Home secretary Priti Patel on Wednesday defended the UK government’s proposed post-Brexit immigration regime, saying businesses should invest in training “economically inactive” people and develop automation technology to fill any future gaps in the labour supply.
“If we invest in people and also if we put [in] the right investment in terms of new technology and skills, more people would be able to work in many sectors,” Ms Patel said.
But opposition politicians argue the government is ignoring the economic havoc which could be unleashed by the new “points-based” system with sectors like farming, hospitality and construction facing the loss of vital but low-skilled labour.
How will the new system work?
The government has presented the new system, which would come into force after the Brexit transition period ends on January 1 2021, as “points-based”.
However, some immigration lawyers say it is far cruder than points-based systems operating elsewhere worldwide. Applicants must reach 70 points to qualify, with migrants awarded points for speaking English, the level of salary being offered by the prospective employer, and postgraduate qualifications.
A high proportion of the points depends on whether the applicant clears a salary threshold of £25,600 per annum.
The plans fulfil pledges made both during the 2016 Brexit referendum campaign and in the run-up to December’s general election to end freedom of movement between the UK and 30 mainland European countries, which make up the European Economic Area (EEA), the 27 members of the EU plus Liechtenstein, Iceland and Norway.
Critics of the system say it will almost entirely close the door on the recruitment of low-skilled, low-wage migrants from the EU.
Which sectors could benefit?
The technology industry, which brings in large numbers of highly qualified, well-paid staff from India, the US and other places outside the EEA, is one of the most obvious beneficiaries.
Julian David, chief executive of TechUK, the industry association, said it was vital that the UK remain “open and attractive” to international innovators and investors.
“This is a welcome step in that direction,” he said.
The proposed regime’s new £25,600 lower salary limit is less restrictive than the current limit of £30,000. The new requirement that applicants need educational qualifications to A-level equivalent is also a relaxation on the current requirement for non-EEA applicants that they hold a college or university degree.
While critical of aspects of the plans, Carolyn Fairbairn, director-general of the CBI, the employers’ organisation, welcomed two other relaxations in the new rules compared with the existing regulations for non-EEA nationals. There will no longer be a cap on the number of skilled migrants who can receive work visas. Ministers will also drop the current rules’ “resident labour-market test”, under which employers have to show there is no suitably qualified British candidate for the role.
Who might lose out?
The government’s proposals are likely to make life more difficult for the many enterprises that have expanded rapidly because of the supply of cheap, willing labour from countries such as Poland and Romania. Those migrants are typically paid less than the £25,600 annual salary floor that will apply to most roles under the new proposals. Applicants generally do not require the equivalent of an A-Level to do the job.
Much of the concern is focused on the social care sector, which is already struggling to fill vacancies and is expected to face growing demand as the UK population’s average age grows.
Nadra Ahmed, executive chairman of the National Care Association, said the government needs to put social care jobs on the shortage occupation list — roles for which applicants receive preferential treatment.
“Their ideas around social care amount to a leaky bucket and don’t hold up,” Ms Ahmed said.
Although pay is likely to rise in some sectors, it is unlikely higher pay would produce significant numbers of new UK workers, while many sectors are unable to increase wage levels easily.
In social care, pay levels for many employees are constrained by the levels of funding they receive from central and local government — which look unlikely to increase rapidly.
Employers in some of the affected sectors — such as food processing and horticulture — also say that their work is so demanding that UK workers are reluctant to do it at any price.
Can workers be replaced by automation?
The shrinking labour pool is bound to make it worthwhile for restaurants and hotels to invest, for example, in tablet computers that will take customers’ restaurant orders and replace check-in desks. However, automation will not provide the solution for sectors facing the biggest crunch.
In social care, robots are unlikely — for now — to be able to replace the human touch when it comes to bathing or offering other care to older people. It has also proved very difficult to produce robots that will pick fruit.
In the meat processing sector, which sources 70 per cent of its staff from EEA countries, few of the butchers who cut up cattle or pig carcasses require educational qualifications high enough to meet the standards of the government’s proposed new regime. However, according to Nick Allen, chief executive of the British Meat Processors’ Association, automation of the process of removing bones from animal carcasses remains in its infancy.
“Animals come in different shapes and sizes, so getting robots to do these things is really, really difficult,” Mr Allen said.
How will the UK economy be affected?
There are likely to be short-term shocks to the economy. The British Poultry Council, representing chicken producers and processors, predicted that the government’s plans would push up prices of many domestically produced items and encourage imports of lower-quality, lower-price, overseas-produced goods.
However, the long-term effect on the overall economy is unclear. The Migration Advisory Committee (MAC) has consistently found that, while immigration has increased the size of the UK’s economy, it has had little effect on gross domestic product per person, the critical barometer of economic wellbeing.
The government’s Brexit economic impact forecasts, by contrast, predicted that both the economy and per capita GDP would be smaller in the long term if net inflows of EEA workers ended after the UK leaves the EU.
Additional reporting by Delphine Strauss and Sarah Neville
