Salary thresholds and an 'Australian-style' points-based immigration system: our response

Stakeholder Views

241. The Scottish Government wrote to stakeholders to draw their attention to the Migration Advisory Committee’s call for evidence and encourage businesses to consider and if appropriate respond for their organisations.

242. It is not clear how many organisations across Scotland have responded to the call for evidence, however, of those that the Scottish Government have seen or been alerted to, all have argued that the proposed salary threshold is too high.

243. In many sectors already facing skills shortages there are legitimate concerns that the extension of the salary threshold to EU citizens will further exacerbate this, and in many instances, many result in downsizing or closure of businesses.

244. The salary threshold will have a more significant effect in rural/remote areas, for women and other part-time workers, and on sectors such as agriculture, fishing and social care.

Enterprise and Skills Agencies

245. Three of Scotland’s Enterprise and Skills Agencies: Scottish Enterprise, Highlands and Islands Enterprise and Skills Development Scotland, submitted aligned responses to this MAC Commission.

246. Following consultation with their networks (including industry leadership groups, sectoral skills groups and industry bodies) they concluded that the proposed minimum salary threshold of £30,000 is substantially greater than the typical salary for many of Scotland’s sectors; and the extension of this could exacerbate current, or create, skills shortages across Scotland.

247. The median salary in Scotland (full and part time workers) in 2018 was £23,833^[82], thus leaving ample room to lower the threshold while also protecting the jobs/salaries of domestic workers.

248. The required salary progression to £35,500 (projected to increase annually) within 5 years in order to be eligible to apply for permanent settlement is often outwith the pay progression policies or capabilities of many employers.

249. The minimum salary threshold currently does not accommodate the circumstances of part-time workers. Unless this is rectified, there will be unintended consequences which perpetuate inequalities (such as gender and urban/rural opportunities).

250. The £30,000 minimum salary threshold for full-time experienced workers should be lowered in line with the proposal to expand the skills threshold to include intermediate level skills (i.e. RQF 3 – 5).

251. There should be more focus on the value and need of the job, rather than a salary threshold e.g. with an ageing population there will be greater need for increased numbers of social care workers, however, data shows that it is unlikely that many workers in this sector are paid £30,000 (’Caring^[83], Leisure and Other Service Occupations’ have median salary levels of £16,923 and £24,551 for 25^th and 75^th percentiles respectively for full-time employees)

252. There is a regional dimension to salaries meaning that the same job may attract a lower salary in a rural or remote location, hence there will be a disproportionate impact of setting a minimum salary threshold on such regions and communities.

National Farmers Union Scotland

253. National Farmers Union Scotland (NFUS) represents over 8,500 agricultural businesses (farmers, crofters and growers) across Scotland. NFUS ran a wide-ranging consultation with their agricultural members and other allied industries in order to inform their response to the MAC.

254. NFUS stress their significant concerns with the proposed salary and skill thresholds, and their disappointment with conclusions previously reached by the MAC which negates both oral and written evidence submitted by NFUS.

255. They state that any application of a Points-Based System must be done flexibly in order to meet the needs of the Scottish agri-food labour market.

Issues with Recruitment

256. 50% of NFUS members who employ (other) temporary and permanent workers reported problems in recruiting non-UK workers in the last three years, 59% reported poorer worker retention in the last 3 years, and 65% that they struggled to attract returnees (normally who fill these roles). Cited reasons for this were the negative perceptions due to the UK’s political environment as well as the weak pound.

257. These shortages meant 29% respondents experienced difficulty undertaking tasks in the business due to a shortage of labour, and an inability to meet supplier orders.

258. Repeated efforts to recruit local or domestic workers have not been successful, meaning this workforce shortage will continue and likely to be exacerbated in future. A lack of access to temporary workers from outside the UK would have a significant impact on businesses: 63% outlined that they would be ‘unlikely’ or ‘very unlikely’ to maintain the existing business structure; 64% that they would downscale their business; and 39% said they would cease current activity.

Salary Thresholds

259. NFUS object to the concept of a salary threshold ‘as a matter of principle’, considering them a ‘blunt and inflexible tool’, ineffective in ensuring gaps in the labour market can be met.

260. Their consistent position (set out in previous submissions to MAC commissions) is that if the tiered immigration scheme is not amended to provide access to lower paid workers, then the Shortage Occupation List must be expanded.

261. Without non-UK workers in roles that aren’t typically defined by academic skill and which do not pay a salary over £30,000 then the supply chain – farms, processors and hauliers – will be unable to maintain the current provision of food to UK consumers.

