In 2015/16, EEA nationals paid £15.5bn more in income tax and National Insurance to the UK government than they took out in Tax Credits and Child Benefit (HMRC, 2018). No great surprise given incoming migrants are more likely to be of working age than the population in general, and more likely to be working and contributing to public finances. In fact, the Office for Budget Responsibility (2018) estimates that increasing net immigration would enable us to reduce the primary budget deficit and reduce the net debt.
Given that the economy so desperately needs skilled workers such as doctors, nurses, physicists and engineers, we should be welcoming people with these skill sets with open arms.
Industry understands that we are honoured to have skilled workers from other countries wanting to contribute to making our country a skilled and productive nation. Compare this to The Home Office’s attitude, that UK companies should pay for the honour of being successful and needing to grow. The result of this approach is the penalisation of those who want to bring their skills, tax payments and experience to our economy.
At the end of last year, work-related migration hit its lowest point since 2014, with just 231,000 work-related migrants arriving in the UK. This may sound quite a high number – but it is less than 1% of the workforce. Is a system as big as the 6th largest economy in the world able to adapt so quickly that it can match >99% of its workforce to an ever-changing work landscape? Of course not.
The key to the flexibility so essential in maintaining this status is migration. However, at present, anyone wanting to migrate to the UK faces a rigorous set of challenges. For those roles on the Shortage Occupations list, a slightly less rigorous process is demanded. Even with this ‘less taxing’ approach, roles still need to surpass the salary threshold of £30,000 required for Tier 2 status.
And, if they’ve successfully hurdled that one, the recruit needs to be one of the lucky 20,700 people that fall within the migration cap each year to be in with a chance of receiving a Tier 2 visa. The problem is … high skills don’t necessarily equate to high levels of pay.
The shortage occupations list doesn’t provide exemption from the other Tier 2 requirements, but for a very select number of roles desperately needed within the UK, exemption from the salary threshold is possible if it can be proved that the salary to be paid is in line with market rate.
One role with this type of exemption is nursing. There were 20,000+ unfilled UK nursing jobs at the end of 2018. It isn’t just nurses either. The same situation exists for doctors, paramedics, healthcare assistants and social care workers: All on the list. All with starting salaries that fall short of the threshold. These healthcare roles can’t be outsourced to other countries, but in the technology sector, there’s an additional factor at play.
Technology businesses are unable to recruit the skillsets they need, they are choosing to outsource – often to overseas design services companies. Others hire and grow teams overseas - Dyson and JP Morgan Chase are slowly moving their entire empires overseas.
Once a visa has been granted, companies continue to be penalised for bringing needed skills into the UK.
Currently, the cost of employing a candidate on a work permit for a £40-£60k role is around £12k. Part of this is an ANNUAL NHS surcharge. An additional charge that employers pay, on top of bringing someone into the country and paying them a wage (of over £30,000), from which they then pay taxes that contribute to our health and education systems and our infrastructure. Then there are legal fees which can add a further £4k to already tight budgets. These fiscal and bureaucratic challenges build up, deterring businesses from recruiting skilled staff on a work permit.
Where we have an opportunity for talent and experience to flow into the country, we’ve developed dams. These dams are allowing essential skills and money to seep out of our economy, creating talent and wealth pools in other countries that will nourish their economies, as ours continues to struggle through a clear skills drought.
In a report on the impact of migration to our economy, The Migration Advisory Committee has recommended the removal of the cap and an introduction of medium-skilled jobs to the list. However, it’s clear that these changes will prove impotent without due consideration of the salary threshold and additional fees employers must face if they are to bring in talent from elsewhere.
Unless we welcome skilled workers with open arms, recognising the benefits they bring to the economy, innovation, and the wider community, and support employers who want to recruit skilled workers into their workforce and our community, we’ll be finding ourselves staring at a dry talent pool as our potentially world-leading position in technology development slowly erodes.