Download Tier 1 - Monash University

Will managed migration help
the UK skills challenge ?
Richard Pearson
University of Leicester
in Melbourne, 16 February 2006
Contents
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The UK skills challenge
Migration – the story so far
The UK government’s proposals
Will the policy ‘work’ for skills (not the
political or process point of view)
Presenting a policy not an academic perspective
Particular interest in how we can link skill needs and
migration numbers
UK Growth
• 10 years economic growth but slowing
• A good long term average but not so much
better than EU
• But low productivity v US & EU
• Low unemployment at around 5%, just starting
to rise
• But skill shortages
• Wage pressures benign
• Low inflation at around 2 %
• Focus on knowledge society
The 3 skill challenges
• Employers expressed needs
• Unarticulated needs eg higher
levels/quality; health & care workers,
• Workforce needs
Employers’ skill problems
• Issue since at least 1845
• Many employer surveys show one in four suffering
• Hard to measure – asking employers has problems
• Good surveys now segment :
Skill Shortages
Hard to Fill Vacancies
Skill Gaps
• In this way problems less acute – only 4 % with skill shortages (only
21% of all vacancies)
• Are Skill Gaps a + ve sign of business change or transition ?
All types of occupations affected
• One in four graduate recruiters have ‘shortages’
• Engineers and sometimes IT
• Nurses & doctors, social care
• Skilled craftsmen and technicians
• But also low skilled, and office based occupations
• Project management skills
• Congitive skills growing in importance
• Location eg London/S East a big dimension
Workforce skills
International skill comparisons a major policy focus since early 1980s
UK has
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Good stock of high level skills - 25 % have a degree
Good graduate supply
Poor craft/technician skills and training
1/3rd lack basic skills
40% not functionally numerate
16% not literate, across age groups
Unknown number ‘workshy’ or not work ready
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Low unemployment
High employment rate
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Low/no skills are a big problem
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Welfare dependency
Crime & anti social behaviour
Poorer health
Teenage births
Shorter lives
Maintained through generations
Linked to poor parenting, health, housing, peer
pressure/clusters, location
• Policy now trying joined up ‘local area’ initiatives
inc housing, childcare, transport, parenting,
Future skills demand
• Hard to be sure but
• Public services been driving job growth
• Demand polarising :
– Hi level eg professionals and managers
– Low skilled services
• New and existing w/force need to improve
skills eg 70% of 2020 w/force already
completed their basic education and
training
The way ahead is complex
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Competitors investing fast
18 major national initiatives since 1990
Multiple targets set and ignored
More than 24 institutions currently involved plus
colleges/schools, employers and individuals
Some skill responses
• HE (over) expanded on econ grounds leading to over qualification ?
• New Deal helped frictional unemployment but big drivers now
employability, basic skills, location
• ETP £5bn + helping basic skills in work place
• Further/vocational education still the cinderella (now shifting to
employer demand as driver)
• Joined up/local area initiatives now linking skills, housing, parenting
• More planning & co-ordination by locality, sector, occupation
What is the solution ?
• Training and skills are only part of the solution to
productivity and GDP growth – also need
innovative firms, R&D, infrastructure etc.
• And if training is not working ? lets try Migration
Migration in UK – the context
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Long history
Settlements going back 2000 years
1600s Recorded brain drain with French headhunting ship workers, silver smiths
Regular migration flows since 1700s
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Immigration/race a big issue in the 1960s & 70s
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Net outflows in 1970s and early 1980s
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Brain Drain big issue since 1980s
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Immigration now back in the headlines
– Some scares with Single market in 1992
– Illegal immigration
– Sangatt reception centre
– In 2004 UK one of few to immediately open borders for work for the Accession countries
– The ‘Polish plumber’
– Race relations
– The Daily Mail
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Migration a big and growing issue throughout developed and developing world
Recent trends
• Global labour markets at the top eg foreign
nationals have headed BA, GSK, ONS, QCA,
RCN, Vodaphone
• Economic growth
• UK a major draw for those in IT, finance,
biotechnology and health
• Opening borders, global pressures
Some key inflow numbers
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In 2004 over 580,000 entered the UK to work or live, a figure that risen
dramatically
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New Zealand, Spain, Ireland, Austria, and Germany have larger inflows per
capita.
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100,000 were returning UK nationals, including some ‘brain drainers’
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140,000 entered on work permits the largest numbers from India, the US,
S. Africa and New Zealand.
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60,000 working holiday makers
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290,000 have entered from the accessions states in eastern Europe since
May 2004 (85,000 went to Ireland).
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Others entered as asylum seekers, domestic employees, and through family
links.
