IPPR: Business groups urge reforms to new points-based immigration system to ensure economic recovery

Tuesday, 3 November 2020 00:01

Employers join IPPR call for government to increase flexibility in new immigration system and reward employers who invest in local skills IPPR analysis reveals almost 80 per cent of EU social care workers would have been found ineligible to migrate under new rules A new report from the IPPR think tank today reveals the stark challenge posed to some of the UK’s most vulnerable industries by the government’s new points-based immigration system. The...Request free trial

Employers join IPPR call for government to increase flexibility in new immigration system and reward employers who invest in local skills
IPPR analysis reveals almost 80 per cent of EU social care workers would have been found ineligible to migrate under new rules

A new report from the IPPR think tank today reveals the stark challenge posed to some of the UK’s most vulnerable industries by the government’s new points-based immigration system. The research finds that restrictions could inhibit recruitment in critical sectors of the economy, and also exacerbate the risks of informal working and exploitation by unscrupulous employers.

Analysis by the think tanks reveals that under the new system almost two-thirds (63 per cent) of EU-born workers currently living in the UK would not have been eligible for a skilled worker visa. This rises to almost 80 per cent (78 per cent) for EU-born employees in the social care sector.

In addition to revealing the system's shortfalls, the report also highlights the ways the new points-based immigration system could be reformed to tackle the UK’s deep economic challenges.

Some of the report’s key reform proposals have been backed by a number of major employer and professional associations in a joint statement. Organisations such as Care England, the Federation of Master Builders, the North West Business Leadership team, London First, the Recruitment and Employment Confederation, UK Homecare Association, and allianceHR have signed the statement saying:

“Many sectors like construction, food and drink manufacturing, social care and hospitality will struggle to recruit from abroad under the new system. And while businesses will be prioritising the recruitment of unemployed UK workers, it will inevitably take time to retrain workers to address skills shortages. We therefore need action now in the interim to support our economy to get back to full strength.”

In the statement, the organisations call for the government to urgently reform the proposed new immigration system in line with IPPR’s recommendations, which include:

“Extending the shortage occupation list to allow for the inclusion of jobs at all skill levels, reflecting the fact that skills shortages can exist in any part of the labour market.

“Following the Migration Advisory Committee's advice to immediately add new occupations to the shortage occupation list in time for the introduction of the new system, in order to address existing skills shortages in sectors critical to the pandemic response.

“Reducing the salary threshold of £25,600 to the living wage (i.e. £19,344 annual salary for a 40 hour week), which will bring the immigration system in line with labour market needs while preventing undercutting.

“Exempting employers from the immigration skills charge if they can demonstrate to the Home Office that they are investing in skills and training, in order to reward employers who are training up the next generation of workers.”

The full list of signatories and the full statement is in the notes below.

Researchers at IPPR found that industries highly reliant on EU migration would be hit particularly hard by the new system, such as in food production where EU workers make up one in every four workers.

The think tank warns that the economic recovery from the pandemic could be jeopardised by the new immigration system. In some areas where economic prospects are returning – such as manufacturing, logistics, and construction – employers may struggle to recruit the skills they need due to the new restrictions. Inhibiting recruitment at this vital moment could slow the recovery, according to IPPR.

The report recognises that the end of free movement and the new points-based immigration system will likely cause a reduction in European migration. However, it concludes that this will not in any way benefit UK workers in the long run. Migration does not only increase the supply of workers, but it can also increase demand for workers, typically resulting in no significant impact on wages or employment.

Marley Morris, IPPR Associate Director for Immigration, Trade and EU Relations, said:

“We are now weeks away from one of the greatest changes to our immigration system in decades. Our research finds that sectors such as social care and construction could face increasing skills shortages as a result of the coming changes. As our care system struggles and businesses reel from the effects of the pandemic, it is vital that the new points-based system helps to support the country’s response to coronavirus and the economic recovery.

