The MAC’s Recommendations Are In: Will the Government Listen to Employers?

In 2015 the Migration Advisory Committee (MAC) was asked by the government to consult on the Tier 2 visa system, the primary route of economic migration into the UK. In mid-January, after examining 251 written submissions, the MAC published their recommendations. The REC’s submission was quoted a number of times and our Report on Jobs data supported the argument that skills shortages in the UK have reached a critical level.

Whilst the MAC states that there is ‘potential tension’ between the government’s objective of growing UK productivity levels and cutting the number of non-EU migrants, it hasn’t stopped them from making recommendations designed to restrict the recruitment of candidates via Tier 2. 

Sunsetting

The MAC has recommended against placing an automatic time limit (‘sunsetting’) on occupations that are on the Shortage Occupation List (SOL). Instead, the MAC will continue to review the list on an ad-hoc basis. This is in line with REC recommendations, but we were disappointed by the MAC’s reluctance to commit to regular, periodic reviews. If ‘under-reviewed’, the SOL will rapidly become out of date and fail to accurately reflect jobs market data.

Immigration skills charge (ISC)

Despite our argument that an ISC is an excessive financial burden on employers, the MAC has recommended that employers are charged £1,000 per Tier 2 worker per year (for example, for a five year visa, this could result in a charge of £5,000). Many organisations already invest in training and the ISC is, in our view, a tax on employers to make up for the lack of investment in careers guidance and vocational training by UK governments over several years.

The ISC is already enshrined in the Immigration Bill but for the moment, legislative detail is lacking. The MAC did go into a little more detail:

1. the employer must be made to bear the costs of the ISC in order to change behaviour (i.e. they should be unable to pass that cost onto the migrant/customer prices etc.) and
2. there should be no exemptions from the ISC (it should apply to all employers, both public and private sector).

The MAC did not agree with the argument made by respondents that public sector employers should be exempt from the ISC, despite the fact that as they are funded by the government such a charge would effectively be returned to the public purse.

Raising salary thresholds

The MAC has recommended that the minimum salary threshold rises to £30,000 (with an exception for graduates), stating that this is more fitting than the current £20,800 salary threshold.

We don’t believe that a rise in salary thresholds will fulfil the MAC’s objective of prioritising those skills of most benefit to the UK. The demand for candidates will remain and organisations unable to afford the higher threshold will see their vacancies unfilled.

The MAC has admitted that a rise in salary thresholds may cause problems for some: start-ups and public sector employers are likely to be disproportionately affected. Recommended solutions include a ‘phasing in’ of the higher pay threshold for public sectors, but no further detail about how this could work is included in their report.

What effect could these recommendations have?

It’s very unlikely that the MAC’s recommendations will help the government meet its ‘tens of thousands’ target, as Tier 2 visas are a tiny slice of the net migration figures.

The MAC has also stated that there is ‘potential tension’ between the government’s objective of growing UK productivity levels and cutting the number of non-EU migrants. All Tier 2 migrants have jobs, pay tax and also contribute to society on more levels than just the ones we can define economically.

If the MAC and government are looking to reduce demand, these recommendations will not fulfil this objective. The only way to reduce demand is to better shape young people in our schools and colleges into the workers of the UK’s future labour market, and to harness and improve the skills of those workers who are already economically active.