Scotland needs more migrants to address the Scottish skills crisis. That is the view of the Scottish National Party, as expressed in its white paper entitled Scotland’s Future, which set out its vision for an independent Scotland ahead of the September 2014 referendum. The paper envisages an immigration system that would “encourage more talented people from around the world” to attend Scottish universities, “providing income for Scotland’s institutions and contributing to a growing economy.”

While the SNP lost its bid for independence, Scotland’s governing party continues to believe, along with many in Scottish business and academia that the country must draft in more talent from overseas. So why does the present immigration regime prevent Scotland from bringing in sufficient migrants? How will recommendations by the recent government-commissioned review into the system affect the situation? And how might this system be changed – whether Scotland leaves the UK, the UK leaves the European Union or under the status quo?

Damaging Scotland’s Economy

Robert E Wright, professor of economics at Strathclyde Business School, is a demographics expert and has published research on these questions. He says that Scotland’s labour force is reducing because of a relatively low birth rate combined with an increasing proportion of retired people. While National Records of Scotland says that the Scottish population as at June 2014 was 5,347,600, the highest ever recorded, Wright says: “The population of Scotland only grows overall, only due to migration”.

The shrinking workforce means that critical industries in Scotland are facing a shortage of highly skilled workers. Wright cites the services, financial, oil and gas, electronics and gaming industries. “Scotland also needs more people to provide less highly skilled services to these kinds of professionals, such as cleaners and taxi drivers.”

The inadequate size of the working population means that Scotland also lacks teachers and nurses. Jacqueline Woodland, Operations Manager at DavidsonMorris, says: “Nurses are at the top of the list of skills Scotland needs, for both the NHS and private care homes. Teachers are a close second.”

Scottish universities, meanwhile, say that the nation would benefit from greater numbers of overseas students. This is not only because, in contrast to domestic students, foreign students pay fees. Woodland says: “Academics feel that international students enrich local life and they also expand Scotland’s influence overseas. For example, if someone is educated in Scotland, returns to their home country and goes on to lead the oil industry there, Scottish companies seeking to work in that oil industry could be received more favourably.”

It’s becoming tricky to fill both the higher and lower skilled roles with either members of the small Scottish working population or migrants from within the European Economic Area (EEA). As Wright puts it: “European Union migrants are finding that the economies of their home country are improving, so the Polish woman working in your local drycleaners who has an MBA is no longer going to stay here.”

An obvious solution, then, would be to bring in non-EEA migrants. But Scotland does not control its own immigration rules and just when it needs international skills and talent so desperately, the central UK government is making it increasingly difficult to acquire them. A rolling series of changes to immigration rules are making moving to the UK progressively tougher for non-EEA nationals. Woodland says: “Immigration rules are the largest hurdle to Scotland moving forward and acquiring the international students and skilled migrants it needs.”

Indeed, a 2013 survey of 700 Scottish employers by the Centre for Population Change (CPC), found employers that: “viewed the current points-based system, which regulates non-EU migration, as restrictive and failing to meet their business needs,” according to the CPC’s briefing note on the research. Breaking down the results by sector, the survey found that 100% of respondents in the oil and gas sector said that “visa and immigration laws” were “important” to them. More than 90% agreed with the statement in the following sectors: wholesale, transport and storage, arts and entertainment, information and communication, property. In finance, agriculture and health, some 80% of employers agreed.

Increasing Barriers

Just a few of the major changes to immigration rules causing headaches for employers and would be-migrants include the closure of two key routes into the UK, the Tier 1 (General) Visa for highly skilled people from outside the EEA and the Tier 1 (Post-Study Work) Visa for non-EEA international graduates of British universities. These were closed to new applicants in 2010 and 2012 respectively.

More recent examples include non-EEA nurses now being required to pass English and competency tests before British employers can apply for permission to recruit them. “This makes the recruitment process much more onerous for both employer and employee. The nurses, for instance, who are often financially disadvantaged, may not have the resources to make it to a test centre. Previously, employers could bring over nurses and then support them in passing the tests in the UK,” explains Woodland.

A raft of further changes on the way will present further barriers to recruiting and retaining foreign skills. These include raising the salary thresholds that people must reach in order to remain in the UK after six years – with the salary levels unattainable for many jobs. The Immigration Bill 2015, passed on 13th October 2015, establishes a new ‘immigration skills charge’ levied on employers sponsoring non-EEA nationals under the Tier 2 points-based system. The government says the funds will be used to train the home-grown workforce but it is questionable whether this is viable – particularly for Scotland, where the native working population is dwindling.