“The government can use the new system to ‘build back better’ from the current crisis. The rules should be reformed to allow employers to address immediate skills shortages across all parts of the labour market, while also encouraging employers who sponsor migrant workers to pay the living wage, offer secure work, and invest in skills and training.”

ENDS

NOTES TO EDITORS

The IPPR paper Building a post-Brexit immigration system for the economic recovery by Marley Morris, will be published at 0001 on Tuesday 3^rd November. It will be available for download at: http://www.ippr.org/research/publications/post-brexit-immigration
Advance copies of the report are available under embargo on request
The full employers’ statement and list of signatories is below and will be published on Tuesday at: https://www.ippr.org/blog/immigration-policy-statement

Today we are two months' away from one of the greatest changes in immigration policy in a generation. This change comes at a time when the coronavirus pandemic has struck a major blow to our economy and many businesses are under unprecedented strain. We therefore believe it is vital that the new points-based immigration system helps business to kickstart the economic recovery next year, spurring productivity and creating new jobs in the process.

We welcome many of the government's reforms to the immigration system next year, including the lowering of the skills threshold for the skilled worker route and the streamlining of the sponsorship system. But to fully support the economic recovery and the country's public health response to the pandemic, we believe the reforms need to go further.

In a new report out this week, the independent think tank IPPR has found that nearly two thirds of EU employees in the UK would not be eligible for the skilled worker route if it were to apply to them. Many sectors like construction, food and drink manufacturing, social care and hospitality will struggle to recruit from abroad under the new system. And while businesses will be prioritising the recruitment of unemployed UK workers, it will inevitably take time to retrain workers to address skills shortages. We therefore need action now in the interim to support our economy to get back to full strength.

That is why we are calling for the following changes to the immigration rules, in line with IPPR recommendations:

Extending the shortage occupation list to allow for the inclusion of jobs at all skill levels, reflecting the fact that skills shortages can exist in any part of the labour market.
Following the Migration Advisory Committee's advice to immediately add new occupations to the shortage occupation list in time for the introduction of the new system, in order to address existing skills shortages in sectors critical to the pandemic response.
Reducing the salary threshold of £25,600 to the living wage (i.e. £19,344 annual salary for a 40 hour week), which will bring the immigration system in line with labour market needs while preventing undercutting.
Exempting employers from the immigration skills charge if they can demonstrate to the Home Office that they are investing in skills and training, in order to reward employers who are training up the next generation of workers.

We believe these changes will be vital for supporting the government's efforts to 'build back better' and to get our economy back to full strength in the wake of the pandemic.

Brian Berry, Chief Executive, Federation of Master Builders

David Camp, Chief Executive, allianceHR

Neil Carberry, Chief Executive, Recruitment and Employment Confederation

Emma Degg, Chief Executive, North West Business Leadership Team

Professor Martin Green OBE, Chief Executive, Care England

Dr Jane Townson, Chief Executive, United Kingdom Homecare Association (UKHCA)

Sophia Wolpers, Programme Director, People & Immigration, London First

Figure 4.1: Density of skills-shortage vacancies by occupation within sector
The report's analysis aggregates quarters 1–4 of the 2019 ONS Labour Force Survey. The analysis uses the country of birth variable to define EU migrants. For the modelling of the impacts of the new points-based system, the researchers have developed a simplified version of the eligibility criteria for the skilled worker route. EU-born migrants are categorised as eligible if they meet the relevant skills and salary threshold. Skill level is defined on the basis of SOC code. Salaries are defined on the basis of annualised gross weekly pay. Migrants are categorised as eligible for the skilled worker route if their occupation meets RQF level 3 and if their earnings from their main job are above the salary threshold of £25,600. The salary threshold is varied depending on whether individuals are PhD holders, aged under 26, employed in jobs on the shortage occupation list, or employed in listed health/education jobs. Self-employed people are excluded from the analysis.