Business groups in the UK have reacted with concern to recommendations made to the UK government, which would raise the costs and effort of bringing non-EU workers into the UK.

In a report of December but published on Tuesday, the Migration Advisory Committee, an independent public body that advises the UK government, has called for an annual charge to be levied on employers who hire from abroad, raise the minimum salaries for visas, and tighten rules governing Intra-Company Transfers — a route used by many Indian outsourcers to bring employees to the UK.

The Confederation of British Industry warned that higher visa costs and salary requirements could “hold back firms’ ability to grow and create jobs,” while the Institute of Directors warned that the proposals would “damage business while doing little to reduce overall migration.”

“The MAC’s proposals will hurt thousands of individual firms, which will find it harder to bring in the skilled workers in areas like IT, where we have shortages,” said Simon Walker, Director General of the IoD.

Tier-2 visas

The MAC’s report focuses on Tier-2 visas, the most commonly used route for non-EU workers to come to the UK. The committee was given the task of “significantly” reducing economic migration from outside the UK, while taking into account the impact on “economy, including the productivity maximisation problem.”

The report suggests an annual immigration skills charge of £1,000 per non-EU employee be charged to fund the training of local workers — this could raise up to 200 million a year and help fund Britain’s skills gap, the MAC estimates. It also recommends raising the minimum salary for a Tier-2 worker to £30,000 from £20,800.

The report also devotes much attention to intra-company transfers, and particularly third party contracting. In an oblique reference to Indian IT outsourcers, the report says that companies employing Indian IT workers on third party contracts made “rather modest efforts to upskill UK workers.”

It noted how the intra-company transfer route had come to be dominated by companies for third party contracting, with Indian IT workers representing some 90 per cent of this category. While the intra-company transfers had the potential to offer great benefit to the UK, the third party route had less tangible benefits, despite the lower costs for clients. “The ready supply of migrant labour sometimes reduces the incentives of firms using this business model to invest in the human capital of UK workers.”

It recommends raising the costs of bringing in workers on the ICT route — requiring them to pay the immigration health surcharge and the immigration skills charge, and requiring they have longer experience with an employer before being eligible for transfer to the UK.

The report recommends that third party contracting become a separate Tier-2 route, with those falling under it required to have a minimum salary of £41,500 a year, leaving it open just to senior managers and specialists.

However, it has not recommended changing the rules governing the working rights of dependents. Under the current system, dependents have unrestricted access to the labour market.

The City of London Corporation joined in the voices of caution: “From simply looking at the City, you will see that we have thrived over the years in a large part because of our openness to those from abroad who want to come here, work hard and prosper. This basic principle should not change,” said the chairman Mark Boleat.

Related Topics