quarterly magazine as a way of promoting cohesion.
Staff morale and community cohesion within the firm have improved
substantially as a result.
. . . and in accessing their employment rights
11. The CBI is very concerned to ensure
that migrant workers who are vulnerable to exploitation and abuse
are able to benefit from their statutory employment rights. It
is essential that they understand their employment rights and
are able to access both advice and enforcement bodies.
12. Information is now being made available
in the newer EU states in the language of migrant workers to explain—before
workers enter the UK—our fundamental employment rights;
for example this guidance spells out the level of the National
Minimum Wage and the maximum that can be deducted for accommodation—as
well as the UK rules under the Working Time Directive (which is
implemented differently in some member states). These leaflets
are also available in the UK and also signpost workers to services
such as that provided by Acas who are often able to resolve disputes
without requiring employees to take their case to Employment Tribunal.
13. It is essential that the UK enforcement
bodies work together to target sectors or localities where abuse
has been highlighted as an issue. The UK has a good network of
well respected bodies responsible for effective enforcement. The
Health & Safety Executive, the Gangmasters Licensing Authority
(designed to deal with specific issues in the agricultural sector),
Employment Agency Standards Inspectorate and the HMRC's work on
enforcing the National Minimum Wage (NMW) all have key roles to
play. The CBI is working with the Government and trade unions—as
well as interested sectors—on the BERR Vulnerable Workers
forum to ensure that co-ordination between these bodies is further
improved. We have also welcomed Government's moves to introduce
proper penalties for non-compliant firms; the CBI has worked closely
with the Government to ensure proportionate fines that reflect
the extent of a firm's non-compliance with the NMW, for instance.
Migration cannot be a long-term answer to UK skills
issues, but it is helping firms in the Short-term
14. Business recognises the economic imperative
of investing in world class skills. To compete in a fast changing
global environment, UK employers must gain a comparative advantage
on skills -as they cannot compete with emerging economies on costs.
Migration can provide a short term solution by filling skills
shortages, but in the longer term the sustainable business solution
is to strengthen the skills profile of the domestic workforce.
15. The UK's skills profile is currently
a "patchwork quilt" of strengths and weaknesses. The
UK performs comparatively well compared with our European competitors
on higher skills (29% of adults are qualified to Level 4[18]),
but significant problems remain on the basic skills which provide
the platform for employability. The Leitch Review of Skills
found that 17 million adults had difficulty with numeracy, and
that five million were not functionally literate.
16. Achieving world class skills, and addressing
skills deficits, will require action by both Government and employers.
Business is willing to play its part and already makes a significant
investment in skills—spending £33 billion[19]
per year in staff training. In addition, the amount UK employers
spend on staff training as a proportion of payroll—3.6%—is
the highest in the EU[20].
17. On basic skills, over 250 employers
have already made the Skills Pledge and committed themselves to
supporting their staff in gaining basic level qualifications.
The CBI has supported the Pledge and is taking steps to actively
promote it amongst our members, but concerted effort is also required
from Government to raise business awareness. Employers welcome
the Government support provided through the Train to Gain programme
which provides brokerage services and public funding for training
on basic qualifications.
18. The CBI Employment Trends Survey 2007
found 15% of employers provided school leavers with remedial numeracy
training, and 13% on literacy. But employers should not have to
remedy failings in the education system, and it is the Government's
responsibility to ensure that young people leave education with
the basic numeracy, literacy and employability skills required
for success in work and life. The Government has made progress
in the last decade on literacy and numeracy, but over half of
young people still fail to gain a good pass in both English and
Maths GCSE[21]
and this situation must improve.
19. The UK needs a world class education
system that produces the young people with the skills and aptitudes
that business requires to compete. In particular:
— young people must leave school literate
and numerate;
— employability skills—such as
self management and problem solving—should be embedded in
to the curriculum, with employers providing quality work experience;
— strong vocational qualifications—with
the new Specialised Diplomas having a key role; and
— high quality careers advice to ensure
young people are informed about all their options.
20. World class skills are becoming ever
more essential—the number of low skilled jobs is predicted
to decline sharply, with the future focus being on higher level
skills. Employers recognise this challenge—our survey found
78% of employers demanding higher skills over the next decade.
But the skills challenge facing the UK is significant, and requires
long term efforts to improve the domestic skills base—migration
can only be a short term solution.
