The new consultation on future of immigration: what you need to know

06 September 2019

On 4 September 2019 the Home Secretary, Priti Patel asked the Migration Advisory Committee (MAC) to undertake a review of the points based systems in Australia and make recommendations as to how it could be adapted to suit the UK. The findings are to be reported back by January 2020. In the Home Secretary's paper, she wrote: “My vision is to have an immigration system that people can have confidence in. A system where it is workers’ skills and talents that matter and not where they come from”. This statement appears to reinforce the Home Office's previous publications stating that following the end of free movement, EU nationals will be treated in the same way as other nationalities seeking to visit and work in the UK.

The Australian Points based system vs current UK system

Although there is no clear indication of what an Australian inspired model would look like in practice, it is worth looking at how the current UK system differs from the Australian points system.

The UK currently operates under an ‘employer-driven’ immigration system whereby skilled workers are required to find an employer who is willing to sponsor them to fill a specific vacancy. It is, however, worth noting that the current system in the UK is loosely established on a points-based model. For non-EU migrants, points are awarded for categories such as English language skills and meeting a salary threshold.

The key defining feature of the Australian system - which differs from the current UK system, and indeed most European countries - is that it is essentially government driven as opposed to employer-led. Under the Australian points-based system, known as ‘General Skilled Migration’ or ‘GSM’, potential migrants do not need to have a job offer, but rather are admitted on the basis of specific skills and educational qualifications. Younger applicants with higher English language proficiency are rewarded with more points than older, less language proficient applicants. Additionally, GSM only relates to permanent visas, temporary routes are not connected to a points based system. Conversely, under the current UK system, points are not awarded for qualifications or age. Essentially, the employer has autonomy in determining whether the applicant is suitably qualified for the role.

In theory, a key strength of the points-based system is that the host government can prioritise those who will add the most value to the country’s economy. By controlling the variety of migrants, employers are well-positioned to access the talent and skills they need. This could help to stimulate wage growth, innovation and could boost the productivity. In this sense, a policy that focuses on human capital could be seen as an investment in the UK’s skillset, productivity and long-term economic growth.

However, the relative merits of a points-based system are disputed. A centrally planned immigration system heavily relies on the government’s ability to accurately assess and predict the labour market. This leaves a wider scope for over-employment and under-employment, hindering integration and adversely affecting the long-term benefits of migration. If the UK adopts a rigid points-based system, highly skilled migrants could potentially arrive in the UK and find themselves unemployed, given that they will not have been selected by an employer to fill a specific job role. Indeed, it is widely reported that the lead time for many GSM migrants can be long as they often do not have the professional network, contacts, or familiarity with Australian norms considered necessary by employers. The UK adopted a conceptually similar system in the mid 2000s - known as the highly skilled migrants programme - but this was closed prematurely due to high levels of unemployment among selected migrants.

It is, however, possible for the UK to implement a points-based system that still accommodates the needs of employers. It is worth noting that the Australian system is fundamentally multifaceted: the points-based policy only applies to some permanent skilled visas as part of a broader mixed system (including business visas and temporary visas to meet skill shortages). Under the Australian model, there is also scope for employers to sponsor migrants to fill specific vacancies without the points test.

Ultimately, the Australian immigration system is not rigidly points-based. The flexibility of the model is reflected Australia’s government plan which is aligned to encourage migrants to move to ‘regional’ Australia - defined as anywhere outside the main metropolitan areas. Under the regional immigration policy, applicants must apply for a regional visa three years before applying for permanent residency. This reflects the Australian Home Office’s commitment to reducing economic disparities across the country by “injecting the right skills into the right regions” to support local businesses and to “ensure local communities thrive.” However, whilst this may be the Australian government’s intentions, the reality appears that those granted permanent residence under GSM are largely living in Sydney and Melbourne, and regional areas with acute skills shortages are not benefiting from the intake of skilled migrants. This is possibly driven by the fact that once the permanent visa under the GSM is granted, there is no requirement for the individual to work in the field where they have skills. Essentially, once the permanent visa is granted, there is no way to enforce any conditions about where these migrants work and what kind of work they do.

Whilst encouraging regional variation is a key policy priority for Australia, the UK government shows no signs of replicating this element of the model. The MAC has explored the prospect of a regional immigration policy, and concluded that wage level variations across the country are not substantial enough to merit a differential policy by region.

The future

By definition, the points-based immigration scheme intends to maximise the benefits of immigration by prioritising those who will make the most valuable contribution economically and socially. In this sense, a selective immigration policy could be an investment in our country’s workforce and productivity, and could be a key driver for our future economic growth and competitiveness.

However, the merits of a points-based system must be carefully analysed. As the Prime Minister stated, we may be able to ‘learn’ something from the Australian system - not necessarily replicate it. Perhaps the most important lesson to take from the Australian model is that it is fundamentally flexible: it is not exclusively points-based, but rather is a hybrid model carefully tailored to suit the interests of the country as a whole.

Whether or not the UK will opt for a robust, points-based system is not entirely clear. There is much speculation as to what an Australian-inspired model will look like in practice, and there is evidently a lot to be discussed before this system comes to fruition, the MAC's findings will certainly be of key importance. Regional migration, the minimum salary threshold and maintaining the role of the employer are likely to be at the forefront of these discussions. In a climate of uncertainty, one thing is for certain: if the UK is to thrive post-Brexit, our immigration system must remain open to the world and continue to welcome bright, international talent that will support business and stimulate long-term economic growth.

What can employers do?

We would encourage businesses to participate and express their views on what the immigration system should look like in the future. The MAC's findings will feed into the government's planning for a future immigration system, as such this presents businesses with the opportunity to help shape the country's immigration system.

 

Lyudmyla Davies

Lyudmyla Davies | Head of Private Client and Private Business Immigration, PwC United Kingdom
Profile | Email |  +44 (0)7803 456 020

Carter  Bovard

Carter Bovard | Partner - National Practice Leader, PwC Australia
Profile | Email | +61 3 8603 1879

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