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.
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.
Table 1: Total foreign labour immigration by major routes of entry, 2007 * Route of entry number per cent WRS (1) 216,892 47.8 Work Permits (2) 87,968 19.4 EU&EFTA (3) 43,000 9.5 Working Holidaymakers (4) 37,845 8.3 HSMP (2) 28,090 6.2 SAWS (2) 16,971 3.7 Domestic Servants (1) 10,600 2.3 UK Ancestry (1) 7,220 1.6 SBS (2) 1,472 0.3 SEGS (1) 2,243 0.5 Au Pairs (1) 765 0.2 Ministers of Religion (1) 860 0.2 Total 453,926 100.0 Sources: (1) Home Office (2) Work Permits (UK) (3) International Passenger Survey (4) UK Visas Notes: * data for January to June 2007 only in italics--now under PBS WRS--Worker Registration Scheme, WP--Work Permits, WHM--Working Holiday Makers. HSMP--Highly Skilled Migrant Programme, SAWS--Seasonal Agricultural Workers Scheme, SBS--Sectors Based Scheme, SEGS--Science and Engineering Graduates Scheme, EU--European Union, EFTA--European Free Trade Agreement. The second message from the statistics is that the new system is coming into operation in a period of declining foreign labour inflows. This is indicated by quarterly data from the Worker Registration Scheme (WRS) on Eastern European migrants from the eight accession countries joining the EU in 2004 and by work-permit data relating to non-EEA migrants who now fall within the remit of the PBS. As the economic downturn has developed, the trends have been downward. The number of applications approved under the WRS has declined from its peak of 227,875 in 2006 but the fall was especially steep during 2008, from 46,625 in the first quarter to 26,815 in the fourth to finish the year at 156,295. The fall continued to only 21,275 in the first quarter of 2009.
Work permit numbers have also fallen recently (Figure 1). (3) Among the categories of applications, work permits and first permissions are of particular interest as they were sought for foreign workers newly entering the labour market and can be used as an indicator of international labour immigration. Their numbers rose from about 24,000 in 1995, peaked at around 96,000 in 2006, falling back to 78,000 in 2008. There is some evidence that there was a last minute rush by employers to submit applications before the launch of Tier 2 of the PBS on 26 November 2008 (4) and this would explain the relatively small fall over the year, despite the economic downturn.
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The third implication of the statistics is that any attempt at major curtailment or reduction in inflows of skilled workers through the PBS at the present time would have a major impact on some very specific groups and areas of economic activity. The 2008 data show particularly the importance of computer services, the significant role of intra-company transfers and the domination of Indians in both Tier 1 and Tier 2. This selectivity is a significant issue and is considered further in the conclusions.
Table 2 shows a breakdown of work permits and first permissions approvals for the main industry groups using the work permit system for the last four years for which data are available. Just a few industries account for most permit issues with the dominance of computer services now unchallenged. Permits for health and medical staff have moved decisively in the opposite direction. There is also a concentration by nationality, with Indians, accounting for 41 per cent of all work permits issued in 2008, way ahead of the USA which came second on the list (Table 3). When nationality and industry are cross-tabulated, the dominance of Indians in computer services...