Examination of Witnesses (Questions 100
- 119)
TUESDAY 16 OCTOBER 2007
Ms Susan Anderson, Mr Neil Carberry and Mr William
Simpson
Q100 Lord Paul:
Has immigration had any effect on the employers' incentives to
invest in mechanisation and other measures to improve productivity?
Ms Anderson: I think employers are always focused
on measures to improve performance and productivity. We certainly
know that the number of low-skilled jobs is set to decline. Lord
Leitch in his report suggested that the number of low-skilled
jobs would fall from around 2.5 million jobs now to only around
half a million jobs by 2020. That obviously is reflecting the
fact that we are on the way to the more highly skilled, knowledge-based
economy that we want so much. So I think that trend is already
there; I do not think it is really to do with migrant workers.
But, certainly, in those sectors where we have strong demand—in
retail and hospitality, for example—you still need a high
degree of personal service, and we are expecting the need for
those customer-service skills to persist. We are not expecting
mechanisation to take the place of what we know customers want,
which is a personal touch, albeit by somebody who has good communication
skills and hopefully a high degree of numeracy and literacy.
Q101 Lord Layard:
Some employers, like Sainsbury's, have described migrant workers
as having a superior work ethic. What exactly do you think they
mean by "work ethic"? Are they including willingness
to take low pay and work longer hours?
Ms Anderson: I think you will have to ask Sainsbury's
what Sainsbury's mean. We pick up more what we might call a "positive
attitude". I think all the evidence you have received from
other groups will suggest that many of the workers coming in from
countries such as Poland have a higher degree of skill or qualification
level. If you use, for example, the age at which they left full-time
school as a proxy for qualifications, certainly they are more
qualified, and this is going to mean that they are keen to work.
They often spend a period in a lower-skilled job brushing up their
language skills, but certainly they want to work. I think some
of the poor attitudes that our members sometimes talk about arise
not because people want to work longer hours but when they are
there they want to provide a high level of service. Whether that
is in hospitality or catering or in a manufacturing environment,
they really want to get on in their jobs. That is what I would
describe as having a strong work ethic. It is not about the hours
that you work, although obviously we are aware that, again, average
hours worked by many migrant workers is longer than maybe UK-born
nationals, but that may be because they are more interested in
overtime than some of their counterparts.
Q102 Lord Layard:
Does this not mean that the existing British workforce that might
otherwise be employed has become disadvantaged by the arrival
of these immigrants?
Ms Anderson: If you have the choice between
two individuals, one of whom seems really enthusiastic about work,
who wants to get on—and, again, a lot of the evidence is
that people who arrive, taking a low-skilled job, then want to
move up within a company—who wants to learn and wants to
move on and wants to perform well, then you are going to chose
that individual with that positive attitude. If those positive
attitudes are coming more from the migrant worker than the UK-born,
then I am afraid you are going to go for the migrant worker. We
know what the solution to that disadvantage would be: a bit more
enthusiasm from the indigenous worker.
Chairman: You did not give the straight
answer yes; but it was jolly nearly yes.
Q103 Lord Sheldon:
Despite the very high level of immigration, there is still a large
number of job vacancies. It is more than half a million. There
has been the same number of people seeking work since 2001, despite
that level of immigration. How do you account for that?
Mr Carberry: The first factor to take account
of is strong performance in the economy over the last 15 years.
In the private sector, employment in the UK grew from about 21.9
million in 1999 to about 23.1 million in 2006, so, from that point
of view, while there is a residual level of vacancy in the economy,
there is clear upward movement in employment in the private sector.
To an extent, those vacancies reflect the natural behaviour of
a healthy labour market in terms of people moving where the demand
is. As regards the level of unmet demand, there are a couple of
policy points from my side of the table that I will make before
I pass to my colleague, one of which is that unemployment has
been at historically low levels recently, whereas we have had
a real challenge in addressing levels of domestic labour market
inactivity. The CBI strongly supported the conclusions of the
Freud report and, in the long term, targeted action to address
inactivity has to be a policy priority on employment levels.
Mr Simpson: Immigrants do not just plug existing
holes in the labour market but they create new demands for products
and services which are already available, but also those which
cater to the immigrant population. So this will, in a dynamic
economy, lead to creating new vacancies. They are not the same
vacancies, obviously. The vacancies churn in response to the demands
of the market place, and if that market place is augmented by
immigrants—
Q104 Lord Sheldon:
If the economy is so dynamic, should not the number of unemployed
be reducing?
