Examination of Witnesses (Questions 500
- 509)
TUESDAY 8 JANUARY 2008
Dr Dhananjayan Sriskandarajah
Q500 Lord Lawson of Blaby:
May I ask a supplementary, very briefly? Since you have said there
should be some way of managing numbers, what the Government is
proposing now in terms of permanent settlement, seems slightly
schizoid because it is proposing to run two systems in parallel:
a points system, like Canada and Australia have, which is Tier
1, and a work permit scheme, basically, which is Tier 2. The Government
is unique in having two quite different systems for permits. If
you accept, which you do, that there should be some control, so
let us assume ex hypothesi that the total numbers of immigrants
are going to the same, would you think that the Tier 1 work points
system is the better system and that is the way to go, or would
you think that the Tier 2 work permit system is the better way
to go?
Dr Sriskandarajah: One important difference
between what the UK Government is proposing and what many countries
like Australia, Canada and New Zealand operate is that our Tier
1 system is not a settlement visa system, whereas in countries
like Australia the points-based system is essentially used to
pre-screen those people who do come for permanent settlement in
that country. Those countries, though, do operate a flexible labour
market visa system. Australia still takes tens of thousands of
people every year who come on short-term work visas to work in
occupations that have been identified as having shortages. Hairdressers,
for example, appear on Australia's occupation shortage list, and
hundreds of hairdressers from around the world go to Australia
to work there. The key is that a successful economy needs to have
a flexible way of meeting labour market needs. Some countries,
like Australia and Canada, have also chosen to add to that system
a system of permanent settlement through a points-based assessment.
My fear is that the UK's approach (schizoid, as you put it) confuses
those two measures; that in rushing towards a points-based system
we lose the flexibility that we have had in the employer-based
work permit system that has been in operation for several decades;
that we are moving the onus away from employers who have had to
meet a labour market test and had to show that they cannot find
a suitable employee from within Europe—we are moving away
from that being the key criterion on which we decide whether someone
is useful or not to having a system whereby individuals are assessed
on their points criteria or the Migration Advisory Committee suggests
that these are shortage occupations. The danger here is that we
lose some of the flexibility that has served the United Kingdom
very well in recent decades.
Chairman: I am watching the clock a little,
and I think if we are going to be able to ask the questions that
we want to ask, can we try and be succinct in the answers and,
indeed, in the questions?
Q501 Lord Layard:
I want to ask about the Olympic Games. How big a role do you expect
migrant labour to play in the construction work, and is the easy
availability of migrant labour going to lead to either employers
or government, or both, cutting back on the training and hiring
of British-born construction workers?
Dr Sriskandarajah: There are two things I would
say about the Olympics and construction. The first is that the
construction sector has been a classic case in which the presence
of migrant workers has been a phenomenon for decades, if not longer.
It would be surprising if migrant workers did not continue to
be a significant presence in construction, especially of big projects
like the Olympics. We know that Irish workers in the construction
sector have been around for decades and, more recently, there
have been people from other parts of Europe. So I do think that
migrant workers will have to have some role to play. The second
observation is that in focusing a lot of public and policy attention
on the Olympics we may lose sight of the fact that the Olympics
construction projects are only a relatively small part of the
projected construction needs in the next few years. Britain is
going through a fairly sustained construction boom at the same
time that British workers, again, show apparently very little
interest in taking up jobs, certainly at the lower end of the
construction sector. Until very recently, we had a situation in
which 1,000 carpenters were lost in net terms every month through
retirement or early retirement of established British carpenters
and through the under-supply of fresh entrants to take up places
in FE colleges. Unless we have some effective way of encouraging
more British workers and more young British people to take up
traineeships in carpentry, and given that we are going to have
these large-scale construction projects, it seems plainly obvious
that we are going to have to continue to supply migrant workers
to meet some of those needs. I come back to the same point that
the OECD representatives made when it comes to this false choice
between training British workers and accessing migrant workers.
Again, I do not think it is an either/or situation. There are
probably only a few sectors in which migrants are present in sufficiently
large numbers for employers and employer bodies, training boards
or indeed government, for migrant workers to be a sufficient disincentive
for investment in training. If, for example, you only have 5%
of your workforce who are migrant workers, they are probably not
going to tip the balance in terms of whether you invest or how
much you invest in training. I think the fundamental point is
it should never be either/or; it has to be both.