Points-Based System

262. The vast majority of roles within Scottish agri-food – including those that can attract a salary over £30,000 – have no pre-requisite for academic qualifications. NFUS therefore urge the MAC to not be constrained within an ‘academic’ definition of skill.

263. It is vital for this sector that any Points-Based system does not prescribe points solely on academic qualifications: but perhaps could apportion points for job roles on the basis of ‘manual’ or ‘technical’ skills.

264. NFUS would be open to exploring how individuals could be assigned more points where they can evidence taking up a role that offers in-work training and/or who will undertake further skills development and workplace qualifications in addition to their employment.

265. They also advocate for consideration of the social capital of non-UK nationals (who in the agri-food sector, fill permanent roles in rural and remote parts of Scotland). These individuals have a demonstrative impact far beyond their participation in the economy e.g. through their families’ participation in rural schools.

266. A new Points-Based System, if designed suitably, could complement those strategies already underway to address Scotland’s demographic and population challenges, which are having an impact on rural economies in particular. The new system must have a means by which points can be apportioned based on the geographic location of certain roles.

Scottish Manufacturing Business

267. A private manufacturing business in Scotland with over 500 employees, from UK, Ireland, EEA and non-EEA countries, which does not wish to be named, similarly responded to the MAC.

268. The business attests that the current salary required for the Tier 2 immigration rules is too high; there should be no minimum salary threshold that is above the Living Wage.

269. The salary threshold has already impacted the firm by restricting their recruitment to the UK and EU only (where a salary threshold does not apply), limiting their access to the skills pool (as the technology skills required are placed globally rather than within Europe).

270. Pay within their factory starts at £17,700, and over 20% of the permanent workforce have self-reported as non-British. Within the temporary workforce the proportion is even higher.

271. Most of the business’ recruitment lies within the new entrant and experienced worker rates (i.e. in the range of £21,000 – £28,000). If these requirements were extended to EU citizens they would struggle to attract and retain enough workers to the lower skilled, lower paid roles which enable the manufacturing business to operate.

272. There would be a significant detrimental impact on the businesses without the current group of EU nationals.

273. This would place the business at a ‘significant disadvantage’ and would struggle to meet our customer demands. It would not be economically feasible to adjust salary scales to meet the Tier 2 (General) visa salary requirements.

Scottish Ballet

274. Scottish Ballet is a registered charitable company and is Scotland’s national dance company, founded in 1969.

275. They state that the minimum salary threshold is too high if applied to EU citizens.

276. The settlement threshold of £35,800 is also too high – while some of their EU employees may have tried to apply for settlement, their salary falls below £35,800.

277. If a salary threshold is to apply, there should be a variety to meet employer needs, with variation by region and occupation (and new entrants/young workers).

Scottish Care

278. Scottish Care is the representative body for independent social care providers in Scotland, encompassing private and voluntary sector providers of care home, care at home and housing support services. Their members comprise over 400 organisations of various sizes, collectively employing over 100,000 staff: the second largest health and care workforce in Scotland (after the NHS), with UK and Ireland, EEA and non-EEA workers.

279. In its entirety, the sector provides 89% of the care home places in Scotland and over 50% of home care hours for older people.

280. Scottish Care make clear in their response their finding that the salaries required by the Tier 2 (General) immigration rules are too high.

281. The settlement income threshold of £35,800 is also too high for the social care sector, where earnings are only around £17,000 per annum (less than half of this).

Salary Thresholds

282. Scottish Care members strongly contend that the £30,000 proposed threshold is “totally and wholly inadequate” and “unrealistic”.

283. They state that there should not be a minimum salary threshold that is above the legal requirement – the national minimum wage.

284. They also propose that any salary threshold should not be applied universally but that there should be a variety to reflect employer needs: appreciative of sector needs and skills demand.

285. Given the social care sector’s prevailing workforce shortages, compounded with geographic factors such as rurality and remoteness and Scotland’s particular demographic challenges (an ageing and vulnerable population away from urban centres), they argue for a distinctive migration approach both geographically sensitive (regional or national) and sector appropriate.

286. Social care is a sector which attracts low salaries and is often portrayed as a low-skilled, entry level sector (which Scottish Care dispute). Nevertheless, the vast majority of roles would not meet the proposed skills or salary thresholds.

