The real policy challenge – under-utilisation of migrants’ skills

Much has been made of Ed Miliband’s failure to deliver sections of his conference speech on the economy and on immigration. But he didn’t forget to repeat the policy first announced just before the party’s 2013 conference to require employers to recruit an apprentice for every non-EU migrant they employ:

 ‘If you want to bring in a worker from outside the European Union, that’s OK, but you must provide apprenticeships to the next generation’

New research out today from the Chartered Institute for Personnel and Development (CIPD) shows that this policy is ill-conceived, based on the widely held assumption that employers recruit migrants rather than invest in their UK born workers. As with much recent immigration policy, it is based on opinion rather than evidence. More importantly, it fails to recognise a real issue in the under-utilisation of migrants’ skills.

Migrants improve firms’ performance

The CIPD’s research confirms existing evidence that migrants are neither substitutes for UK workers nor do they discourage training activity. In fact, as the CIPD found, firms which recruit migrants are actually more likely to invest in apprenticeships, work experience and internships than employers who don’t recruit migrants. The research also finds little evidence to suggest that employers recruit migrant workers because they are cheaper than UK born or because they don’t need to be trained. Rather, they recruit them because they are more suitable because of their background, experience and qualifications or because they are unable to recruit enough applicants locally. Migrants allow employers to meet their skill needs and find recruits for vacancies which are hard to fill.

The CIPD’s findings confirm those of research we carried out for  the Migration Advisory Committee in which we investigated whether recruitment of skilled migrants is used as a substitute for training of resident workers. We found no evidence for this practice, from existing research, statistical data or from case study research with employers. The employers who took part in the research, from the engineering, finance and pharmaceutical sectors included a number of employers in the research recruited regularly from outside of the EU, often because they could not find the skills they needed from within the UK. These employers were also employing skilled British workers already and had invested in their skills themselves through apprenticeships and on-going training. A number of case study firms also worked with schools and universities to stimulate interest in their sectors among young people. Many felt they were doing as much as they could, given their own resources and capabilities and felt strongly that more public investment is required in training, including through funding of provision by regional colleges who feed skills into sectors such as engineering.

The CIPD research also found that firms recruiting migrants were more likely to be growing than those who didn’t, again confirming existing indications from research findings that migrants increase productivity. Rather than taking opportunities away from the UK born, migrants seem to be allowing businesses to grow so that they can offer more jobs to local workers.

Young people face a more competitive jobs market

The jobs market for young people has undoubtedly become much more competitive than 10 or 20 years ago. As the CIPD report points out, at lower skill levels, competition for jobs has increased with welfare reforms increasing the flow of people including lone parents, from benefits into work, combined with longer working lives. In some sectors, particularly manufacturing, structural changes, resulting in loss of middle layer jobs, or ‘hollowing out’, have reduced opportunities to enter at higher levels through vocational education and to break out of low skilled work. Labour’s policy to increase the number of apprenticeships, particularly at higher level, can help to address this problem, although it should clearly be targeted at employers who currently under-invest in training. The report’s suggestions include the following measures to enable young UK-born job seekers to compete more effectively with others, including migrants:

• Encourage more employers to create more skilled jobs and progression, through better management and workforce investment
• Better links between employers and schools to help equip young people with the skills they need to find work
• Improvements in careers information advice and guidance for young people

Employers should invest more in their migrant workers

But migrants are also disadvantaged in the labour  market, in different ways. Existing research also shows that migrants, particularly from Eastern Europe, frequently work beneath their levels of qualifications and skills, often in low-skilled and low-paid jobs. Reasons for this are not fully understood but are likely to include language skills, non-recognition of qualifications, recruitment via agencies and discrimination. They may sometimes sacrifice use of skills for other gains, such as learning English, but may experience a loss of confidence while in low skilled work, making transitions difficult.

Although the CIPD’s report rejects the view that EU migrants are a ‘crock of gold’ allowing employers to skimp on training, employers clearly viewed them as good workers, sometimes with better job-specific, practical or technical knowledge. Employers may experience gains from employing migrants as high quality workers in low-skilled work which may disincentivise moving them upwards. if widely practiced, this underutilisation of skills represents a loss to the UK economy. The concentration of migrants in low skilled work also has social and political consequences, particularly for integration. Removing barriers to migrants trapped in low skilled work may provide opportunities for native workers as well as having benefits for migrants themselves, and enabling employers to benefit from their skills.

The CIPD report adds further weight to evidence that migrants are not used as substitutes for training, but are enabling firms to meet skills needs, fill vacancies and to grow. Asking employers who recruit migrants to invest more in the skills of their UK-born workers is hitting the wrong target and fails to acknowledge the real barriers to training provision. It also fails to address a skills issue of equal magnitude to skills deficits among the UK born – the underutilisation of migrants’ skills.