Post-Brexit immigration policy cannot ignore employers’ needs

The MAC report out today concludes that a new managed migration system will have ‘winners and losers’ and the size of the benefits are likely to be modest’. Its key recommendation is that:

There should be a ‘less restrictive’ system for higher-skilled workers than for lower-skilled workers in a system where there is no preference for EEA over non-EEA workers’

It argues against reducing current salary visa salary thresholds and against sector based schemes, with the exception of agriculture. By prioritising highly skilled, higher paid, migration, it argues that fiscal benefits will be maximised and potential wage impacts on British workers minimised. Its conclusions and emphasis on high skilled migration in future policy are unlikely to be welcomed by employers in key sectors who rely on migrant workers to meet labour, as well as skill shortages. Little is offered to give these employers confidence that, once we leave the EU, they will continue to be able to recruit the labour they need.

The report is a useful reminder that new immigration policy has to be fit for purpose and based in evidence, in particular of its impacts on services. And the report makes it clear that such impacts are fairly minimal. But new policy also has to be based on what employers need. With its emphasis on highly skilled migration, the report appears not to recognise the extent to which employers in key sectors need access to lower skilled labour too. It’s one thing to prioritise higher level skills, but quite another to give almost no provision for lower skilled labour.

Let’s remind ourselves why employers recruit migrants

NIESR has collected data on employers’ preferences through research before and after the referendum vote, focusing on employers in key sectors including food processing, hospitality and social care. These sectors employ substantial numbers of lower skilled workers, and among them high proportions of migrants. How well would the MAC proposals seem to meet their needs? First, it cannot be said often enough that employers in these sectors recruit migrants because of persistent and chronic labour shortages spanning a very long period of time, in the case of the food industry since the end of the Second World War. Migrants aren’t recruited in preference to British workers and, as the MAC research by Jonathan Portes and colleagues finds, they don’t reduce investment in training. There’s also some evidence that low skilled migration increases the likelihood of native workers upskilling themselves, or becoming more productive.

It’s true that the quality of jobs in sectors like hospitality and social care is low and could be improved to attract more British workers. The referendum was in some respects a wake-up call for employers who have relied most heavily on migrant workers. And driven by a fall in the flow of EU migrants and expectations that free movement will end and, employers have been looking at how they might increase the supply of domestic labour, including by trying to attract more young people. But with unemployment at a record low and employment participation at an all-time high, this is proving a struggle.

Employers need proper routes for low skilled labour – not just students and family members

The MAC report suggests three ways in which migration policy can meet employers’ needs for lower skilled labour:

• A scheme for the agricultural sector, but explicitly no other
• An expanded Youth Mobility scheme
• Recruitment of individuals migrating as family members

None of these options will come close to meeting employers’ needs: first, agriculture is by no means the only sector which faces challenges in recruiting British workers. In relation to social care the MAC argues that it needs ‘a policy wider than just migration policy to fix its many problems’. This is true of other sectors too, but restricting migration is likely to exacerbate its problems, especially in the short term. Turning round a whole sector, including its funding model, will take even longer than leaving the EU.

The MAC also states that low skilled needs will be met in the future by the ‘existing stock’ of EU migrants and through ‘a continued flow through family migration’. And it also recommends an expanded Youth Mobility Scheme. Neither of these is likely to meet employers’ needs since there is no guarantee that such visa holders will chose to work in the sectors where labour is needed most. The Youth Mobility scheme also has the disadvantage of supplying only temporary labour, while research findings show that employers in sectors such as social care and hospitality value stability among migrant workers, not just their flexibility.

Workable options are needed for low skilled migration

The MAC recommendations appear to be drawn from the conclusion that skilled migrants contribute more: they earn higher wages, pay more tax, contribute more to public services and have positive effects on employment and wages of British workers. These benefits have been found to be much weaker and even slightly negative in relation to lower skilled migration. It’s true that in an ideal world we might want migrants to be highly skilled and high net-contributors, but that isn’t what all employers need. Many need migration to keep production and services up and running. Post-Brexit immigration policy cannot ignore the needs of employers in key, low skilled sectors and workable options need to be put in place.