They argue therefore for an immigration system which ascertains skills level beyond only the consideration of traditional qualifications or salary levels (which would omit many social care positions) – akin to some of the Canadian practices. Likewise they attend to some geographically sensitive routes that are applied in Australia.

Conclusion

287. Scottish Care conclude their submission by stating their view that it is critical for the social care (and nursing) sector to be able to easily recruit from within and outwith the EEA: both in terms of workers providing support to the sector, and through them, for those who rely on its services.

288. They evidence increasing difficulties faced by providers in recruiting from the EEA post Brexit^[84] (for example, 77% of care home providers indicated more increased difficulty in 2018 than previously, and 89% of care at home/housing
support providers, where up to 12% of the workforce are from the EEA), and which for many members has thus ceased to be a viable route. They warn even after the conclusion of a Brexit settlement it may take years to restore relationships and trust to enable a return to previous levels of EEA migration.

289. The social care system in Scotland is significantly dependent upon the skills, experience and abilities of those who came to Scotland from elsewhere. These individuals have contributed a great deal to the care of some of Scotland’s most vulnerable citizens.

290. They conclude that the current recruitment and retention crisis facing social care in Scotland must not be made worse by a migration system that ‘deters or presents any undue barriers and obstacles’. Without a workforce from out-with Scotland, the social care system will be unsustainable and unable to meet increasing demographic demand.

Convention of Scottish Local Authorities (COSLA)

291. The Convention of Scottish Local Authorities (COSLA) represent the views of Scotland’s 32 local authorities, and acts as the employers’ association for local authorities. Total employment in local government in Scotland was 251,000 in June 2019^[85].

292. COSLA make clear in their response that Migration is crucial to Scotland’s economy, to Scottish local authorities and to our local communities, and that Scotland has benefited significantly from membership of the single market, and the continuation of free movement of people would be the most advantageous system for Scotland.

293. They are clear and consistent that the salary threshold is too high and presents a barrier to many occupations, key sectors and in local areas.

294. Rather than on an arbitrary salary threshold, they stress that the system should instead focus on the value and need of the job.

295. The key ask from councils was for flexibility in the immigration system: one which takes account of economic diversity; recognises demographic challenges across Scotland (and other parts of the UK); and is responsive to national and regional requirements.

296. A one-size-fits-all immigration policy could accelerate depopulation with significant implications for economic activity.

297. COSLA and their member councils express concern that Scottish perspectives haven’t been, and continue not to be, involved in the MAC’s decision making-processes. There is a definite need for Scottish stakeholders to have a greater role in planning and monitoring their immediate and projected labour shortages in the development of an immigration system - which must have the capacity to look beyond the national level to local level needs.

298. A Regional Sponsorship Scheme (similar to in Australia) could be favoured, which enables regions to recruit staff from overseas on a specific ‘Skills In-Demand’ list, with a requirement to live within the region for a set period. This would be able to reflect regional variation in both salaries and job shortages.

299. COSLA conclude that while they would advocate for the continuation of freedom of movement as the most advantageous system for Scotland, in the absence of this, the immigration system must be more flexible and work for every part of the country. COSLA and our member authorities therefore want to see the introduction of an immigration system which takes account of the diversity that exists within Scotland, and is responsive to the economic and demographic challenges faced by different parts of the country.

Salary Threshold

300. The overwhelming response from the member councils similarly agreed that there should be no minimum salary threshold – but if one was to be applied, this should not be anything other than the Living Wage.

301. The proposed salary threshold would significantly impact on council and local area workforce/sectors, especially when expanded to EEA citizens. For example, Angus Council reported that 88% of employees working in manufacturing (excluding professional jobs such as senior engineers) would not meet the £30,000 threshold^[86]; and 69.7% of the roles in Dumfries and Galloway council filled by European citizens are below the £30,000 threshold. They predict an impact will be particularly felt in education, where recruiting teachers to the region has been difficult, and they currently have EU nationals employed in e.g. modern language teaching positions, with salaries ranging below the threshold.

302. Member councils report that the salary threshold is a ‘blunt instrument’ which will effectively rules out the option of migrant labour for local businesses, impacting on local economies. Strong views were held on how the proposed immigration policy would hinder the socio-economic development in some areas.

303. All but one member council indicated that the settlement threshold (£35,800) is also too high, and should be revisited.

304. The settlement income threshold also assumes significant career progression over the five-year period (not always the case); for those who started at the minimum threshold of £30,000, their salary must have increased by almost 20%.