Q502 Lord Macdonald of Tradeston:
In your written evidence, you suggest that the UK will not be
able to get enough low-skilled migrants from within the UK. In
asking you to explain why this should be, could I point you back
to the United Kingdom and what you said about British skills,
and ask you what work, if any, has been done on geographical mobility
inside the United Kingdom? We have obviously got hundreds of thousands,
perhaps millions, of people who could take up jobs, who do not
seem to move in response to their own economic needs in the way
that previous British generations did. I remember, and I think
Iain shared the experience, wondering how you could get people
from Ayrshire to Fife to fill jobs in Scotland. Is there an imperative
to try and look at some of those British problems of lack of mobility,
of moving people around the country, so that we get more of the
pattern that you can see in the United States of people being
able to pull out of their house or their local culture and go
and live elsewhere?
Dr Sriskandarajah: I think I have answered the
question about why the UK cannot rely on an enlarged Europe for
less-skilled workers. The point you make about mobility and the
focus on mobility rather than immigration, or even migration,
is an important one. I think the fundamental economic challenges
we are dealing with are around mobility. At the European level,
if we are to make Europe a competitive and dynamic economy, then
mobility and increased mobility has to be part of that package.
For example, before the most recent 2004 enlargement, only about
1.7% of the total EU 15 population lived in a country other than
its birth. On the other hand, some 3% of Americans move across
state boundaries every year. That sort of geographical, spatial
mobility is very important in keeping the American economy dynamic
and flexible. I think that European leaders have rightfully targeted
mobility as a key issue in increasing the UK's competitiveness.
In the UK context, it is the stickiness of UK workers, spatially
but, also, sectorally, that might explain why it is that we have
a million or so people who are economically inactive at the same
time as several hundred thousand vacancies. What we have seen,
especially from young Poles and Lithuanians who have come in recent
years, is that they are highly mobile spatially within the UK—sectorally
as well; that they come and pick fruit in the East of England,
and then go and work in hospitality in Cornwall, and then come
and work in another sector in London. They are responding to labour
market needs where and when they occur in a much more fluid way
than I think sections of the British workforce are. That, of course,
presents incredible challenges for policy makers.
Q503 Lord Macdonald of Tradeston:
One of the carrots in the past, if you were an economic migrant
from Scotland to Coventry, was that you got higher wages. Is that
carrot still the most important thing or is there a stick as well
to say to people: "You will not live comfortably here unless
you work"?
Dr Sriskandarajah: I do not know.
Q504 Lord Paul:
Do you have comments on the Government's submission to this inquiry?
Are the Government's conclusions about the economic impacts of
immigration based, in your view, on a balanced assessment of the
available evidence? Have you done any studies to show, if there
had been no immigration since 1948, what would be the ratio in
this country of people over 65 compared to the other ones, in
view of the problem with more children being born?
Dr Sriskandarajah: The Government's submission
to this inquiry and government publications in recent years have
been balanced and have taken a considered view of what, unfortunately,
little evidence exists in this area. The Government, like all
of us, has been constrained by the lack of good quality, recent,
nuanced data on the economic impacts of immigration. I think,
in fact, the Government has not been bold enough, perhaps, in
singing its successes in terms of managing migration; that we
have, I think, been able to sustain this relatively long period
of economic growth, low unemployment, low inflation, in part,
as I said from the outset, because of access to migrant workers.
Unfortunately, I think the Government has been on the back foot
in terms of defending or having to defend its record on migration.
I have some concerns about some of the assumptions in the Government's
submission around accessing EU workers, around low-skilled workers,
and I await evidence, real evidence, of those local impacts of
migration that the Government is concerned about. I fear a situation
in which anecdote about local economic and other impacts drives
policy making. On your question about the counterfactual, I do
not have figures to hand but I can certainly ask colleagues to
generate them and submit those to the Committee.
Q505 Lord Griffiths of Fforestfach:
Can I just ask one question? You say in your evidence to us that
"an assessment of whether those who are admitted on exclusively
or primarily economic grounds are contributing to the economy
... is likely to reveal a very positive picture". That, I
have to say, goes against some of the evidence that we have received.
I just wonder what is your basis for saying it so strongly.
