Migrants paid under £35k become “guest workers”, but it won’t help the government

Matt Cavanagh runs through the government's plans to throw out workers who don't earn enough fast enough - but it won't work the way they want it to.


Matt Cavanagh (@Matt_Cav_) is an associate director at the Institute for Public Policy Research (IPPR)

As we know, the government has saddled itself with a target of cutting “net migration” – immigration minus emigration – to the “tens of thousands” by 2015.

This was always going to be challenging, particularly given two trends: emigration levels, which are low by recent standards, and net migration from Eastern Europe, which remains high.

Most of the focus has been on the government’s attempts to cut immigration, including their flagship policy of the “cap” on working migrants from outside the EU. But equally important are its plans to increase emigration, by stopping these migrants from settling permanently – by sending them home instead.

Like many (though not all) of the areas the government is attacking, the trends are actually going in the direction ministers want – just not fast enough to hit the target.

Numbers of working migrants from outside the EU fell by half between 2004 and 2010. Reforms by the previous government made it harder for them to settle permanently.

International migration patterns also suggest a wider shift towards temporary migration. Without any further policy changes, the numbers of working migrants settling permanently would probably fall by half.

Cutting further isn’t needed to “bring immigration under control”, or even to “break the automatic link between coming here and staying permanently”, as ministers like to claim. It is needed to hit the target they have chosen.

So what exactly is the government going to do?

Last summer it consulted on proposals which would have turned virtually all working migrants into “guest workers”, sent home after five years.

It asked the advice of the independent Migration Advisory committee (MAC), which urged that the proposals be softened, to mitigate the economic damage they would cause. The MAC recommended instead a minimum salary requirement for working migrants wanting to settle permanently, set higher than the level required to come here in the first place – between £31,000 and £49,000 per year.

Today, Home Secretary Theresa May announced her intention to set the requirement at £35,000 (as predicted in IPPR’s New Year Migration Review), which would disqualify just under half of skilled workers from outside the EU from staying permanently.

£35,000 is the median income level for these migrant workers, but there will be some exceptions for “shortage” occupations and PhD level jobs.

There is nothing wrong with the broad principle behind these plans. Shifting the mix of immigration from permanent to temporary is a reasonable policy objective – including for progressives, as IPPR argued in its report on the issue.

So is toughening the criteria for settling permanently in the UK. Minimum income requirements are also a legitimate policy tool: even supporters of immigration tend to cite its positive fiscal impact, and clearly this will be higher for better-paid migrants.

But this new policy goes too far.

Essentially, the government accepts that our economy needs tens of thousands of skilled migrants to come and work in jobs that pay less than £35,000 a year, but is saying that even if they work hard, pay their taxes, and play by the rules, they will be forced to go home after five years.

This makes little sense in economic terms, will cause big problems for employers, and is arguably unfair on individual migrants.

Ministers may even have stumbled on that rare thing, a tough immigration policy which isn’t popular: surveys have found a majority saying that migrants who come to Britain legally to work should be given the chance to earn the right to stay.

For many of these migrants, especially outside London and the south east, an income requirement of £35,000 won’t give them that chance. In terms of occupations, nurses will be among the most heavily affected.

The MAC conceded that an income requirement at this level could “have a negative impact on GDP and, to a lesser extent, on GDP per head”.

They also admitted that it could lead us to send home some of our best migrants, or even discourage them from coming here in the first place. The majority of working migrants don’t stay permanently anyway, but they value the option; if Britain no longer offers it, they may go elsewhere.

In November, a distinguished group of economists wrote to the Financial Times arguing that this policy would be:

deeply damaging to the competitiveness of the UK science and research sectors and to the wider economy.

They also made the point that many of the signatories would either not have been allowed to stay under these proposals, or would not have come in the first place.

A policy like this is also notoriously hard to implement.

IPPR’s report reviewed similar attempts in other countries: starting with the “Gastarbeiter” programme, launched fifty years ago, in which Turks were invited to come to Germany as temporary workers.

Decades later, the German government was forced to admit that the policy was a spectacular failure: some workers went home, but millions ended up staying permanently, bringing the policy into disrepute.

The UK government will argue the German example does not compare like with like: the “Gastarbeiter” were unskilled workers.

But other programmes, including recent examples in Canada and elsewhere which did cover skilled workers, evolved in exactly the same way: as the moment approached when the workers were supposed to go home, the enforcement of the policy was first postponed, and then quietly abandoned.

At the very least, any such policy requires a serious analysis of the issues around compliance and options for enforcement, an analysis which so far has been entirely lacking. Otherwise the fear will be that the government has created a rod for its own back, adding a new category of people who shouldn’t be here, but whom it has no serious plans to remove.

To repeat, there is nothing wrong with trying to shift the mix of immigration towards the temporary, but this policy is the wrong way to go about it.

Ministers should learn from experience here and abroad, and look at other ways to encourage the existing trend towards temporary migration: for example, financial incentives for migrants to return home, funded through national insurance contributions, or more tailored support for migrants to take up job opportunities in their home country (an idea which is being explored in Germany and elsewhere).

These alternatives would be fairer, more practical – and above all better for our economy, at a time when supporting growth should be our number one priority.

See also:

“She calls her town a ‘s***hole’”: Irish newspaper smears Polish migrantsAlex Hern, February 1st 2012

So is Britain really “full up”?Matt Cavanagh, November 1st 2011

The government must stop spreading untruths about immigrationDonna Covey, October 18th 2011

May is wrong: We can have a liberal immigration policyMatt Cavanagh, October 7th 2011

How to create a Telegraph migration scare storyMatt Cavanagh, September 9th 2011

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