305. In Glasgow, for example, average wages have not increased by 20% during the last 5 years (true for the public sector as a whole). And of the 304,200 jobs surveyed in 2017, only 2.6% would meet the settlement threshold.

306. They state the settlement threshold is an ‘arbitrary figure’, ‘divorced from the realities of pay and progression increases’ and would similarly economically disadvantage rural Scotland. This also has the potential to exacerbate current trends towards ageing populations and depopulation, would make it much more difficult for employers to attract workers, and may also have a discriminatory impact in relation to age and gender.

Occupations in Threat

307. As noted above and elsewhere in this report, the proposed salary threshold would have a particularly detrimental impact on the health and social care sector; a point emphasised by councils in their responses. While some roles would meet the proposed qualification threshold, they would not meet the £30,000 limit. In order to meet the needs of health and social care sector, the salary threshold needs to be significantly lower.

308. Particularly in the context of an ageing population, the sector faces increasing demand for care workers which are already struggling to be filled.

309. Highland, for example, has a population ageing faster than the Scottish and UK averages, meaning a starker increase in demand for health and social care. Skills Development Scotland anticipate the need for 3,400 Health Professionals and 3,800 new recruits in the Caring Personal Service Occupations between 2018 and 2028 to meet replacement and expansion demands. However, the average nurse salary in the UK is only £24,664, meaning that these essential posts could not be filled by migrant workers.

310. Health and Social Care is an example of a sector with jobs of high social value but not high wage. The critical support provided by individuals in these roles is threatened by the proposed salary threshold.

311. The impact of the UK Government’s proposals would thus have repercussions felt beyond the health and social care workforce to those in need of care and support.

312. COSLA and their member councils also raise concern about the impact on the early learning and childcare workforce.

313. With a required workforce increase of an estimated 8,000 to 20,000 by 2020^[87], the sector already faces significant recruitment challenges. However, as evidenced by East Renfrewshire, Early Years Officers and Pupil Support Assistants (positions currently filled by EU nationals) do not meet the £30,000 threshold - despite meeting the proposed qualification threshold. Aberdeen City Council similarly cite their potential reduced teacher numbers by the threshold (which would not allow them to sponsor probationary teachers).

314. There are many other occupations within local government which will also be impacted by the proposed salary threshold: such as catering, cleaning, IT, Probationer Teachers and School Support, and Agricultural Workers.

315. The Western Isles, as a remote and rural area, envisage the long-term impact of cessation (or lessening) of economic EU migration to their islands will have impact on all of the fishing, shellfish, retail, construction, tourism, and healthcare/social care sectors (many of the Consultants in the Western Isles, for example, are EEA nationals).

316. It is clear that the remote and rural communities in Scotland are particularly dependent on workers from the EU, in a range of sectors, in roles that may not meet the £30,000 salary threshold.

317. In small communities, small numbers of workers have an aggregate economic and social impact beyond their occupation/sector itself to local schools, businesses, and communicates. The proportionate impact of reduced EU migrants will therefore be a lot greater.

Regional Wage Variations

318. Councils also emphasised the regional variation in salaries and raised concerns the salary threshold would impact regions differentially. Areas with lower wage levels will thus be disadvantaged – even with a job-specific threshold – concentrating migrants in areas of higher salaries.

319. For example, average salaries in Highland are 3% below the Scottish average (which in turn is below that of London, the South East and east of England), and workers will only earn 81% of what a Londoner earns. Scottish Borders is another low wage economy: with an annual median wage of £20,000 that falls well below the salary threshold, only an estimated one in four jobs would be available to migrant workers.

Part-time Workers

320. As raised elsewhere, the salary threshold must also consider part-time jobs. COSLA note that while there are some who work part time through choice (or forced choice through necessity), there are also instances e.g. in rural communities, more peripheral areas or on islands, where the scale of service required dictates what can be offered.

321. In order that these communities are not disadvantaged, the system must recognise posts that do not meet the salary threshold due to their part-time nature.

Points-Based System

322. Many councils supported the position of awarding points-based on areas in need of increased population (specifically highlighting population and demographic challenges they are facing: for example, North Ayrshire, one of eight local authorities (all in the West of Scotland) anticipated to see population decline, with an impact on regional economic inequality^[88].

323. There is a significant need for inward migration to increase the number and proportion of working age population in specific areas (such as the Highlands and Islands). A Regional Skills route could help to meet this need.

Macduff Shellfish

324. Macduff Shellfish is a seafood processing business with 434 employees.

325. EU Citizens comprise a significant majority of their workforce at 70%: only 29% are UK citizens and 1% are non-EU employees (via an ICT Tier 2 Visa from the parent company).