Dr Sriskandarajah: If we were to look at a group
such as work permit holders—the 100,000 or so people in
the last few years, each year, who have been issued work permits—and
were to look at the economic contribution of that group (this
is the classic discretionary economic migrant group), I am confident
that we will see a group of people who are contributing immensely
to the UK's GDP per capita, the UK's competitiveness, the UK's
dynamism and the UK's international networks. If we were to focus
on just those people who have been allowed into the UK on a discretionary
basis for the purpose of working here, or some other form of economic
activity—highly-skilled people, investors, business people—those
are exactly the sorts of people who are the sort of "cream
of the crop". If you look—
Q506 Lord Griffiths of Fforestfach:
Can I just say: do you judge it because their income per head
is higher than the income per head of the existing population?
Dr Sriskandarajah: Yes, and other factors. If
you look at the income distribution of foreign-born people in
the UK, it is what might be called simplistically an hour-glass
shape. At the high end of the income spectrum, foreign-born people
out-number British-born people significantly. The Russian billionaires,
the Indian entrepreneurs, are here in substantial numbers and
making substantial contributions, and the American bankers. My
point, right at the outset, is that if we were to look at the
economic impact of those people, the people we are admitting to
the UK on economic grounds, purely or primarily economic grounds,
I think we would have a very positive picture. Unfortunately,
our data sources do not allow us to be sufficiently nuanced. Our
labour force survey does not classify people according to immigration
status, so we are left to count people and assess their characteristics
by dint of where they were born or what nationality they hold,
not whether they are here as asylum seekers, spouses, work permit
holders or highly skilled migrants. If we were to do that, the
claim I make is that those economic migrants who are there are
probably making incredibly important economic contributions in
terms of GDP per capita, and in all sorts of other ways.
Chairman: Are there any other questions?
Q507 Lord Lawson of Blaby:
I think that the contribution made by American bankers and wealthy
Indian businessmen is very, very considerable, but I do not think
you can draw conclusions on large-scale migration from that. May
I ask you a simple question? What is wrong with this country?
I live half the time in France. We have a more flexible labour
market than the French do and, indeed, the present Prime Minister
has frequently boasted about that; it is a fact. You say that
we cannot manage in the health service and we cannot get carpenters
without immigration. The French have immigration but it is at
a far lower level than ours, and yet the health service, in my
experience, in France works better than ours and there is no difficulty,
particularly, in getting carpenters there. What is wrong with
this country?
Dr Sriskandarajah: How long do you have? Just
to give one example of economic contributions made by people other
than, say, American bankers, the North West Development Agency
published a report last year in which it looked at entrepreneurs
in the North West of England and they calculated that migrant
entrepreneurs, many of whom run small-scale businesses in hospitality,
catering and retail, have turnovers on average that are double
their UK-born compatriots and their activity together generates
100,000 new jobs in a region such as the North West. My point
is not simply that it is the American bankers sitting in Canary
Wharf who are the migrants who are creating economic dynamism;
I suspect it is across the board. In terms of dynamism and labour
market flexibility and "what is wrong with this country",
I think there is a lot right with the way that the UK is managing
migration. There are obvious challenges in terms of managing the
numbers of people coming in and managing local impacts, but I
think that if we relish the fact that the UK is a highly competitive,
open economy, then we have to accept the fact that migration has
to be part of the solution. Migration alone is not going to solve
Britain's carpenter under-supply. However, in the short term,
it has to be part of the way of responding to that. If we have
construction projects that need to happen tomorrow and we do not
have the time to train up our British carpenters, then we have—
Q508 Lord Lawson of Blaby:
May I suggest to you there is an alternative explanation? In fact,
we do not need to do this at all. The French have proved that
you do not need to solve your problems that way. They solve it
with a much, much lower level of migration. You may wish to, but
there is no need to do it that way.
Dr Sriskandarajah: I think there is something
inherent about the nature of British society that suggests that
immigration and emigration are facts of life. Last year, one million
people moved across UK borders as migrants, people who were intending
to stay for a year or longer—600,000 in and 400,000 out.
We have calculated there are some 5.5 million British nationals
who spend all or part of their time living abroad—more than
the number of foreign nationals who live in the UK. Historically,
and especially in the last ten years, migration in and out of
this country has become a reality. I think that brings immense
challenges but it is a reality that we should face up to and make
the most of.
Q509 Chairman:
A good point, I think, on which to end. Thank you, again, for
coming along and answering our questions. Thank you for your written
submission. If there is anything you feel that you have not let
us have that you want to let us have later on, then do drop a
line to the Secretary.
Dr Sriskandarajah: Thank you very much.
Chairman: Thank you.
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