MAC’s recommendations for the post-Brexit immigration system would exacerbate the recruitment crisis across multiple sectors

Posted: 21/09/2018

The Migration Advisory Committee (MAC) has now published its final report on EEA migration in the UK.  

When commissioning the report back in July 2017, the Government asked the MAC to align migration policy with the Government’s industrial strategy. The broad aim of the industrial strategy is to deliver a highly productive, innovative economy providing a higher quality of life for all residents of the UK.

The MAC’s report, whilst making some welcome recommendations, falls short of meeting the needs of all UK businesses in the post-Brexit era. It proposes a number of restrictions that will almost certainly have a negative impact on the ability of key sectors to address staff shortages. According to the Institute for Public Policy Research, 75 per cent of EU nationals currently in the UK would be ineligible under the proposals.

It is important to note two points regarding the MAC’s recommendations:

• they are based on the premise that the migration policy will not be subject to exit negotiations with the EU; and
• they do not give any preferential access to the labour market for EU citizens.

If the UK’s future migration policy does not form part of the exit negotiations then it is expected that the MAC’s recommendations will most likely form part of the government’s white paper which sets out the post-Brexit immigration system, due to be published shortly.

Penningtons Manches’ immigration team submitted a response to the MAC’s call for evidence. The response was based on the results of a survey, which was completed by a range of businesses. The findings concluded that simply bringing EEA nationals under the current Points Based System (PBS) would not provide an immediate solution to businesses. Minimum salary levels, skill level and the administrative burden of Tier 2 were amongst some of the issues cited.

The MAC report, whilst proposing the extension of the PBS to EEA nationals, also warns that the criticisms of the administrative burden should not be ignored.

The main recommendations made by the MAC are as follows:

On self-employed EEA nationals  

The MAC states that currently most self-employed workers from within the EEA are in low-skilled roles. The main routes for self-employed migrants under the PBS are Tier 1 (Exceptional Talent) and (Entrepreneur). The MAC states that they do not feel able to make recommendations on how this scheme should be changed if self-employed workers from the EEA were to be brought within it. The lack of any proposed route for self-employed EEA nationals coupled with the end of free movement could have disastrous impact if no provision is made for them in the government’s white Paper.

On workers

The MAC makes the following recommendations on Tier 2 which is the main work permit route:

• Licensing – the current system requires businesses to apply for and obtain a sponsor licence to enable them to sponsor non-EEA migrants. The MAC acknowledges that this system needs to be reviewed as it is much harder for small and medium sized businesses to use the current system but does not suggest a viable alternative.
• Skill level – Tier 2 is currently mainly restricted to jobs that are at RQF 6 (degree level). The MAC recommends that the skills threshold is reconsidered to allow any job at RQF level 3, 4 and 5 to be eligible, adding 142 occupations to the list. For a list of jobs that the MAC recommends should now be included please click here. However, they do not recommend this being expanded to also include low skilled migrants (RQF 1 and 2) for list of jobs which fall into these lower skill levels click here.
• Skills charge – the minimum skills charge of £1,000 (medium/large companies) or £364 (small companies/charities) per year of sponsorship to be extended to EEA citizens post Brexit.
• Intra Company Transfer route – this allows international companies to transfer their overseas based employees to the UK. Employees generally need to have worked for the overseas company for 12 months and the UK minimum salary package needs to be £41,500. The MAC recommends no changes to how the system works. However, they recommend that Tier 2 ICT sponsored workers be allowed to switch employers within the UK.
• Tier 2 General
• Salary thresholds - Maintaining a £30,000 minimum salary level for all Tier 2. This will include those on the medium skill levels (RQF 3, 4 and 5). This will prove prohibitive for many employers as the MAC points out that only 40% of existing level 3 to 5 jobs meet this salary threshold.
• Abolition of the Resident of the Labour Market Test. If however the government wishes to retain this, the MAC recommends that the salary threshold for exemption be reduced from £159,600 to below £50,000 and allow businesses to hire the best available candidate. 
• Removal of the Tier 2 cap of 20,700 allowing for all migrants who meet the necessary skills/criteria to be sponsored. However, this will present a substantial increase in those applying under this route, which will present the Home Office with an administrative challenge.
• Expansion of the Shortage Occupation List (SOL) to all occupation skills at RQF level 3 or above (in line with the reconsideration of the skills threshold). The SOL list will next be reviewed by the MAC in the spring of 2019.
• Allowing Tier 2 migrants to switch employers within the UK more easily.

On lower skilled workers

The MAC does not suggest a route for lower skilled workers. Instead it states that there is likely to be a continued flow of low skilled migrants through the family route. However, it suggests that if the government want to “provide a safety valve for the employers of low skilled workers” then they suggest the following routes:

• Tier 5 (Youth Mobility) – this is a route that allows nationals of certain countries who are between 18 and 30 years old to enter and work in the UK for a maximum period of 2 years with limited restrictions. The MAC recommends expanding this to EU citizens. For those who wish to be retained they also recommend allowing them to switch to Tier 2 provided the minimum skill level and salary level can be met.
• Seasonal Agricultural Workers Scheme (SAWS) – The MAC does not recommend introducing separate employer-led sector based routes. However, the report highlights that the labour market for SAW group is separate from other labour markets as 99% of seasonal agricultural workers are from EU countries. They recommend that employers pay a higher minimum wage in return for “the privileged access to labour this scheme would give the sector in order to encourage increases in productivity”. The government has already announced a new pilot scheme to allow the hiring of 2,500 non-EU migrant seasonal agricultural workers for up to six months. The MAC states that the scheme should be properly evaluated to ensure it is not an easy option that allows the agricultural sector access to low-skilled migrant labour on a permanent basis.

It is clear from the MAC’s report that its recommendations are designed to favour the highly skilled over those with lower skills.  In addition, while the report highlights the impact of EEA workers as being largely positive, it does not recommend EEA nationals be treated more favourably than non-EEA nationals. This is something that has also been repeated by the Prime Minister and is disappointing for many employers who feel that they still need time to prepare for the loss of free movement.

What businesses need is clarity. It remains to be seen what the government’s response to the MAC’s recommendations will be and what additional information is published in the white paper. However, some preferential access for EU workers may well be offered by the government in exchange for post-Brexit participation for the UK in the single market.

For further information, please contact Pat Saini, Hazar El-Chamaa or Penny Evans.

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