Immigration – it’s not going away.
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Immigration – it’s not going away.

Immigration – it’s not going away.

Posted on 5th June 2017

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Gareth BiggerstaffHere are some quotes from an online article I read recently on the subject of the election and the recruitment industry.

Business leaders regularly ask for one thing and that’s stability. They like to be able to predict what is going to happen next … whether you are personally pleased or not with the election result, it will provide stability, which in turn should mean a platform for further investment, including investment in people … However there are other less stable factors on the horizon which could have a bigger impact … there is the question over the UK’s continued membership of the European Union (which) is always going to have an impact on our industry, from an economic, cultural and regulatory perspective.”

Sounds drearily familiar, doesn’t it?  Yet this was written before the 2015 election, and it doesn’t seem as if much has changed, other than, of course, the impact of British membership, soon to be non-membership, of the European Union.

As to why not much has changed, you’ll have to ask the politicians. They are the ones canvassing for our votes and setting out their plans for the economy and society.   To be fair, they are constantly besieged by special interest groups, all with their own particular demands for government action that benefits their specific industry or area of interest.  Recruitment is no different in making its own demands. Witness, the REC “manifesto”, launched just a few weeks ago, with its advice on what government needs to do to “build the best jobs market in the world”. 

As it happens, there is a lot to agree with in the REC manifesto, yet we all know that government simply cannot please all the people all of the time. However, REC is not wrong when they state that, amongst other things, the new government needs to:

  • prepare young people for jobs of the future by embedding employability within the school curriculum and aligning the skills market with labour market needs   
  • build a pragmatic post-EU immigration system that reflects the needs of businesses in different sectors and regions
  • simplify the tax system and avoid extending IR35 rules to the private sector  
  • ensure employment regulations reflect modern working practices 
  • work with the recruitment industry to pre-empt how new working relationships with the EU might impact UK jobs  

Furthermore, REC notes that despite record levels of employment, “the next government will face challenges including skills shortages, poor productivity, falling real wages, and uncertainty during Brexit negotiations”.

The problem of skills shortages applies in spades in the IT sector. We have regularly written on our blog pages of the appalling lack of education in IT in our schools, and especially the issue of the lack of girls studying STEM subjects generally. No government has got this right and I don’t see that changing much in the short to medium term after this election.  Assuming I’m right, that means that we are going to have to continue to get some of the IT talent this country needs from overseas.  And that, of course, means that Brexit needs to be handled with a judicious mixture of intelligence and pragmatism; something I do not trust any of the political leaders, here or in Europe, to do.

It’s not just me.  In the middle of May, the Sunday Times reported that Herman Narula, the co-founder (in 2012) of virtual reality firm, Improbable, which is Britain’s newest unicorn, “has warned that the hi-tech industry would suffer if the government imposes curbs on hiring skilled overseas workers after the UK leaves the European Union”, and “anything that makes it more insular would fundamentally be a mistake”.

In addition, REC director of policy, Tom Hadley, said, “We also need an immigration system which will help not hinder employers as they seek the skills and talent they need”.  

That statement from Mr. Hadley sums up what I believe is an essential outcome of Brexit if it is going to be a success.  Yet it’s not what I’m seeing from the party most likely to win the election.  The Conservative manifesto states: "Skilled immigration should not be a way for government or business to avoid their obligations to improve the skills of the British workforce”.  I understand the politics – and the economics – of that sentiment, but it still doesn’t make sense to me to double, as the Conservatives have promised, the charge companies currently pay a year for every skilled non-EU (my underlining) migrant they employ. 

This fee, the Immigration Skills Charge, came into effect at the start of the current fiscal year.  It is currently set at £1,000 a year: after the election it will go up to £2,000 a year. The rationale is that with public demanding reduced migration, the fees will go towards training British nationals. That sounds all well and good, but you don’t train an IT specialist in five minutes, far less a doctor or, indeed, a teacher of computing. As part of a longer term strategy it may have its place, but as part of a strategy to keep the British economy motoring while we try to steer a path between the numerous obstacles we’ll encounter as we negotiate and then leave the EU strikes me as plain dumb.

At present, we can employ people from across the EU without too much difficulty.   That will change after Brexit.  So why does the Immigration Skills Charge only apply (as per my underlining above), to non-EU migrants?  Will this change to apply to all of them after Brexit?

Yes, I know that the Tier 2 visa system will still allow us to hire overseas nationals with the skills that are on the approved government lists, and yes I know that these lists are regularly updated, but while I know that the £2K per annum fee will not deter big businesses, who will consider it a charge worth paying if it solves their IT problems, that doesn’t alter the fact that, despite this, we’ll still be short of the number and quality of IT professionals we need if this country – one of the most powerful economies in the world don’t forget - is to continue to succeed as it should.  Moreover, if we can find a way to attract most of the IT talent we need from the global labour market (as opposed to just the EU), it will also have the effect of perhaps reducing the rate of increase in IT salaries, currently being driven skywards by the immutable laws of supply and demand. That would benefit employers and free up more money for more hires, more investment, more success and, ultimately help make Brexit more likely to be a success than a failure.  And surely, if the Conservatives (or even Labour) win the election, that’s what they want – isn’t it?

To that end, a key way of making this happen is to attract students from all over the world, and seek to keep them here to build and develop new businesses – the future unicorns like Herman Narula’s Improbable.  It should be noted that Mr. Narula was born in India and came here with his family when he was only three.  He studied at Cambridge University and set up his firm with a university friend.  Students like him, although usually coming here in their teens and twenties rather than at the age of three, are vital to this country, for the money they bring and spend on fees, services and goods, and also for their potential impact in the future.  Of course the majority of them go back home, but they generally do so with positive impressions and a real like for the UK, whereas if they all remain in India, China and the rest of the growing economic powerhouses for their higher education it will be those countries that benefit from their educated and entrepreneurial mindsets. 

I’ll finish by repeating Tom Handley's quote from the REC manifesto:

“We need an immigration system which will help not hinder employers as they seek the skills and talent they need”.  Amen.

Gareth Biggerstaff, MD, Be-IT

 

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