In July 2015, the MAC was commissioned by the Government to advise on a number of potential changes to Tier 2 to address concerns about the rising number of migrants in that route and reliance on them to fill shortages in the labour market.
The MAC was specifically asked to consider the following issues:
- salary thresholds for Tier 2 migrants
- overall design of Tier 2 and how to prioritise Tier 2 and make it more selective
- a skills levy, now called an Immigration Skills Charge (ISC)
- tightening of the intra-company transfer route
- automatic sunsetting, such that an occupation or job is removed from the Shortage Occupation List (SOL) after a fixed period
- automatic work rights for dependants
It should be noted that, while the UK Government is not obliged to implement all the MAC’s recommendations, historically it has implemented the majority of changes proposed by the MAC. It is expected that some of the recommendations may be implemented this April.
MAC recommendations: (please click on the individual bullets for further analysis)
- The minimum salary threshold should rise to £30,000 to reflect the current degree-level skill requirement for Tier 2. As the typical pay of migrants in some occupations, such as healthcare and teaching, is below the new proposed threshold, the MAC recommends this new minimum is phased in.
- An Immigration Skills Charge (ISC) of £1,000 per year per migrant should be introduced to act as a skills levy on firms using migrant labour. The revenue accumulated from the charge could be used to help raise skills in the domestic jobs market through training, and decrease the demand for migrant labour.
- Use of the Tier 2 (Intra-company Transfer) route for third-party contracting should be moved into a separate route and a higher salary threshold at £41,500 be applied.
- Resident labour market test (RLMT) to be extended to all in-country switchers, which will include Tier 4 students switching to Tier 2.
- There should be no automatic sunsetting of jobs on the Shortage Occupation List (SOL), but employers should provide sufficient evidence when an occupation has been on the list for a number of years.
- No restriction on the automatic work rights for Tier 2 dependants.
The MAC were also asked to look at the overall design of
Tier 2 and whether it should be reformed. In particular, the MAC was asked to comment on:
- restricting the route to highly specialist experts and genuine skills shortages
- having an expanded shortage occupation list in place of the RLMT
- reform of the RLMT
The MAC concluded that those employees who are most in shortage or most highly specialised will be the ones who employers are willing to pay for. The MAC therefore did not recommend any redefining of Tier 2 jobs in terms of genuine skill shortages or highly specialist experts.
In addition, the MAC did not recommend restricting eligibility for Tier 2 (General) only to occupations on an expanded shortage occupation list as such an approach would be extremely challenging to implement given the difficulty in reliably determining which occupations were most in shortage and/or involve highly specialist experts.
Finally, the MAC recommended that RLMT be retained but stated that there may be some scope to modernise it to ensure that it reflects modern recruitment methods. The MAC went on to comment that it was of critical importance to the overall functioning of Tier 2 (General) that the RLMT functions effectively and efficiently.
Interestingly, whilst the MAC was commissioned to advise on “significantly reducing the level of economic migration from outside the EU”, taking into account the impact on the economy, including productivity and competitiveness, it found that even if non-EU work net migration was zero, overall net migration would still exceed 250,000. This begs the question, given the marginal impact on net migration and the severe impact on productivity and competitiveness, what actual results such recommendations will achieve, other than to further restrict UK businesses - particularly start-ups - from accessing and employing the talent they need to grow and help plug the skills gap.