Mr Simpson: It is very low.
Lord Sheldon: Half a million. It has
still been half a million since 2001.
Q105 Lord Lamont of Lerwick:
Could I not suggest the answer is the one you partly gave, that
staff creates its own demand, and the quantity of employment adjusts
to the number of people available for work. If you justify immigration
on the grounds that there are half a million vacancies, I would
suggest that if you had unlimited immigration for ever, at the
end of any period you would still have half a million vacancies.
You cannot justify immigration in terms of trying to fill vacancies.
Mr Simpson: No. But.[28]
Lord Lamont of Lerwick: It is a very
important point.
Q106 Lord Griffiths of Fforestfach:
I would like to ask your views about the Migration Advisory Committee,
which suggests that it is going to advise the Government sensibly
on labour shortages which could be filled by migration. What are
your views on that and the criteria to use? I have to say, one
thinks of this, in principle, as a planning body. Surely to figure
out what the shortages short and long term are is a huge exercise
in itself. How many dentists do we need? How many IT workers do
we need? And then to ask the question after that: how many of
these can sensibly be filled by migrants? Without wishing in any
way to be ideological, it does seem an enormous task to ask a
committee to do and I am wondering what your views are.
Ms Anderson: Clearly, the history of manpower
planning in the UK is not exactly a strong one, so we understand
your concerns.
Mr Carberry: We supported the points-based system
in general—and I know your Lordships will turn to that in
a moment—because we saw an attempt to look at the position
of migration in the UK economy. From your own inquiry, you will
have picked up the fact that data on the effect of migration in
the UK started in a fairly sketchy place not particularly long
ago. We see the Migration Advisory Committee as a key part of
developing an evidence-based policy on migration and we welcome
the appointment of David Metcalfe as chair of the committee. We
think his experience on the Low Pay Commission, which is another
body which takes a strategic look at the whole economy, will be
very useful. We have said to the Government that we want the Migration
Advisory Committee to adopt some of the behaviours that maybe
we associate with the Monetary Policy Committee of the Bank of
England, in terms of being seen as independent, as evidence- based,
commissioning research, looking to develop better data around
regional skill shortages, interacting with stakeholder bodies,
like the Sector Skills Development Agency, the Sector Skills Councils,
Future Skills in Scotland, the Bank of England and the Office
of National Statistics, to try, on an incremental basis, to give
us a better dataset, on which they as a body can then make recommendations
to the Government. As a policy step we welcome the attempt to
move towards more evidence-based policymaking in this area.
Q107 Lord Griffiths of Fforestfach:
It is primarily the provision of better data that you see as the
major benefit.
Ms Anderson: Not just for the Migration Advisory
Committee, but in general we need better data. The fact that we
do not have very good data at the moment is not good and certainly
allows people to make assertions about the impact of migration,
both negative and positive. We think better data is important,
irrespective of having the Migration Advisory Committee, but we
see the Migration Advisory Committee, certainly in the first instance,
taking very much of a strategic overview and then working with
the various bodies who have more of a brief and a mandate to look,
for example, at skills shortages, such as the Sector Skills Councils,
which cover all sectors of the UK. So pulling that together and
taking advice from the relevant experts but, obviously, in order
to do that good data has to be a pre-condition.
Q108 Lord Lawson of Blaby:
Mr Carberry mentioned a moment ago that you supported the points-based
system. Of course, it is clearly important to have a sensitive
points-based system, not just any old points-based system. I do
not ask you to answer this now; it might perhaps be useful if
you could let us have a note on this. There are in the Government
scheme five different tiers: highly-skilled, skilled, low-skilled,
students and so on. In each tier there are various control factors,
of which one—which you think in your written evidence is
particularly important, and I would agree with you—is language
skills. If you were advising the Government—and I am sure
they would ask you for your advice—on what the relevant
percentages should be of a fixed number of non-EEA immigrants
divided between these tiers, and also of the various control factors,
what percentage weight should be attached? Because the Government
is going to have to do this to each different control factor,
it would be very interesting for us to know what your answer would
be.
Ms Anderson: We would not be in a position to
give that answer today, but, as you have pointed out, it is a
balance. You do have to introduce some fairly complicated weighting.
As you rightly have suggested, we are not in a position to do
that now. We would recognise that it has to be a balance between
the views of the employers and of the other interested parties,
because we must be aware of the impact on public services.
