The salary threshold for skilled migrant workers entering the UK should be lowered to £25,600 to make it more affordable for employers to sponsor skilled workers from abroad after Brexit.
This is the recommendation of the Migration Advisory Committee (MAC), which said reducing the salary threshold under the Tier 2 (General) visa scheme from £30,000 would mean that “most employers” could hire migrants “at wages which many existing workers in those occupations are currently being paid”.
Immigration and Brexit
In addition to meeting the thresholds, employers offering jobs to workers from overseas would also need to pay an occupation-specific rate, the MAC recommends in its latest report.
Last week industry bodies including the CBI, British Chambers of Commerce and Make UK urged home secretary Priti Patel to slash the threshold to £20,100, while reports suggested the prime minister was considering scrapping the salary threshold entirely under his plans for an “Australian-style” points-based immigration system.
“We see an important role for salary thresholds; what is a cost to an employer is an income for a worker,” Professor Alan Manning, chair of the MAC, said.
“Salary thresholds prevent undercutting in the labour market, ensuring that employers are not hiring migrants simply because they are cheaper. Salary thresholds can help ensure that migrants are helping to improve the public finances: of every extra pound in earnings approximately 50p goes to the state, and they can help realise the ambition of the UK as a high-wage, high-skill, high-productivity economy.”
It’s likely that for many employers, the biggest deterrent from bringing in foreign workers will not be the salary thresholds, but the cost and bureaucracy of the process,” – Denis Kierans, University of Oxford.
It recommends that most teachers and NHS workers should be exempted from meeting a salary threshold, while those under 26 and recent graduates from UK universities should be given permission to work in the UK with a minimum salary of £17,920 per year.
The MAC report also rejects the possibility of a geographical-based variation on salary thresholds, suggesting that it would be better to target problems in some areas of the UK with “a visa that caters for these areas’ specific needs rather than to alter the whole UK system”. It suggests the government should evaluate this as an option.
We see an important role for salary thresholds; what is a cost to an employer is an income for a worker,” – Prof Alan Manning, MAC
The Tier 1 (Exceptional Talent) visa route is also criticised by the MAC, as the skills requirements for entry into the UK are “far too high, targeted at those the very top of their field”. It describes the system, under which only 600 people were admitted into the UK last year, as “too risk averse”.
It says that introducing an Australian-style points system, the government’s preferred option, would bring little value when deciding which workers should enter the UK. However, it could be used to decide who should be eligible to receive permanent settlement rights once they have been in the UK for a few years.
Prof Manning said: “If the government wants to introduce a points-based system (PBS) we recommend modifying (or replacing) the current Tier 1 (Exceptional Talent) to be a more open PBS, drawing on best practice from other countries and not repeating the mistakes of earlier UK PBS for those without a job offer.”
Yesterday, the government announced a new Global Talent visa as a replacement for the Tier 1 (Exceptional Talent) scheme, launching on 20 February.
Highly-skilled workers who want to come to the UK should be able to register their interest in working in the UK, say the MAC, and a capped number of monthly invitations to apply should be drawn from that pool.
The report says there should be a “tradeable” points-based system, with more points for the types of migrants the government wants to encourage, such as STEM skills. It should be focused on those with “high potential” rather than “established exceptional talent”.
“In doing this, the government should proceed with caution and have limits on the numbers of visas issued. No system for picking winners will be perfect and there will inevitably be some admitted on this route where promise does not deliver,” added Prof Manning.
Denis Kierans, researcher at the Migration Observatory at the University of Oxford, said: “For non-EU workers, what the MAC is proposing is a clear liberalisation.
“But for EU workers, even this more liberal proposal is still much more restrictive than the status quo – fewer people will be eligible and it will be more bureaucratic and more expensive. It’s likely that for many employers, the biggest deterrent from bringing in foreign workers will not be the salary thresholds, but the cost and bureaucracy of the process.”
The announcement will provide some mild, but temporary, relief for employers concerned about the post-Brexit immigration system, suggested Gerwyn Davies, senior labour market adviser for the CIPD.
He said: “Many will be relieved to see that the lower minimum salary threshold of £25,600 does not include sectoral or regional variations. This would have added complexity to a system many already feel daunted by.
“In addition, the expansion of a new unsponsored route, together with other proposed temporary routes, such as the Youth Mobility Scheme, will ease the cost and administrative burden for some employers.
“One the downside, other employers will be disappointed that the MAC has not supported lower salary thresholds for shortage occupations, especially public sector employers who have less scope to raise wages in response to labour shortages.”
Edwin Morgan, director of policy at the Institute of Directors, said the government should take up the recommendation to pilot visas for specific areas, “Our members in Scotland and Northern Ireland in particular have raised concerns about the system not taking account of the different circumstances firms there face.”
Tom Hadley, director of policy at the Recruitment & Employment Confederation, said: “It’s good news that the MAC is recommending ways of making the Tier 2 system better for employers and workers. Allowing more people from medium-skilled occupations to apply, abolishing caps on numbers of workers that can come in and proposing to get rid of the resident labour market test all make sense. So does lowering the income threshold, however we think the threshold should be even lower to address the skills needs of businesses who need labour at all pay levels.
“Skills shortages are one of the biggest problems facing the UK economy. We need an immigration system that can solve this. For food to be produced, for goods to be delivered and for our NHS to continue to be the best in the world. A flexible route into the country for temporary workers of all skill levels means that workers can move into sectors and geographies where they are needed without being tied to a particular employer. For instance, drivers can support our hospitality or retail sect depending where there is demand.”
Danny Mortimer, chief executive of NHS Employers, welcomed the MAC’s recommendation to lower the salary threshold but was concerned that it does not go far enough to address the workforce crisis in social care despite recognition of the problem.
“If social care is unable to recruit from overseas, the sector will simply not be able to meet the growth in demand, leading to significant implications for the health and wealth of the nation,” he said. “Both the NHS and social care carry more than 100,000 vacancies respectively in England and our ageing population with complex needs means record demand for services and care will increase.
“Brexit provides an opportunity for the government to re-set the UK’s approach to immigration. The focus on an Australian-style, points-based system offers scope to tackle workforce challenges, which could complement domestic supply efforts. We are confident that the NHS is firmly in the government’s considerations but need an equal if not greater acknowledgement of the requirements for overseas colleagues to work in social care.
“The coalition has had a very constructive dialogue with the Home Office and we will continue to ask the home secretary to go further than MAC in providing support to the social care workforce.”
Chetal Patel, a partner at law firm Bates Wells, said: “It’s clear that there is no one size fits all approach. The recommendations vary across different sectors and someone, somewhere will miss out.
“With the Tier 1 (Exceptional Talent) cap having never been hit, it’s not surprising to see that the MAC have recommended a whole raft of modifications to this route. Having an expression of interest basis would see that only those individuals who were highly motivated to use this route would register their interest which on the face of it seems like a good thing.”