Asylum & removals
• 50,000 asylum seekers were granted settlement ie refugee status in
2003 (included big backlog)
• 61,000 applied for such status then but number since fallen
• 55,000 removals in 2004 (mainly non asylum seekers)
• UK has fewer asylum applications relative to its population than eg
Switzerland, Sweden, Belgium, Netherlands, Germany
• The numbers claiming asylum globally has fallen in recent years
What is often overlooked
• 360,000 people left the UK to live overseas in 2003
• Two thirds were UK nationals.
• The net inflow to the UK was just over 220,000
• Migration drives over half of the projected population
growth to 2030
Foreign born in the UK
• 4.9 million in the UK, over 8 % of the population and over 10% of
working age population.
• Much lower than in Austria, France and Germany, as well as in
Australia, Canada, New Zealand and the USA
• High concentrations in finance, IT, hospitality, health and education
sectors.
• 45 % live in London, (1 in 3 of working age population).
• Half of the new nurses in 2002 (mainly non EU)
• 10% of nurses, 16 % of dentists, 25 % of doctors
• 60 % of those working in London hotels and restaurants.
• One in four employers expects to recruit from overseas in the next
year.
• ‘White’ migrants do better than black migrants
• Skills of asylum seekers and refugees often wasted
The official view
• Bank of England ‘…migrants are holding down
inflation..’
• Treasury ‘..immigration makes an annual net
contribution of £2.5 billion to the economy and a
1 % increase in inward migration is associated
with an increase of GDP of over 1 %..’
• DWP ‘… Lower illegals, Higher employment &
output, Possibly higher u/e claimants, slower
wage growth..’
Current policy
• 50 + entry schemes
• Seen as bureaucratic, and not transparent
• Refugees are dealt with separately
• Restrictions on recruiting health and related workers
from developing countries
• Allocation of work permits simplified in recent years from
employer driven to be skill based
• Work of Sector Skills Panels advise on sectors
shortages opaque
The government’s proposals
A simple points based 5 Tier entry scheme
• Tier 1 : for investors and the highly skilled who would
help maximise growth and productivity in the UK
• Tier 2 : for skilled workers with a job offer where there
are skill shortages
• Tier 3 : for limited numbers to fill specific low skill jobs
• Tier 4 : for students
• Tier 5 : for visiting workers, development schemes and
youth mobility/cultural exchanges etc
Points would take account of factors such as previous
salary, skills, age, English language following the
Australian model.
The 3 Skills Tiers
Tier 1 : for investors and the highly skilled as defined by points scores.
Tier 2 : for skilled workers with a job offer where there are skill shortages.
A new Skills Advisory Body to advise
Possibly employers ‘proving’ difficulties, and Auctions.
Salary seen as the best indicator of the individual’s contribution to the UK economy
May be regional criteria, Scotland already has its own migration agenda.
Applicants are likely to need the support of a sponsor or job offer.
Tier 3 : for limited numbers to fill specific low skill jobs.
The government does not see a need for low skill immigration for non EEA nationals following EU enlargement.
The Skills Advisory Body to advise on any short term needs in sectors such as hospitality, agriculture, and
food processing .
Likely to need the support of a sponsor or job offer.
Possibly quotas managed by an accredited operator who selection and manage workers including their return,
through eg (witholding) compulsory remittances or bonds.
Tiers 1 and 2 - family members can accompany them, and long term residence after five years if they meet the
necessary conditions. Tier 3 would be for a time limited stay.
Decisions would be taken at the point of application.
Fines and bonds would help ensure compliance
Major issues for the SAB
How can the Skills Advisory Body (SAB)
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Forecast long term skill needs (employers, models, benchmarking, cost benefit, DELPHI?)
Assess supply side
Balance the impact of ‘interventions’ eg
• wages, technology, smarter working,
• internal flows ?
• EU flows ?
• Emigration ?
Manage lobbying/suspect evidence
How should the points be allocated eg past earnings, occupation
How will the consequences for source countries be considered
How far ahead, and with what detail will points/occupations be designated to allow employers and
individuals to plan ahead?
Will the SAB or the government set the points/quotas and hence migrant numbers?
Some other issues
• Linking Tier 1and 2 with citizenship
• How would an auction work ?
• How ensure consistent local decisions ?
• Employers not happy with devolved decisions
• Role of employers in helping integration
• Legal sanctions on employers, colleges, migrants eg
fines, Bonds, witheld remittances
Will migration solve the UK skills
challenge ?
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It depends on numbers and skills but
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It should help employers in the short term
But it may also
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Reduce employers incentive to invest in training, innovation etc and reduce
long competitiveness
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Accentuate regional differences
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Reduce wage growth
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Raise unemployment at all levels by crowding out indigenous workers
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Further reduce opportunities for those with poor skills