Migrant workers in IT and engineering professionals have a positive financial impact on the UK and have helped the two sectors expand their skills, a key government report – the first of its kind – has found.
A report by the independent Migration Advisory Committee and commissioned by home secretary Yvette Cooper found that migrant workers in both occupation groups made a “significantly positive net fiscal contribution”. This was driven both by their higher-than-average wages, and their reduced reliance and access to public services and benefits. While calculations were for their first year in the UK, it was judged highly likely that they would make a large net positive contribution over their lifetimes.
The report was the first of its kind, designed by the Home Office to understand the reasons behind key sectors’ reliance on international recruitment. IT, telecoms and engineering were among the top 10 of those sectors which have been reliant on overseas specialists. Ministers sought to understand the reasons behind this and how future demands may change. MAC was asked to find out:
- What types of roles are in shortage?
- What are the different drivers of these shortages including training, pay and conditions?
- How have the sectors sought to respond and adapt to these shortages, beyond seeking to recruit from overseas?
- Where relevant, what, if any, impact has being on the shortage occupation list had on these sectors/occupations?
- What policy levers within the immigration system could be used more effectively to incentivise sectors to focus on recruiting from the domestic workforce? This included looking at the role of the Immigration Salary List, which the recent Immigration White Paper proposes abolishing.
The report conceded that the positive picture it painted resulted in part from its focus on the higher-level “professional” roles within IT and engineering. It also acknowledged the inherent differences between the sectors. IT has substantially higher visa usage than engineering (around 9% and 3% of all Skilled Worker visas respectively), yet both are substantially below other (often largely publicly funded) groups such as nursing and other health professionals.
Domestic skills
MAC said that increasing the level of skills in the domestic labour pool did not guarantee reducing migration, as migrant and domestic workers were not perfect substitutes: “Even a very successful skills policy could not guarantee reductions in immigration if there is no change in immigration policy. However, skills policy may be able to help mitigate any negative impacts of restricting migration into highly paid, highly skilled jobs,” it stated. Often it was the pay and conditions of the work that drove skills shortages – but this was more true of other sectors, not IT and engineering.
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Looking at ways of increasing the proportion of domestic workers in IT and engineering, MAC pointed out that any expansion of numbers on science technology engineering and mathematics (Stem) courses in higher and further education would have to address the funding models used in these sectors. It said: “Universities lose money on average teaching UK undergraduates, but they lose relatively more teaching high-cost Stem subjects. FE has been starved of money over the past few decades, and again the costs of providing courses outstrips the revenue they receive.
“Having training providers willing to put on courses at the going rates is a prerequisite for most employers to invest in skills training. Many large firms we talked to have addressed the problem by creating their own training courses, but that is not a solution for the overall economy.”
Apprenticeship Levy
It added that the reform of the Apprenticeship Levy to become the Growth and Skills Levy was likely to be beneficial to the IT sector in particular, where shorter courses and bootcamps are an important part of the training environment.
In higher education, the freezing of tuition fees in England, and high levels of inflation in recent years had created a demanding environment, with these issues exacerbated in IT and engineering by the higher operating cost of these courses, found MAC. In further education, providers struggled to recruit and retain teachers who could earn substantially more utilising the skills they are teaching.
Efforts to improve diversity in IT and engineering were yet to bear fruit, said the study, but remained important for the long-term health of the sectors. “Issues with diversity, in particular the male-dominated nature of both sectors, are well known, but despite many initiatives they are yet to make a substantial difference and action is required from school age to make change in the long term. Many of these are long-running issues and action should be prioritised to help the long-term future of the sectors,” it said.
MAC recognised that IT professionals accounted for more than three times the number of visas as engineering professionals. This was partly because engineering was older and more established than IT, it stated, “and so, relatively, has more settled pathways and support networks for workers”.
MAC added: “Although the engineering sector faces challenges in areas such as the continued lack of female participation, and the high cost of running courses, from an immigration perspective at least, the system is broadly working as intended.”
IT faced different challenges, being a fast-growing industry, operating in a global marketplace. There was a need to train more domestic workers given these factors.
Global mobility route
The Global Business Mobility route was being misused in the IT sector, said the study, with “evidence of bunching around the threshold”. This route appeared not to be being used in the way the policy originally intended and was not for specialists at the top of the wage distribution. The Skilled Worker route, which provided a pathway to settlement, was more appropriate, it suggested.
On average each year about 11,900 skilled worker visas are issued to IT workers – 9% of all such visas. 7% of new hires use the visa. Social care and nursing (in which 34% of new hires used the visa) were the only two professions using the visa more than IT.
In engineering, 3,600 skilled worker visas are issued each year on average and 6% of new hires use the visa.
About 75% of IT professionals hold UK passports as opposed to 84% of engineering specialists.
Louise Haycock, partner at immigration law firm Fragomen, described the tone and content of the report as “very positive.” She said the study “largely dispels cynicism around how these sectors use the immigration system, instead highlighting the genuine recruitment challenges they face. Importantly, it also demonstrates the net contribution of migrants through these routes and underscores how critical immigration is to sustaining growth ambitions.
Haycock added: “MAC also brings a dose of realism to the ambition of aligning skills and immigration policy, reinforcing the ongoing need for immigration. It highlights the opportunity for further advocacy before final policy recommendations are made, and we look forward to providing our insight to help shape those policy directions.”
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