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Analysis of proposed changes to Tier 2

The Home Secretary has asked the Migration Advisory Committee to look at proposals to cut non-EEA work migration. The proposals reveal a tension between what business wants (the brightest and best staff, no matter their nationality) and what the Government wants (more jobs for British Citizens).

The Tier 2 route is for workers skilled to graduate level, with some limited exceptions. It takes time to skill a workforce to be able to perform at this level. It is likely to take more than one term of office to ensure there are sufficient British workers to fill the gaps left by skilled migrants if the route is significantly narrowed. In many cases, the role being sponsored is a managerial one, which opens up more jobs under their supervision. Therefore, restricting skilled worker visas does not always mean that there are more jobs available to the resident labour market.

The MAC has been asked to advise on several measures:

1) Raising the minimum salary levels that economic migrants have to be paid

The minimum salary is £20,800, which is not especially high. However, there is also a minimum salary for each job classification. For example, the minimum salary for an experienced Chief Executive is £47,500.

Raising the minimum salary will particularly affect jobs outside London. This may affect the Government’s manifesto commitment to create a ‘Northern Powerhouse’ and drive economic growth in the South West, East of England and Midlands.

The Government’s press release on the issue suggests it considers that the demand for Tier 2 migrants is a result of a desire to hire cheap foreign labour. In reality, Tier 2 migrants are well-educated and are not ‘cheap’ labour, especially when the business has to bear the costs of obtaining and maintaining sponsorship.

2) Options to re-focus the route on areas where there are genuine skills shortages or require highly-specialised experts.

There is already a shortage occupation route within Tier 2. The MAC is regularly tasked with identifying genuine skills shortages for the Tier 2 category. The other professions in Tier 2 are not necessarily shortage, but they are highly skilled.

Restricting the route to ‘highly-specialised experts’ would have a large impact on graduate hires. Perhaps that is the Government’s intention. But recent graduates do not remain so, and the most talented of them become the highly-specialised experts of the future.

There is a conflict here between what the Government wants and what business wants. This Government has made much of its commitment to business and enterprise. Businesses want the most capable individuals to become a part of their team. It is both a commercial and legal imperative not to discriminate on the basis of nationality. Conversely, the Government wants jobs to go to any worker already settled in the UK who meets the minimum requirements for the job. The Tier 2 sponsorship rules reflect the Government’s view.

3) How to limit the time that sectors are deemed to be in shortage.

In Prime Minister’s Questions the Prime Minister said that sectors which claim to have a skills shortage should be “dealing with that”. Representatives of these sectors are likely to counter that the Government needs to educate the resident workforce better. This comes down to a question of who should be responsible for educating and skilling a labour market: the sector or the state.

In the health sector, for example, the Government took credit for hiring “thousands more doctors and nurses” in its 2015 manifesto and accepted responsibility for continuing to ensure that there are enough healthcare staff to meet patients’ needs. This suggests there are some sectors where there is willingness to deal with shortages at Government level. It may be that these are only restricted to sectors which are wholly or mainly public sector: health and education are the most obvious examples. However, a shortage of architects, engineers or programmers could also damage the UK. If the Government succeeds in restricting the Tier 2 category it may well be that there are serious shortages in these occupations.

Either the sector or the Government needs to have a serious, long-term plan about how to avoid or prepare for a shortage, as these professions require lengthy education and training. How to limit the time that sectors are deemed to be in shortage is therefore going to be a very difficult undertaking, and the Home Office will be required to forecast the landscape of both business and the labour market in 5, 10, 15 and more years.

4) The implementation of a levy on Tier 2 visas, to fund apprenticeships.

This suggests an increase in the Visa Application Fee. It is significant that the Government intends to use the money to fund apprenticeships. This does not balance the possible effects of the Tier 2 review. Tier 2 is for graduate-level occupations, so it would be more sensible to use any additional funds to skill the resident labour market to graduate level.

5) Restrictions on the automatic right of Tier 2 dependants to work.

This could be very damaging for businesses trying to recruit for more senior positions. While these types of positions may not be so affected by a rise in minimum salaries, the most experienced candidates are more likely to have partners and families accompanying them. If their spouse or partner cannot work it may be a key factor in deciding against relocating to the UK. The talent will then go elsewhere. This could be a problem in sectors like financial services, where employers are already considering relocating headquarters in order to be closer to Asian markets. These countries normally have much more flexible immigration policies.

6) Tightening up on the intra company transferee (ICT) route, including applying the immigration health surcharge to ICTs.

The ICT route is used by businesses who have a presence abroad to bring their overseas workers to the UK for a temporary period of up to 5 years (9 years for those earning more than £155,300). In most cases the employee must have worked abroad for the company for a year. It is difficult to see how this can be tightened up or why it should be tightened up. This route provides flexibility to businesses, and allows them to bring in staff from abroad at short notice. The fact that the role does not have to be advertised is the reason why ICT migrants are not allowed to settle in the UK. A charge to use the NHS is unlikely to deter businesses from using this route when the route is so useful for temporary postings.

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