Pointing the way? Managing UK immigration in difficult times

People and Place, June, 2009 by Janet Dobson, John Salt

The United Kingdom has moved to a new points-based system of managing the temporary and long-term immigration of workers, students and their families. It is designed to ensure that only workers with high-level and/or needed skills are selected and that students are genuine and of benefit to the UK. The government view is that the new system will provide it with the tools necessary to reduce labour immigration during the current economic downturn. The system is not yet fully operational but recent data on skilled immigration show that around 60 per cent of migrants are from the European Economic Area, and thus have the right to enter Britain for work, and that many others have been transferred by the multinational companies that employ them. Thus while the new system represents a definite administrative break with the past, its effects on selection and on overall numbers may be limited.

INTRODUCTION

Economic recession and rising unemployment are likely to focus increased attention in many countries on international labour movement. Governments are already facing calls to curb immigration in order to protect the jobs of indigenous workers and are looking at the policy options open to them. The response of the UK government is that the new points based system (PBS), planned and implemented over the last three years or so, allows it the flexibility it needs to manage the 'downsizing' of foreign (non-European Economic Area [EEA]) labour inflows to match declining numbers of skill vacancies. A system devised during a period of strong economic growth is now being tested in very different circumstances. Not surprisingly, the UK's experience of implementing a new system for managing labour immigration may be expected to attract widespread interest.

An earlier paper in this journal (2) reviewed the background to the policy, especially in relation to the highly-skilled people deemed essential for the development of the UK economy, including intra-company transferees (ICTs) moving within the internal labour markets of large trans-national corporations (TNCs). The authors described the proposed five tiers of the PBS and identified eight main, largely administrative, differences between the new system and the existing work permit system. The present paper takes up where the previous one left off. We seek to provide an overview of how the new arrangements have been put in place and are evolving in the current economic context. The structures and processes that are being established clearly incorporate more devolved responsibility for immigration control than hitherto.

Given that the PBS only became operational in 2008, there are as yet no statistical data on its outcomes. Most government effort has been expended in getting the new system up and running; monitoring its impact has taken a back seat. Thus we are at present unable to say how many workers and students have entered via the PBS, what their characteristics are or even what actual statistics will be produced. However, the most recent figures (for 2008) on migration and work permits issued under the old system give us clues as to how the economic downturn has been affecting labour inflows to the UK and how far they can potentially be reduced by PBS decisions. The data also enable some assessment of the areas of employment and economic activity most likely to be affected if there were to be any major limitation on the numbers allowed to enter under the new system and the implications of such limitations for different stakeholders.

The paper has five sections. The first presents the most recent statistical data on labour migrants entering the UK. The focus here and in much of the rest of the paper is on migrants covered by Tier 2 of the PBS, which deals with the temporary immigration of non-EEA skilled workers. Second, the administrative structures of the PBS and the distribution of powers and responsibilities under the new system are discussed. The third section outlines the current position on each of the five tiers of the system. The fourth elaborates on the key role of one of the new structural elements in the system, the Migration Advisory Committee (MAC). Finally, we discuss some of the issues arising from the paper and suggest aspects to be considered or reviewed in the future as economic conditions change.

TRENDS IN LABOUR IMMIGRATION

In 2007 (data for 2008 are not yet available for all routes of entry) the total number of foreign labour immigrants to the UK under all schemes, including the free movement provisions of the EEA, was 454,000 (Table 1). Only about 40 per cent of these would now come under the jurisdiction of the PBS, from which EEA nationals are excluded. Because the Worker Registration Scheme (WRS) does not include the self-employed, it is likely that its total is an underestimate. The statistics in Table 1 (which exclude dependents) take no account of duration of employment so they will include an unknown number of short-term migrants. The message is clear: most labour immigration bypasses the PBS.