September 20, 2018

A Global Migration Policy for a Post-Brexit U.K.?

A Summary of the Migration Advisory Committee`s Final Report on EEA Migration in the U.K.

In July 2017, the British government commissioned the Migration Advisory Committee (MAC) to write a report on the past impact and future patterns of migration from the European Economic Area (EEA) to the United Kingdom. The MAC was established in 2007 as an independent, non-departmental public body, which advises and makes recommendations on migration issues to the government. This report will influence the design of the U.K.’s new migration system following the end of the Brexit implementation period on 1 January 2021. The MAC published its final report on 18 September 2018.

In commissioning the MAC to produce this report, the government asked it to consider the government`s industrial strategy. As the strategy consists currently of broad principles rather than specific policies, the MAC interpreted the industrial strategy as aiming to create a productive and innovative economy that results in a higher quality of life for all residents of the U.K.

The report examines the historic impact of EEA migration on six key areas: the labour market; productivity, innovation, investment and training; consumer and house prices; public finances; the allocation of public resources; and communities. Migrants are defined as those who were born outside of the U.K., regardless of nationality. Those who were born in Ireland are included among the U.K.-born due to the Common Travel Area. Moreover, only migrants who have moved for the purpose of work, and not for study or for family reasons, are considered.

The report finds that the overall economic impact of EEA migration has been relatively small. Where migration has had a beneficial impact, this has generally come from high-skilled migration. Conversely, lower-skilled migration has had a mildly negative impact on U.K.-born workers. The impacts of the migration of EEA workers are summarised in the following table (excerpted, but condensed, from the final report).

Theme Impacts
Labour market: Employment and unemployment No evidence that EEA migration has reduced employment opportunities for the U.K.-born workforce. Some evidence of impacts on certain groups, such as the young and less well-educated, but this is subject to significant uncertainty.
Labour market: Wages No evidence that EEA migration has reduced wages for the U.K.-born workforce. Some evidence that migration has reduced earnings growth for the lower paid and raised it for the higher paid, but this is subject to significant uncertainty.
Productivity Evidence that migration has, on average, a positive impact on productivity. This impact is larger for high-skilled migrants than for lower-skilled migrants.
Innovation High-skilled migrants increase the level of innovation.
Training No evidence that migration has reduced the training opportunities of U.K.-born workers.
Consumer and house prices Evidence that migration, especially lower-skilled, has reduced the prices of personal services. Evidence that migration has raised house prices, particularly in areas where housebuilding is more restricted.
Public finances EEA migrants make a net positive contribution to public finances, as they pay more in taxes than they receive in welfare benefits and consume in public services. This net fiscal benefit is strongly related to earnings and age.
Public services: Health No evidence that migration has reduced the quality of health care. EEA migrants make a larger contribution both in terms of money and work to the NHS than they receive in health services.
Public services: Social care EEA migrants are a small but increasing share of the social care workforce. Very few EEA migrants receive social care.
Public services: Education No evidence that migration has reduced the educational attainment of other children or the choice of school. Migrants or the children of migrants make up an increasing proportion of the school-age population. Children with English as an additional language academically out-perform children with English as a first language.
Public services: Social housing EEA migrants are an increasing share of new tenancies. Due to the limited supply of social housing, this is likely to be at the expense of other potential tenants of social housing.
Crime No evidence that migration affects the overall level of crime.
Life satisfaction No evidence of an impact of migration on self-reported levels of life satisfaction. However, there is some evidence of a positive effect among those with a favourable view of migration and a negative effect among those with a less positive view.

The report recommends that there should not be different rules governing the ability of EEA and non-EEA citizens to settle in the U.K., unless this is subject to an agreement with the EU. Instead, the criteria should be based on the migrant`s skills, employment, age and use of public services. The report also recommends that a future migration policy should provide greater access for higher-skilled workers and should limit access to lower-skilled workers.

The report indicates that the existing Tier 2 (General) scheme could provide a useful template for a work permit scheme covering EEA workers. Employer sponsorship is believed to be an effective basis for a skill-selective migration policy. The report does not recommend any change to Tier 2 (Intra-Company Transfer).

Assuming that free movement from the EEA ends and that the Tier 2 (General) scheme is extended to EEA citizens, the report recommends the following changes for high and medium-skilled workers:

  • Abolish the Tier 2 (General) cap
  • Extend Tier 2 (General) to medium-skilled jobs
  • Expand the list of eligible occupations, but retain the £30,000 salary threshold
  • Extend the Immigration Skills Charge to EEA citizens
  • Abolish the Resident Labour Market Test (however, if this is to be retained then more jobs should be exempt)
  • Make it easier for Tier 2 migrants to change employers within the country
For lower-skilled workers, the report makes the following suggestions:
  • There should not be a specific employer-led sector-based work migration route for lower-skilled workers, apart from seasonal agricultural workers.
  • An expanded Tier 5 (Youth Mobility) scheme would be preferable to sector-based routes for lower-skilled workers, though this should be closely monitored.
  • A seasonal agricultural workers scheme could be beneficial, but employers should be required to pay a higher minimum wage or an Immigration Skills Charge to encourage increases in productivity.

Although the devolved governments of Northern Ireland, Scotland and Wales have all stated a preference for a region-specific migration policy, the MAC does not believe that there should be regional differentiation in migration policy.

The report indicates that the government should ultimately do a better job of monitoring and evaluating the impact of labour migration policies and whether they are achieving their intended goals. Existing data should be used more effectively, for example by linking HMRC and Home Office records.

The government will now consider the MAC`s final report.

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