Salary Threshold

326. Macduff Shellfish argue that there should not be a minimum salary threshold above the legal requirement like the national minimum wage.

327. If there is to be a salary threshold, they argue that this should not be applied universally across the economy and the UK, but has a variety to reflect employer needs.

328. They also suggest a salary threshold of either £30,000 or the 25th percentile is too high.

329. Macduff Shellfish argue that any national figure will not allow for regional variance, nor the nature of the region (rural/urban).

330. They reference Aberdeen and Aberdeenshire as an example: there are a large number of relatively low paid rural jobs (agriculture, forestry, fishing) but average salaries are offset by a particular sector (in this case oil, gas and increasingly wind energy sectors).

331. Although the region enjoys high employment levels, there is a particular shortage of semi-skilled manual labour. A high £30,000 threshold will exacerbate that demand.

332. They state that local recruitment drives have had only very limited success (similar to NFUS/etc), hence a heavy reliance on EU workers. This is a feature of many large food processors in the area.

333. They warn that additional barriers to employing EU citizens will lead to increasing automation and job losses, and thus hasten rural depopulation.

Scottish Seafood Association

334. Scottish Seafood Association (SSA) are a membership organisation representing 80 members in the fishing industry (Inc. transportation and storage), based in the North East of Scotland.

335. Their members are mostly SMEs with under 50 employees, from UK and Ireland and countries.

Salary Threshold

336. The salary required by the Tier 2 (General) immigration rules is too high and is not what than the sector would pay.

337. Their organisations cannot pay this salary: as a global seafood producing industry, competing in a global market they must have access to a global workforce whilst respecting the living wage/minimum wage laws of the UK.

338. The Seafood sector is dependent on access to migration labour, but the proposed salary requirements are set too high for the level of skill.

339. They state the significant risk to the sector of lost opportunity in the event the caveats to access global workers (non-EU labour) is set above the that of local workers. The sector needs to compete competitively in a global market. Access to global workers is vital for the continuation seafood production.

340. The salary thresholds do not reflect pay in the sector nor minimum/living wage thresholds. There should be no application of a salary threshold above the living wage, and should consider variations by sector/region, occupation and new entrants.

341. The industry already faces difficulty in attracting young people – particularly in the North East of Scotland which experiences low unemployment. In order to produce for the domestic and global market, the immigration system must take ensure continued access to a global labour market.

Royal Society of Edinburgh

342. The Royal Society of Edinburgh (RSE) is Scotland’s National Academy. In their response to the MAC^[89] the RSE outlines key points and considerations on migration, as well as answers to the specific questions posed by the MAC.

343. They are clear that the UK should promote a narrative of being ‘open for business’ and a welcoming destination for immigrants. Further, given the future labour market may differ significantly from that of today, the immigration system must be flexible enough to deal with potentially significant changes.

344. The UK research base has been internationally recognised as one of the strongest in the world, which is partly predicated on its ability to attract the highest quality staff from around the world. In order to maintain this, it is vital the immigration system is affordable and can attract researchers at all career stages.

345. Scotland’s research and higher education base relies heavily, and disproportionately compared to the rest of the UK, on contributions made by EU and international staff.

346. Scotland is more dependent than the rest of the UK on sectors such as social care and healthcare, agriculture and food services and these areas will require continued access to labour from elsewhere. It is, however, unlikely that many workers in these sectors will meet the skilled route criteria and may not be attracted by the option of a temporary route.

Salary Threshold

347. The RSE are clear that salary is not an adequate proxy for skill. In Scotland the majority of workers earn less than the proposed threshold, and in certain professions no employees would meet it^[90].

348. Further, a salary threshold would only serve to disadvantage part-time workers^[91] – therefore disproportionately impacting women – and certain geographic areas, which are less likely to have jobs that meet the criteria of £30,000.

349. They note the difficulty of defining and quantifying skills, and posit that a salary threshold should not be utilised without clear communication of the expected benefits and the evidence-base for this.

350. The application of the proposed salary threshold to EU nationals (currently exempt) could cut overseas net migration to Scotland by almost half (from over 13,000 annually to between 6,600 and 9,000)^[92].

351. The RSE, similar to views expressed elsewhere in this document, argue that if a salary threshold is to remain, it should be a flexible threshold with variations/consideration for occupations facing severe shortages - particularly where these jobs may be vital to the economic or social wellbeing of local communities.

