Access to Talent: The Future of Skill-Based Migration to the UK | IPT

On Tuesday 20 October, I spoke at an IPT virtual event titled Access to Talent: The Future of Skill-Based Migration to the UK. Nick Thomas-Symonds, the Shadow Home Secretary, chaired the event and Woz Ahmed, Chief Strategy Officer at Imagination Technologies, was a guest speaker also.  The event was attended by representatives from both the House of Commons and House of Lords and a wide range of sectors across industry.

Below is a summary of the main discussion points raised during the event.

A new skills-based work migration system

The points-based migration system will be implemented by the Government at the end of the Brexit transition period. It will give priority to migrants with proficiency in English; with formal qualifications; with job offers in sectors experiencing labour shortages; and with wage above £25,600.

The discussion did not question the basic logic of the migration regime; similar schemes are operational in other countries with success. However, devil is in detail; unintended consequences can never be anticipated in full; and it will be important to monitor how the scheme functions, allowing for piecemeal improvement.

The challenge of attracting best talent from abroad

Speed and low bureaucratic and financial burdens imposed on the highly qualified migrants may enhance their willingness to come and settle in the UK. The international market for talent is highly competitive, and in the recent period, demand for UK jobs in the advanced technologies sector has weakened. This is also visible within the university sector. In this strata of high qualifications, the issue is how to attract best talent. And, even if people who come have similar qualifications to the UK residents, there is additional business value in increasing diversity of the firm’s personnel: migrants bring additional value not because their knowledge is higher, but because it is different.

It is also possible that the system will not be able to match perfectly the individual conditions of each firm. For example, a dynamic, high-value added firm, with average high level of human capital of its employees, may nevertheless found itself constrained by a lower skill position, say in simple data processing. Leaving a margin for open bidding for permits could provide the government with valuable information of what the scheme is missing.

National or local impact?

Furthermore, the current scheme does not directly address the issue of local impact of immigration. In recent years public support for regulating or restricting immigration was predominantly driven not by sectoral imbalances, but by perceived local impact in pockets of high migration. Local impact relates to health care, schools, social and physical infrastructure, housing rental costs and more. As raised in the discussion, one means to alleviate these concerns effectively will be to devolve the immigration policy decisions both to home nations, but also to the regions of England. The fundamental issue is this: from the local perspective, there are likely trade-offs between shortages of labour (or conversely, weak labour markets) against over-stretched social and physical infrastructure (or conversely, slack in it). Uniform country-level parameters may still result in levels of migration above short-term absorption capacity in some places, while leaving other places with labour shortages. For example, the wage level parameter is not weighted by local cost of living, therefore it may have very different local implications.

Too much or too little?

Obviously the Government target is not to curb the immigration as much as possible, and this is clear from public policy statements. But what is too much and what is too little? It is quite possible that we are now entering the period of less immigration driven by less interest in moving to the UK. The 2018 figure shows that 14% of the UK population was born abroad. This is a higher figure than the OECD average, thus supporting a case for lower immigration. Things look different however, when we consider the fact that the crude birth rates in the UK remained lower than the OECD mean for more than half a century. Birth rates and migration exhibit strong negative association across countries, and once we account for the former, it could be argued that the level of migration in the UK has been too low and not too high, and that possibly was one of the factors slowing down development.

Words by Professor Tomasz Mickiewicz, Head of Economics and Strategy Group, Aston Business School