Meanwhile, the government has commissioned the Migration Advisory Committee (MAC) to review the Tier 2 points-based-system to address concerns about rising number of migrants and reliance on their skills. The MAC issued its recommendations on 19 January and they include multiple measures that could impact upon employers seeking to sponsor workers from overseas. Recommendations include:

  • Raising the salary thresholds further for certain types of jobs – for example £41,500 for third party contractors on a Tier 2 (Intra-Company Transfer) Visa.
  • Extending the Immigration Health Surcharge to all ICT categories and family members.
  • Setting the immigration skills charge at £1000 per year.
  • Increasing visa application fees.

Wright summarises the consequences in Scotland of these increasing barriers to bringing in talent from overseas: “Employers tell me that they can’t get the people they want locally, so if they are unable to bring over people they need from abroad, is this damaging the Scottish economy? Absolutely.”

Solutions?

The solutions open to Scotland relate to whether it remains in the UK and the EU. Wright says: “If Scotland became independent it could create its own points-based system allowing the people with the specific skills it needs to come in – and quickly.”

But an independent Scotland is expected to have to exit the EU and re-apply for membership. So would there be a net benefit to the Scottish economy if EU migrants lost their current complete freedom enshrined in European to law to move to Scotland? The CPC survey found that two thirds of Scottish employers viewed EU membership as important. The CPC said: “The survey revealed that employers overwhelmingly perceived unrestricted migration for EU citizens as positive for Scottish business, and Scotland more broadly. Employers are concerned that Scottish independence, or the UK changing its relationship with the EU, may interrupt the freedom of EU citizens to live and work in Scotland.”

Yet Wright argues that Scotland would do well to focus on attracting non-EEA migrants: “At the moment more workers are coming into Scotland from the poorer EU nations than anywhere else. But countries that join the Union won’t be poor for ever, so their emigrants are going to return at some point – there is indeed already a high turnover – while Scotland needs stable, long-term migrants.” In addition, it is worth noting that an independent Scotland could presumably set its own rules for EEA migrants, regardless of EU membership.

However, while the SNP is expected to hold another independence vote simply because this is the party’s reason for being – indeed, first minister Nicola Sturgeon has said in press interviews that a second vote is “inevitable” –  it is not thought to be imminent. The party would need to know it would win a second time around to avoid severe loss of face and the fall in the oil price has somewhat scuppered the SNP’s economic vision for independence, for the time being.

So the scenario of the UK leaving the EU, and taking Scotland with it, is perhaps a more imminent prospect, with the in-out referendum due at some point on 23 June 2016. Where would Brexit leave Scottish immigration?  Wright says that whether Scotland, as part of the UK, is in the EU or not, it could ask the British government for independence in setting its own immigration rules.

Precedents that show how such a model could work include Canadian provinces. Canada’s federal government recognises that each province may have a unique need for certain skills at particular periods. The provinces are permitted to draft in these skills, even when they would not get past the federal-level points-based system. Wright says: “Ontario might need 300 truck drivers, so even though they don’t meet federal requirements for migrants to be highly skilled, the province can bring them in, usually with the provision that they live in Ontario for a certain number of years.”

What can Scottish business and universities do?

Woodland says: “Get your voices heard. Businesses and universities should get out there and make the case for their need for talent from overseas.

The Scottish Affairs Committee, a select committee inquiry into post-study work visas in December 2015, showed what Scottish stakeholders need in terms of immigration and the event was well advertised and televised. People should look out for these opportunities and take part.

Labour’s shadow immigration minister has been going around the UK asking people what they would like to see in immigration policy. I would advise going to talk to him. The more that this is discussed, with the specific impacts on Scotland’s economy made clear, the better the chance of bringing about change.”

Conclusion

To implement the rule changes needed to allow international skills and talent to come in and boost the economy, Scotland needs independence – either in full or at least in setting its own immigration rules. The latter is potentially within easier reach, but the question is whether the SNP will fight the UK government for the right to control Scottish migration. While it has voiced this desire, Wright says that the fact that the Scottish government did not insist on this being negotiated in the Smith Commission suggests lack of will – likely because immigration is little more popular with voters in Scotland than in England. So Scotland may only acquire the migrants it needs if it becomes independent, and even then, the government will probably tread carefully.