Migration has brought economic benefit to the
UK
21. The UK has now enjoyed stable economic
growth for over 60 quarters and employment remains high. There
are now over 29m employee jobs in the economy. In the past such
a situation might have led to capacity constraints on firms' further
growth to become evident and we might also have feared some upward
wage and price inflation pressures—leading to a wage-price
"inertia" which would be damaging to the economy as
a whole. Such pressures, driven by skill and labour shortages,
have a deleterious impact on the performance of firms operating
in the global economy—against competitors with fewer human
resource constraints.
22. The CBI believes that price inflation
has been restrained by migrant workers as they have raised the
supply potential of the economy to match demand growth. They do
this by addressing the needs of businesses in two areas—constraints
on labour supply (often in less skilled jobs) and on skilled labour.
This was the key finding of a recent report by MPC member David
Blanchflower and colleagues which concluded that unemployment
and inflation are likely to be lower because of recent migration
trends[22].
Other recent research supports this conclusion[23],
and shows that immigrants broadly have a positive effect on the
economy, contributing more to GDP than the UK average and consuming
less in public services (although there is some variance between
nationality groups). This is also broadly supported by the findings
of the City of London Corporation[24]
and the Home Office[25].
23. The UK's labour market flexibility has
been a significant part of the UK's economic success over the
past two decades. The labour market has been able to react to
react to changes in patterns of demand, cyclical changes and market
shocks—and gives employers the ability to react quickly
and efficiently to changes, ensuring labour demand and supply
are matched. In this way, flexible labour markets are beneficial
not just for employers but for employees too— they have
helped the UK sustain one of the highest employment rates in Europe.
24. Employee mobility—both internationally
and within the UK—is one of the key pillars of a flexible
labour market. It helps firms and workers to adapt to changing
conditions. In good economic climates it helps firms continue
to grow and provide jobs, in less good times it eases the process
of adjustment. Because of this legal economic mobility and migration
tend to have a positive effect on the economy.
25. In the past, mobility within the UK
and EU has been poor. In 2003, the CBI and the European Mobility
Forum suggested that a process of labour market adaption aided
by mobility—with targeted action to address obstacles provided
by social security, pensions and language difficulties—would
help improve economic performance.[26]
The IMF has recognised this. It concluded that the well-established
flexibility of UK labour markets means "migration is likely
to have positive effects on economic growth, capital accumulation,
consumption, and the public finances[27]."
Migration from outside the EU should be managed
to balance economic need and integration
26. The CBI supports an approach to migration
that balances the needs of the economy with social issues. Our
support for the new points-based system (PBS) rests on the system
effectively delivering this balance.
27. The CBI remains fully supportive of
the free movement of workers within the European Union. The success
of migration to the UK in recent years—in particular the
so-called A8 enlargement—was in the fact that it reacted
directly to demand. Reports from the Workers Registration Scheme
show remarkable levels of employment, low benefit claims and a
tendency to work in sectors where shortages were previously evident.
There is little evidence of a negative wage effect for non-migrant
workers. This is not to say, however, that A8 migration has not
had some social effects—in particular on public services
in those areas where migrant workers have clustered as funding
lags behind actual numbers of people in the area. This is why,
in the interests of maintaining a balance between integration
and economic performance, the CBI called for a pause before extending
the right to free movement to workers from Bulgaria and Romania.
28. CBI represents business interests on
the Migration Impacts Forum whose role is to advise the government
and the Migration Advisory Committee (MAC) on the social impacts
of migration. We welcome the appointment of Prof. David Metcalf
as chair of the MAC and want to work with it to ensure that it
can successfully marry the twin goals of meeting employer demand
and social integration through the PBS.
October 2007
18 World Class Skills, Implementing the Leitch Review
of Skills in England, DIUS 2007 Back
19
National Employers Skills Survey 2005, LSC Back
20
CVTS2 Survey, Eurostat 2002 Edition Back
21
DfES figures show the proportion of pupils getting GCSE A*-C in
both English and maths 47% in 2006 Back
22
D Blanchflower et al "The impact of recent migration from
eastern Europe on the UK economy" Back
23
IPPR "Britain's Immigrants: An economic profile" September
2007 Back
24
LSE "The Impact of Recent Immigration on the London Economy"
July 2007 Back
25
S Dench "Employers' use of migrant labour" 2006 Back
26
CBI & European Mobility Forum "Europe without borders:
Creating a culture of mobility within Europe" 2003 Back
27
Dora Iakova "The Macroeconomic Effects of Migration from
the New European Union Member States to the United Kingdom"
March 2007 Back
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