The impact of international students in Scotland: Scottish Government response

Chapter Five – Impact on the Labour Market

Demographic context

As we set out in our recent publication 'Scotland's population needs and migration policy: Discussion paper on evidence, policy and powers for the Scottish Parliament', the dominant feature of Scotland's history over the last seventy years or so has been out-migration. This is in contrast to the rest of the UK. Throughout the 1950s and 1960s, when England and Wales saw strong in-migration, almost 6% of the population left Scotland in each decade. Scotland also saw population decline throughout the 1970s, 1980s and 1990s whereas the UK as a whole saw almost constant growth in population over this period.

There are projected to be more deaths than births in Scotland in every year going forward. Each year for the next 25 years all of Scotland's population growth is projected to come from migration. UK Government policy and the impact of Brexit mean that international migration to Scotland is projected to decline, further inhibiting Scotland's growth.

The age profile of the population will also change, with the proportion of the population of state pension age increasing by 25% in the coming years as the Baby Boomer generation reaches retirement. People aged 75 and over are projected to be the fastest growing age group in Scotland, increasing by 79% over the next 25 years.

The prospect of people in Scotland living longer, healthier lives is welcome, and increasingly many people of state pension age continue to work and contribute to the economy in that way. It is also the case that people in the oldest age categories become more likely to need access to health and social care services to support them in their old age. Those essential public services will require a buoyant working age population. ^[34]

Immigration policy

UK Government policy and rhetoric on international students, including their continued inclusion in the Government's target to reduce net inward migration to the tens of thousands, has been noted in several key markets. ^[35] The impact on Scotland is apparent in the reduction in the number of international students from certain countries. For example the number of Indian entrants fell by 58% between 2010-11 and 2016-17 from 1,985 to 835, and the number of Nigerian entrants has reduced by 61% in the same timeframe, from 1,395 to 550. The decline highlights the vulnerability of Scottish institutions' ability to attract international students to changes that make, or are perceived to make the UK's immigration system more restrictive. Scottish HEIs will have suffered a material loss as a result of the decline in students from such key markets.

Overall, Scottish HEIs have seen a modest increase in both non- EU and EU entrants in recent years, rising by 2% in 2014-15, 1% in 2015-16 and 5% in 2016-17. ^[36] While this is welcome, it contrasts sharply with other countries that are in competition for international students. During the period 2013-14 to 2014-15, the number of international students in higher education in Canada increased by 8% and in Australia by 9%. During the period 2014-15 to 2015-16, the number of international students in higher education in the United States increased by 7%. There is therefore of real concern that Scottish institutions are inhibited in their ability to compete in the global marketplace for international students by a UK immigration regime that is less attractive than that of its competitors, from the cost of applying for visas to arrangements for post-study work.

The UK Government has not yet published its proposals for immigration rules for EU citizens after Brexit. However, should the UK Government adopt more restrictive approach than the current freedom of movement of people, it is reasonable to assume that there will be a decline in number of students from the EU, with the subsequent loss of the economic, educational, cultural and social benefits described elsewhere in this paper.

International students in the workforce

Until recently the UK Government estimated that the number of international students in the UK overstaying their visas each year was as high as 100,000. However, figures published by the Office for National Statistics in August 2017 showed that in fact fewer than 5,000 international students overstay their visas. ^[37] The perceived risks that have driven the current UK Government's policy on student migration and post-study work have therefore been found to be baseless.

Evidence shows that international students are a potentially valuable asset to Scotland's workforce, helping to address the demographic challenges described above. Data from 2012 showed that a higher proportion of graduates from Scotland's universities go into positive destinations of employment of further study within six months than anywhere else in the UK and graduates from Scotland's universities have the highest starting salaries in the UK. ^[38] In 2015-16, of the EU domiciled graduates with confirmed destinations, 87% went on to positive destinations (work, further study or combination of both). ^[39]

Destination of EU (excluding UK) qualifiers 6 months after graduating from Scottish HEIs ^[40]

Scottish Government analysis found that the average EU citizen in Scotland adds £10,400 to government revenue and £34,400 to GDP. There is some evidence that migration generally boosts long term GDP per capita, thereby increasing living standards, through diversity of skills and higher innovation activity. ^[41]

In order to sustain an ageing population, Scotland needs to expand its working age population. All of Scotland's population growth over the next 25 years is expected to come from migration. International students are a valuable source of talented migrants. However, UK Government policy, driven by assumptions about the risk of students breaching their visa conditions that have now been shown to be incorrect and based on the demography of the UK as a whole rather than differentiated by the needs of its constituent nations, does not allow Scotland to make the best use of this pool of talent. There is broad agreement among stakeholders in Scotland on the need for the re-introduction of a post-study work route to be more inclusive in retaining international students in the workforce after graduation and precedent for a differentiated immigration system that caters for Scotland's particular demographic and economic needs.