Q109 Lord Lawson of Blaby:
Could you, on reflection, let us have a note setting out your
views of what you think might be a sensible weighting.
Ms Anderson: Yes, we are happy to do that.
Q110 Lord Lamont of Lerwick:
Could I follow up on that. The points-based system assumes that
the Government knows what sort of workers the country actually
needs. This is really a decision that the Government should be
making. Why not have something more market-oriented, such as the
auctioning of different categories?
Ms Anderson: We see the Migration Advisory Committee
advising on both sector and, indeed, skill levels. We see the
Government listening to this committee—or, otherwise, why
have it—and therefore taking advice from the various sectors
that are experiencing shortages, whether that is low-skilled or,
indeed, skilled. We see it very much acting in an advisory capacity,
but I think at the end of the day these are decisions that have
to be made by the Government and not just by employers.[29]
Chairman: I think you will have gathered
from the series of questions you have just been asked that there
is some possible scepticism as to how well the Government can
do this very difficult job. If the CBI were to give a bit of guidance
as to how they think they might do it, we would appreciate it.
I am not asking you to do it now, but if you would give us some
indication as to how you think this thing should be set about
it would be very valuable to us.
Q111 Lord Vallance of Tummel:
Can we focus on Eastern Europe? The Government has claimed in
the past that the great majority of immigrants from Eastern Europe
are temporary migrants who come to the UK for a short period of
time and then move on. Do employers share that view? Is there
any evidence of a high turnover amongst Eastern European migrants?
Are employers finding it difficult to retain migrant workers from
that part of the world? What is your assessment of recent migrants
likely to stay in the UK?
Mr Carberry: There are certainly advantages
to circular migration, particularly around some of the agricultural
schemes that have previously existed for migrants. Obviously,
it makes economic sense for them to earn higher wages here and
then to remit that money to spend in, for instance, Poland. Some
roles lend themselves to that. The younger, more mobile demographic
that we typically see among the A8 workers (the average age of
a Polish worker in the UK is 34 and of a UK citizen worker is
about 39) suggests that they are likely to be more mobile. Our
members tell us that a lot of the jobs these people do have relatively
high levels of turnover anyway and they do not see a great difference
between the domestic and A8 workers. We do not particularly keep
any data on length of stay.
Q112 Lord Paul:
In your written evidence you are against granting the Romanians
and Bulgarians free access to the British labour market because
of what you say are social impacts of immigration. How should
the economic impact of immigration be balanced against the social
impacts when considering the immigration policy?
Mr Carberry: We were clear at the time, when
we expressed an opinion last year on Bulgaria and Romania, that,
as an organisation, we remained committed to the principle of
free movement of workers. It was merely the fact that we had had
a major accession in 2004 that we felt it was right to pause and
look at the effect that had had. We heard the comments from our
colleagues in local government about local authority funding and
about allowing public services to adapt to new communities, and
we felt that at that time, given the paucity of data about the
total impact, it would be appropriate to use accession controls
for temporary period. From that point of view, we erred on the
side of caution, I think it is fair to say, in what we suggested
government might do at that time, and we have joined the Migration
Impact Forum very much with the hope that it, as a body, will
help us find what that balance is.
Q113 Lord Layard:
If we look at the economics of this and take the standard economic
theory, in the short run one would think migration would be good
for profits and bad for wages and one would think that in the
longer run it would be neutral. As capital accumulated in proportion
to workforce, you would think it would be neutral, in the sense
that the profit rate would go back to a previous level and wages
would go back to their previous level. But you are claiming something
quite different. Those propositions were the ones we had put to
us, if I may say, last week by people giving evidence. You are
claiming something quite different, that migration actually increases—I
think even in the short run—output per head.[30]
Are you saying that standard economic theory is wrong? Are you
sure that it is not special pleading on behalf of a group who
probably have gained in terms of income and possibly at the expense
of other people, namely business.
Ms Anderson: We certainly think it has benefited
the economy. Certainly I would accept that it has benefited business.
I am going to leave my economist friend here to answer that question.
That is why we brought him!
Mr Simpson: I think there is a growing amount
of evidence that immigration is net positive for economies. If
you look at the accession of 2004 and the three countries that
have been most open: Sweden, Ireland and the UK, our rates of
growth have exceeded those in less open economies post-accession.
