IMPACT – HIGH

The Migration Advisory Committee has published an interim report on the progress of its research into current and future EEA migration and its impact on the United Kingdom. The report summarizes written responses from 417 businesses, organizations and individuals to its call for evidence—a record number of responses to a MAC project—which will form part of the evidence base for the committee’s recommendations on the U.K.’s immigration system when any Brexit transition period ends (expected 2021). The MAC divided its report into two broad categories: (1) employer responses regarding employment of EEA workers, and (2) regional government responses on the impact of EEA migrants on population and demographic issues. The key points arising out of the employer responses on business immigration are summarized below.

Key points:

  • The vast majority of employers do not deliberately seek to hire EEA migrants, but employ the best, or the only available, candidates. The reasons employers gave for hiring EEA migrants include that they possess necessary skills that are scarce in the U.K.-born workforce, are more reliable and flexible than U.K.-born workers and are prepared to do work the U.K.-born workforce finds unappealing. Employers also said they believe that record-low unemployment means there is a low supply of U.K.-born workers.
  • EEA migrants from countries that were part of the EEA before 2004 (EU +13) have been, and remain, relatively high-skilled. The expansion of the EU to new member states in 2004 enabled employers in many sectors, especially lower-skilled categories, to gain access to a new, well-qualified and highly motivated labor force. These sectors then had a “tail-wind” which formed the basis for expansion in employment.
  • Wages are not the main reason employers hire EEA migrants over U.K. workers. Rather, employers reported getting better quality workers for the same wages. When adjusted for differences in age, sector, region, and type of job, EU +13 migrants earn wages that are similar to U.K.-born workers; workers from new member states earn 5 percent less than U.K.-born workers and non-EEA migrants earn 6 percent less than U.K.-born workers.
  • Employers are concerned about the prospects of future restrictions on EEA migration. These concerns affect all sectors of the economy but are especially pronounced in low-skilled sectors where the impact of restrictions could be greatest. Any proposals for such restrictions are likely to be opposed by many employers as making a hard job even harder.
  • Among high-skilled occupations, employers in many sectors expressed concerns about skills shortages in STEM areas, suggesting that U.K. schools and universities were not training sufficient workers in these areas or were not providing students with sufficient business-relevant skills.
  • Employers were fearful about what the future migration system might be. Employers in higher-skilled sectors that currently use the Tier 2 system to recruit non-EEA migrant workers expressed mostly negative views of that system. Many felt that it was time-consuming, costly and overly complex. They were concerned about both the rules and the caps in that system being applied to EEA migrants. Fears about the future migration system were particularly great in lower-skilled sectors where many workers would not be eligible under the existing Tier 2 system and where there have been large increases in the share of EEA migrants since 2004, mostly from the new member states.
  • There was a general consensus that employers want an immigration system that is simple, transparent and low-cost. A range of sectors felt the current Tier 2 system does not take account of business requirements. Many employers in “low skilled” areas request a system that considers training, experience and social value of work rather than formal qualifications and salary as is currently the case in the Tier 2 system.
  • How the lives of U.K. residents are affected by EEA migration requires further assessment. The MAC final report will consider a wide range of impacts: on wages, unemployment, prices, productivity, training, the provision of public services, public finances, community cohesion and well-being.

The full interim report can be viewed here.

BAL Analysis: The interim report does not make recommendations on EEA migration or a future U.K. immigration system—those will be left for the final report, which is due in September – and the MAC warns against jumping to premature conclusions. However, the report demonstrates that the MAC has received certain key messages from U.K. employers: that restrictions on EEA migration would have a negative impact on business and the U.K. economy across a broad range of sectors; that retained access to low-, medium- and high-skilled EEA labor is necessary; and that the current Tier 2 is too restrictive. In turn, the MAC has made clear that it considers that the best migration policy is that which delivers the highest quality of life for U.K. residents and that a thriving economy is only one means to this end. Employer responses and business demands will not be taken at face value and will be weighed against other impacts. In particular, the MAC has been robust in suggesting that employers (particularly those relying on lower-skilled migration) should expect to invest funds in both short- and long-term training, technology and other productivity innovations, and pay higher wages in order to attract and retain workers in a future competitive jobs market.

This alert has been provided by the BAL Global Practice group in the United Kingdom. For additional information, please contact uk@bal.com.

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