352. There should also be consideration of a scheme with the specific aim of attracting and retaining migrants to rural and remote areas which face declining populations - which could potentially include a list of shortage occupations that do not meet the skills threshold.

353. The Scottish economy is more dependent than the UK on sectors such as social and healthcare (14.2% of all jobs, compared to 13.2%), accommodation and food services (7.1% vs 5.4%), and agriculture, forestry and fishing (1.6% vs 1.1%); sectors which will require continued access to labour. However, as noted above and elsewhere in this response, many workers in these sectors will not meet the criteria. A temporary route, without the opportunity (or simplicity/ease) of settlement, may not be sufficient to attract these workers.

354. Similarly, the threshold is also likely to disproportionately affect certain geographic regions. Rural areas of Scotland are less likely to have jobs that meet the threshold, while conversely these areas, due to depopulation and an ageing population, are those most in need of increased immigration.

A Differentiated Migration System for Scotland

355. The RSE proposes a case for a differentiated immigration system for Scotland as most effective in responding to Scotland’s demographic and economic needs.

356. The RSE suggest that Scotland could develop its own points-based system for recruiting (especially high skilled) labour, along the lines of the Australian or Canadian decentralised (points-based) systems being examined by this commission.

357. The schemes (they state) are well placed to cater for sub-national variations in demographic conditions, skills or sectoral shortages; and can be targeted to promote the permanent settlement and integration of immigrants. This could offer a promising model for Scotland to address its distinct demographic and economic needs and, in particular, to consider how these needs vary within different Scottish regions and localities (e.g. urban conglomerations versus rural and remote rural regions).

358. While differentiated points-based systems have clear advantages for Scotland, they also raise potential challenges. Such schemes typically build in generous rights for entrants, with no restrictions on access to employment – or, indeed, to welfare and public services. They would offer a set of rights (for those selected to enter) that go beyond those currently provided under free movement provisions, which may prove politically unpalatable to some.

359. Furthermore, concerns have been expressed over onward migration under such systems. However, while it is appropriate and potentially informative to look at statistics relating to onward migration in other countries, it should not automatically be assumed that such behaviour would be replicated under a UK system due to considerably different geography, levels of migration and economic factors. In the MAC’s May 2019 review of the Shortage Occupation List, the Committee noted concerns around onward migration and suggested that a scheme could be piloted to facilitate migration to rural and remote areas.^[93] The scheme would then need to be monitored over several years and the outcomes evaluated. The Committee’s offer to provide advice on the design of such a pilot scheme should be taken forward.

360. Finally, the RSE notes that one of the main challenges for Scotland and the rest of the UK will be retaining a supply of labour for low-skilled and seasonal work. From the perspective of Scotland, clearly it will be important to ensure that any UK-wide sectoral scheme is tailored to meet Scotland’s particular labour market needs. For example, while the UK Government has announced a seasonal workers pilot scheme, allowing fruit and vegetable farmers to employ up to 2,500 non-EU migrant workers for seasonal work for up to six months, this would be insufficient: Scottish farms alone employ up to 10,000 non-UK nationals in this sector.^[94]

361. Such sectoral schemes, however, are often associated with far less generous rights and social protection compared to the channels available to high skilled workers, or to EU nationals under current free movement rules. The RSE strongly opposes any reduction in the rights of temporary workers, which could lead to problems of exploitation and socio-economic precariousness, impede integration and potentially generate irregular forms of work and movement. Such impacts could also have undesirable wider effects on EU nationals already settled in Scotland. It could trigger a downturn in migration that is facilitated by networks with migrants already resident in Scotland and stimulate those currently in Scotland to move elsewhere in the EU or to return to their countries of origin.

Culture Counts

362. Culture Counts is a third sector representative organisation, who responded to the MAC providing evidence on behalf of their nation-wide members in the arts, entertainment and recreation industry.

363. Other than comments on the salary threshold and points-based system, Culture Counts propose a number of improvements for a future immigration system for the interests of UK producers and festivals, including:

• Expanding the Visitor Visa rules around Permit Free Festivals list to include EEA;
• Extend Permitted Paid Engagement to three months (the one month currently provided is not sufficient to cover a performer’s rehearsal time and 25-day run at the Fringe Festival followed by another engagement beyond Edinburgh – which for many makes a UK visit viable/cost efficient).
• Distinguishing ‘high-risk’ and ‘low-risk’ by nationality is too simplistic;
• Secure the ability of cultural Services Specialists to move around within the EU (45% of the current UK creative industries service exports go to the EU) and where possible internationally – within Mode 4 GATS agreements.

