Undercutting UK workers – Tory style

We don't need secretive deals that bring in people through the back door and undercut the wages of UK-based workers.

We don’t need secretive deals that bring in people through the back door and undercut the wages of UK-based workers

Today George Osborne and William Hague set off on a two-day trade mission to India, with the aim of opening up opportunities for British business.

Progressives will hope that this trip will be of benefit to UK workers. But this has not always been the case, as previous trade missions to India have led to agreements that undercut the pay of staff who work in the UK.

Every year, though Tier Two work visa routes, the UK admits a group of migrants through a discretion called an intra-company transfer.

This allows companies based in the UK to bring in staff from their overseas branches to work here.

Over the last 15 years the numbers of intra-company transfers has soared and by 2009 the UK admitted twice as many per head of population than did the United States and the most among all OECD countries.

In the past many intra-company transfers used normal work visa routes to come the UK. But since the introduction of the points-based work visa system in 2009, this policy has changed. There are now specific visas are granted to workers who want to move to the UK through an intra-company transfer.

They have now three main intra-company transfer schemes: for long-term staff, short-term staff and graduate trainees. Long-term staff transfers need to be earning more than £41,000 per year in their home country and are allowed to remain in the UK for five years. Short-term staff can come for up to 12 months, but only need to be earning £24,500 in order to qualify.

Despite these restrictions, the numbers of staff coming through these schemes has increased. In 2013 the UK issued visas for 33,260 main applicants and 21,638 dependents through intra-company transfer routes. In the same year, 78 per cent of the intra-company transfers were from India. In 2012, 47,218 applicants and dependent visas were issued.

This route brings in far more people than most other work visa routes. Moreover, intra-company transfers are entirely outside the government’s target to reduce net migration – the difference between immigration and emigration – to the tens of thousands by 2015.

When the present government, then in opposition, announced its migration cap, there was extensive lobbying by a range of business interests for intra-company transfers to be exempt. But it took a secretive trade deal with the Indian government to make this happen.

TheCityUK, a powerful financial services lobby group, wanted the Indian government to remove restrictions placed on the European financial services sector which made it difficult for them to set up in India. As a sweetener, TheCityUK pushed for EU governments to accept more Indian graduates through intra-company transfers. It used its own India group and its membership of the European Services Forum to argue for this policy, as well as negotiations of GATS – General Agreement of Trade in Services Mode 4 which covers the movement of people.

In the UK, one of the outcomes of TheCityUK lobbying has been the exemption of intra-company transfers from the net migration target. When this was exposed in 2012, the government blamed’ the EU for ‘forcing’ them to take intra-company transfers.

Of course many people coming to the UK through this route perform important roles that benefit the UK economy. They train UK-based workers and help in the transfer of knowledge and skills.

But over the years, there have been concerns raised by those who work in the IT sector that multinational companies were bringing staff from countries such as India and paying them less than the going rate for work previously undertaken by UK-based workers.

In 2011 these concerns led the government to request the Migration Advisory Committee looking at this issue and to see if an increased minimum income threshold for these schemes would prevent abuse. It recommended that the government raise the minimum income and skills threshold and limit the numbers of workers any one company could transfer.

There have been some minor changes to intra-company transfer visas requirements since 2012 – the minimum income thresholds have been increased in line with inflation.

But the concerns voiced by IT workers remain. Although those on short-term intra-company visas are prevented from returning to the UK for a two year period, there are accounts of staff being rotated in order to subvert this rule. Outside the UK, there has been disquiet about abuse of intra-company transfer schemes, with the Indian-owned IT giant Infosys recently fined $32 million for abusing US visa rules.

All of this does little to inspire confidence in the immigration system. At a time when migration is high on the list of public concerns, we do not need secretive deals that bring in people through the back door and undercut the wages of UK-based workers.

Above all migration policy needs to be developed in an open and democratic manner.

Jill Rutter is an associate editor of Left Foot Forward and mostly writes on migration issues

9 Responses to “Undercutting UK workers – Tory style”

  1. Leon Wolfeson

    More myths about wage undercutting?

    You are indeed undercutting UK workers, as a Tory, by repeating such myths. You seem to have posted on the wrong site.

  2. Leon Wolfeson

    More myths about wage undercutting?

    You are indeed undercutting UK workers, as a Tory, by repeating such myths. You seem to have posted on the wrong site.

  3. treborc1

    So we then need to leave the EU then, this would stop people from coming here we could shut the doors and live in our own little world. Immigration has always been good for the UK in the old days those long lost day of the NHS we needed idiots to work for the low wages paid to nurses and teachers police and fire fighters, and MP’s actually, now they are all paid high wages no more need for immigrants so we can blame the Tories, but which ones the new labour ones or the Tories ones we have today.

    Nice to have sarcasm.

  4. externalities

    I’m very much in favour of free movement of people but I think there is a big issue that Jill hasn’t touched on here, which is the generous tax treatment of intra-company transfers. As I understand it, these employers and employees pay no National Insurance on their pay in their first year, and then tend to pay it on only a fraction of their income after that. The tax system actively helps undercut British workers.

    There is a legitimate counterargument that those who won’t be drawing a UK state pension etc. shouldn’t have to pay NI, but that presumes a level of contributory principle and hypothecation which really don’t exist in the UK.

  5. remarx

    Wage undercutting is a crime against all workers in this country. The unemployment figures are applauded as a ‘Tory victory’. Bullshit! Many, many of those vacancies are filled are by either immigrants or young people, of which neither group is entitled to even the minimum wage – a fact not often publicised. The workers of this country have once again been sh=t on by by those above, not necessarily by a particular government, but by the monied that control them.

    In many ways the working classes have been taken back 100 years. Shameful.

  6. Leon Wolfeson

    “of which neither group is entitled to even the minimum wage”

    Myth. Adults immigration status does not affect minimum wage eligibility.

    Don’t believe everything you read in the Daily Mail.

  7. Leon Wolfeson

    Well, there is certainly an argument *now* that they should not pay NI, as they are basically not eligible for anything it covers (or a range of other basic services).

  8. remarx

    Immigrants may be eligible for minimum wage, but it is lawful to pay them less if they accept.

  9. Leon Wolfeson

    Complete mythological crap! Your businesses really, really need an audit.

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