A further update for employers on the MAC report on immigration

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On 18 September 2018 the Migration Advisory Committee (‘MAC’) finally published its long awaited report on the impact on the UK labour market of the UK’s exit from the European Union.  The MAC was commissioned by the Government to assess the impact of EEA migration on the UK’s economy and society as well as to consider recommendations for the UK’s future immigration system.

No preferential access for EU citizens

The headline recommendation from the MAC report was that there should be no preferential access to the UK for EEA citizens in the future.

This recommendation was surprising in view of the fact that the MAC report concluded that EEA immigration to the UK has had virtually no negative impact on the UK economy or society.  The MAC found that EEA migrants actually make a positive net contribution to public finances, paying more in taxes than they receive in benefits.

Many employers submitted evidence to the MAC emphasising the importance of being able to continue to hire EEA employees with little or no red tape.  However, their views have been largely ignored as it has since been reported that the government has agreed with the MAC’s recommendation that there will be no preferential access to the UK labour market for EEA nationals and that the future immigration system should be based on skills rather than nationality. 

Ahead of her speech at the Conservative party conference this week, Theresa May pledged a major overhaul of immigration policy after Brexit with a new regime that will treat EEA citizens no differently to anyone else and with a focus on skilled workers.

Lower-skilled workers

Disappointingly for many employers, the MAC also recommended that there was no need for a separate low-skilled worker scheme, with the possible exception of a seasonal agricultural workers scheme.  Instead, the focus should be on highly skilled migrants.

The government has also accepted this recommendation. When questioned this week about sectors reliant on low skilled EEA workers Theresa May said “[t]here is one area where we have said we will look at a system, which is agricultural workers…But I’m not saying that suddenly there are going to be lots of different sectors of the economy which are going to have exemptions, which means actually that you no longer have an immigration policy”.

In September the government announced a post-Brexit migrant farm worker pilot visa scheme. This will run between Spring 2019 and December 2020 to address expected labour shortages in this sector. The visas will be valid for 6 months and for up to 2,500 workers from outside the EU.

However, without a specific route for low-skilled workers to come into the UK to work in other sectors such as retail, construction, social care and hospitality it is far from clear where employers will be able to source the staff they need after the transition period. Sourcing sufficient workers from the UK workforce to fill low skilled roles in these sectors has been a real struggle in the past.  On current proposals this is likely to continue and perhaps worsen.

Focus on highly skilled workforce

Post Brexit, the MAC proposed that the current Tier 2 sponsored visa category could be extended to cover EEA and non-EEA nationals. However, it recommended some key changes that should be made:

  • Abolishing the annual Tier 2 cap of 20,700 per year;
  • Expanding this route to cover medium skilled roles as well as highly skilled roles.  This would make an additional 142 occupations potentially eligible for Tier 2 (General) provided they meet the minimum salary threshold of £30,000 per annum;
  • Abolishing the ‘Resident labour market test’ –i.e. the advertising and recruitment process that is often required before an employer is able to sponsor someone under the Tier 2 (General) category;
  • Relaxing the requirement that employers may only sponsor someone if there is no suitable settled worker and allowing employers to appoint the best candidate; and
  • Allowing Tier 2 migrants to switch employers more easily.    

For those businesses which rely on migrants from around the world, the MAC’s suggested changes to Tier 2 are on the face of it welcome proposals. The Home Secretary, Sajid Javid, said this week that the government might consider abolishing the annual Tier 2 cap but a final decision had not yet been made.

The MAC report also proposed using the current Tier 2 sponsorship system as a template for the future system and specifically recommended making EEA nationals subject to the Immigration Skills Surcharge, which would add up to £5,000 to the cost of employing an individual for a 5 year visa. For many businesses relying on EEA workers the skills charge would be a prohibitive cost.

Further, those UK employers who already sponsor non-EEA migrants under the Tier 2 route will know how cumbersome and expensive the process is. The concern is that if, in the future, EEA nationals are subject to the same levels of red tape currently faced by non-EEA nationals this will cause delays and costs for businesses and may deter EEA nationals from coming to the UK.  The MAC report acknowledged these criticisms and recommended that the Government tries to reduce the bureaucracy although no guidance was given as to how.   

Finally, in certain industries, even if the Tier 2 category was expanded to include medium skilled roles, the salaries offered would still fall below the minimum £30,000 threshold. Skills shortages for employers relying on an EEA workforce after the transitional period in certain industries or sectors could therefore still arise if this model is adopted in future immigration policy.

Conclusion

In her party conference speech on Wednesday, regarding a future immigration policy, Theresa May stated:

“The free movement of people will end, once and for all. In its place we will introduce a new system. It will be based on what skills you have to offer, not which country you come from…And by ending free movement we will give British business an incentive to train our own young people and to invest in technology that will improve their productivity”.

The Home Secretary, Sajid Javid, in his speech spoke of a system “…that doesn’t discriminate against between any one region or country. A system based on merit”.

It is unlikely that any changes will come into effect immediately after Brexit as both the MAC and industry bodies have acknowledged the need for changes to be introduced gradually.  It is likely that there will be a transitional period until 31 December 2020 during which EEA nationals will continue to be able to come to the UK with few or no restrictions. 

The Prime Minister’s and Home Secretary’s comments and speeches at the conference this week have provided some signs of the extent to which the government will follow the MAC’s recommendations.  That said, nothing is certain and much remains unclear. Employers will need to await the outcome of the Brexit negotiations and the Brexit White Paper (due to be published later this autumn) for a better indication as to what the post Brexit immigration system will look like.

However the CBI Director-General’s response to the Prime Minister’s immigration proposals this week has been critical. Carolyn Fairbairn said:

“Freedom of movement is ending and firms understand that. But the Prime Minister’s proposals for a new system have taken a wrong turn. By dismissing the importance of low skilled workers to the UK economy, the government risks harming businesses and living standards now and in the future. All skill levels matter to the UK economy. Today’s proposals risk worsening labour shortages, already serious in construction, hospitality and care. Restricting access to the workers the UK needs is self-defeating”.

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