Salary threshold

364. In their response, Culture Counts argue that if the UK became a ‘third country’ no longer able to employ workers from the EEA through freedom of movement, the salary threshold of £30,000 (or £35,800 settlement threshold) is too high and would present a barrier for the sector.

365. In order to remain creatively competitive, many organisations in the UK regularly employ highly-skilled specialists from a pool of EEA competitors.

366. Culture counts propose an alternative model whereby visa applicants could earn ‘additional salary-threshold points’, where the salary for the job earns below the threshold, but additional points are granted due to the applicants’ contribution to soft power or to the social, cultural, economic or environmental benefit to the UK.

367. Otherwise, Culture Counts believe there should be no minimum salary threshold below the real living wage.

Part-time Workers

368. Culture Counts clearly state that part-time working patterns should be accounted for within the threshold calculation.

369. They cite evidence from a recent TUC report, The Motherhood Pay Penalty, which found that women remain the primary caregivers: over half of the mothers in the study (54%) in work at 42 worked part-time, opposed to only 3% of fathers. Further, women working part-time earn 32% less per house than women working full time.

370. Therefore salaries within the immigration system, currently judged by calculating earnings solely, must be amended with consideration for part-time and other working patterns: otherwise are prejudiced, discriminating against women and caregivers.

Points-Based System

371. Culture Counts propose an additional category of ‘diversity’ ought to be considered in a points-based system, due to the necessity of this to ‘fuel innovation through the exchange of ideas’.

372. Culture counts members reported that the Australian system in place for freelancers in entertainment and culture is ‘expensive’ and ‘time-consuming’, and that the Canadian model would be the ‘overall favourite’ system.

Russell Group

373. The Russell Group provide strategic direction, policy development and communications for 24 research-intensive universities in the UK^[95]. Their submission of evidence^[96] was informed by Russell Group universities’ responses and supplemented by analysis of datasets provided by the Higher Education Statistics Agency (HESA).^[97]

374. The Russell Group outline that the UK’s higher education and research sector is dependent on its ability to recruit and retain international staff, and their analysis shows that the extension of the minimum salary threshold for entry and settlement to EU nationals will seriously obstruct the recruitment and retention of skilled workers, who are vital to UK Research and Development.

375. The [UK Government’s immigration] proposals would negatively impact on the operational, teaching and research functions of universities across the UK.

376. The impact would be particularly acute for part-time workers, especially women, specialist technical staff and early-career researchers.

377. Based on their evidence, they recommend the removal of salary requirements as a necessary condition of entry for skilled workers – for example through a sponsored points-based route that judges applicants based on factors reflecting their skills and value to UK research.

378. This could supplement or replace Tier 2 or take the form of a new Global Talent visa route which does not have a minimum salary threshold.

379. If this is not possible in the short-term and Tier 2 is to include minimum salary requirements, these requirements should be significantly reformed before they are extended to EU nationals in a new system. Reforms should include:

• Calculating salaries pro-rata to reflect modern ways of working and allow the recruitment of part-time staff to avoid discriminating against women and early-career researchers.
• Reflecting occupational variation in salary so applicants must meet the lower of occupation or general salary thresholds. Currently, applicants must meet the higher of the national or occupational thresholds, meaning applicants may have to meet higher thresholds than the recognised average rate for their occupation. This will inhibit the recruitment of skilled technicians.
• Lowering the experienced worker threshold to £21,000. In the absence of a new points-based route that relies on skill rather than salary, or the modifications to existing salary thresholds proposed above, an experienced worker rate of £21,000^[98] would allow Russell Group universities to recruit skilled workers integral to research.
• Re-evaluating minimum salary thresholds for indefinite leave to remain (ILR) and the 6-year cut off for skilled work visas. A new minimum salary threshold for ILR should reflect average national pay progression for recent graduates and experienced workers.

380. Points-based-routes could help deliver an immigration system that supports the UK’s ambitions within research and innovation. However, they stress that this requires clarity on who the points-based routes would aim to recruit; what employer involvement would be; and what rights these routes would grant.

Salary Threshold

381. While the Russell Group welcome the MAC’s proposal to lower the skilled threshold so that RQF3 and 4 occupations are eligible for the Tier 2 route, by including these lower-skilled jobs, the 25^th percentile of earnings of Tier 2 occupations will decrease.