Q114 Lord Lamont of Lerwick:
I think we need to be precise. Are you talking about growth of
GDP or growth of GDP per head of population?
Mr Simpson: Fair enough, growth of GDP. But,
nevertheless, I would suggest to you that a healthy and dynamic
economy is assisted better by willing recruits to the labour market,
that can plug gaps in the existing labour market and also create
new demand for labour themselves by their own demands for goods
and services. It is not clear what impact on productivity statistics
it has had, but I would suggest to you that the willingness of
these immigrants to plug the gaps that locals do not want to take
has independently held down prices and contributed to perhaps
a lower interest rate than would otherwise have existed and the
overall macro economic environment is therefore a positive one.
Q115 Lord Layard:
You agreed with the five-point system for migrants applying to
work in the United Kingdom. How will this meet the needs of employers?
Mr Carberry: We did welcome the points-based
system. One of the benefits of a points-based system is that it
is quite flexible to what you want to achieve with your migration
policy. I think that was evidenced by the fact that major parties
seemed to coalesce around the idea at the time of the last General
Election. One of the major facets of the UK's migration policy
has been its relatively organic development since 1971. This system
has become diffuse and very confusing. There are a high number
of different entry routes into work and it has become difficult
for employers and migrants to understand. A points system offers
some clarity and understanding of entry criteria. I can go on
to the Canadian Government website and do the Canadian points
test in ten minutes; I can understand whether I would be allowed
to go to Canada. But, looking at Canada and Australia, we can
also see that countries use the points-based system to achieve
different ends quite effectively, so, as an idea, we back the
points system on that basis. The other thing the PBS should offer
us is simpler interface for employers with the system. The Home
Office and the Border and Immigration Agency are working on a
model office that seems to be, to us, more effective. There are
some clear issues around the points-based system, many of which
were referenced by Lord Lawson and Lord Lamont, and we have been
working through those with the Home Office over the last couple
of months, but, in principle, the idea of a points-based seems
to us to be simpler and easier for employers to work with.
Q116 Lord Sheldon:
I would like to refer to a question I put to you earlier. With
high levels of immigration there is still a large number of job
vacancies. Surely they should have filled some of those job vacancies.
The job vacancies have remained the same. Why is that?
Mr Simpson: There will be a change in job vacancies.
It would be alarming if they were exactly the same vacancies.
The ebb and flow of the market place generates vacancies in particular
regions that cannot be filled quickly, whether it be a hard-to-fill
job or a job that is repeatedly advertised because no one satisfactorily
holds it down or new vacancies created by new demand, possibly
from the immigrants themselves. But you would expect in a dynamic
economy some degree of friction between the needs of employers
and the supply that is available. It is part and parcel of a growing
economy. It would be a weird economy if there were no change in
the vacancies. If the level of vacancies was very low, that would
suggest to me a rather static economy.
Q117 Lord Sheldon:
If there were not the levels of immigration, then you would accept
that the levels of job vacancies would have declined. But it is
the same, irrespective of that.
Ms Anderson: There is always going to be a degree
of labour turnover. Employers often want a degree of labour turnover
because you always want to reinvigorate your workforce. It may
be that you need to adjust the balance of your workforce. There
are always companies that are having major recruitment campaigns,
because they are opening factories or new shops or whatever, and
you are going to have some companies that are sadly having to
reduce the number of jobs. So a certain amount of turnover is
both positive and inevitable in any economy and is a sign probably
of health rather than a negative sign.
Lord Sheldon: You are saying that the
number of people coming in for employment has not affected the
levels of unemployment at all.
Q118 Lord Lamont of Lerwick:
And will not.
Ms Anderson: No.
Mr Simpson: We are talking about vacancies rather
than unemployment.
Q119 Lord Sheldon:
Well the vacancies are the unemployed, clearly.
Mr Simpson: No, not always.
28 Note by Witness: Migration does answer specific
shortages at the micro level for individual firms. We accept
that this can't be extrapolated to the macroeconomic picture on
vacancies. Back
29
Note by Witness: Auction systems have some problems-notably
they would still need some form of appointment system to avoid
domination by larger or cash-rich business at the expense or the-possibly
greater-need of SMEs. Politically, it would also be difficult
for any government to pass the immigration issue to a market mechanism. Back
30
Note by Witness: CBI evidence did not state that there
were proven GDP per capita benefits, rather that there were broader
economic benefits. Ref: supplementary submission from the CBI. Back
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