382. They therefore disagree with the MAC proposal to retain the £30,000 threshold, rather than lower it in line with a new calculation of the 25^th percentile of earnings. This will mean applicants to RQF 3 and 4 roles are likely to be ineligible (and undermining the lowering of the skills threshold).

383. Entry criteria should reflect a range of national objectives, including ambitions to strengthen the UK’s economy and boost productivity through growing research and innovation capacity.

384. 85% of Russell Group universities responded that they either agreed or strongly agreed minimum salary thresholds should be tailored for new entrants – initial earnings for graduates are typically lower than experienced workers and if minimum salary thresholds are retained they should reflect this.

385. Universities also noted their concern that extending the thresholds to EU nationals would prevent them from being able to recruit some skilled talent: currently, EU nationals apply for a wider range of positions than international applicants, from which they would likely be excluded if the existing minimum salary threshold is extended.^[99]

386. The negative impacts of minimum salary thresholds for entry would be particularly acute for the recruitment of part-time workers, teaching and education professionals (including early career researchers and academics), the social and natural sciences and technical staff working in STEM areas.

387. If current recruitment levels remain constant, the Russell Group calculates that the extension of the minimum salary thresholds would prevent at least 1,200 skilled EU nationals from taking up roles at Russell Group universities every year (as a highly conservative estimate which does not factor the ageing workforce, expansion in R&D, increasing domestic shortage, etc).

388. If thresholds are used as a necessary condition for entry for skilled workers, and in the absence of other reforms to minimum salary thresholds (e.g. no pro-rated salaried), the experienced minimum salary threshold should be lowered to £21,000.

Salary threshold for Settlement

389. The Russell Group similarly state that the proposed minimum salary threshold for settlement (£35,800) could prevent UK institutions from retaining skilled workers. Currently, non-UK, non-EU nationals can stay in the UK to undertake skilled work for a maximum of 6 years before they must apply for indefinite leave to remain (ILR): by April 2024, to be eligible, they must meet the salary threshold of £40,100^[100].

390. Graduates of UK universities, eligible for a new entrant threshold and with a starting salary of £20,800 would therefore have to increase their salaries by nearly £20,000 in 6 years in order to remain in the UK – in considerably higher than average pay progression for UK graduates.

391. Over a third of Russell Group universities indicated that the existing income thresholds for settlement were above the incomes of those applying to settle. Some also reported that staff left the country earlier than they would have done due to the requirement to apply for settlement (as opposed to extending their stay).

392. To allow employers to retain staff, the Russell Group propose that skilled workers are permitted to extend their stay without applying for settlement, and that the minimum salary threshold for settlement is lowered^[101].

Part-time workers

393. 26% of Russell Group staff are employed on a part-time basis^[102]. The minimum salary thresholds’ calculations on actual salary rather than pro-rated salaries therefore discriminates against these part-time workers, not because of their skill level, but their hours worked.

394. This would be at odds to university (and wider economic and labour market) commitments to support flexible and inclusive working environments (e.g. considering new parents and carers). Given that women comprise the majority of the part-time workforce (72%) this policy will discriminate against women in particular.

395. Minimum salary thresholds which are not pro-rated are also likely to impact on the recruitment of teaching professionals^[103]. This group includes early-career researchers and academics. Of those earning less than £33,000, 69% are on part-time contracts^[104] and only 9% would likely have been eligible for a new entrant’s threshold^[105].

396. Over the last 2 years, Russell Group universities recruited an average of 770 skilled EU Teaching and Educational Professionals a year to roles paying less than £33,000 – the occupation threshold for higher education teaching professionals. If extended at existing levels, minimum salary thresholds that are not pro-rated are therefore likely to impact the UK’s ability to attract early-career academics and researchers.

Points-based System

397. The Russell Group notes that while the Australian immigration system has points-based routes, the system is not points-based in its entirety. They therefore call the UK Government’s commitment to an ‘Australian-style’ points-based system ambiguous, and make responding to the consultation challenging.

398. They call for further consultation on points-based systems due to the complexity of the issue.

399. Points-based routes could be a way of achieving cross-party goals to grow the UK’s R&D capacity (which relies on the UK’s ability to attract and retain skilled workers), but this depends on the design of these routes and the underlying capacity to operationalise them.

400. However, a poorly designed points-based route could damage the competitiveness of the sector.

401. The Russell Group conclude by calling for further clarity on who points-based routes are designed for and the opportunity for further discussion.

Expert Advisory Group on Migration and Population

402. The Expert Advisory Group on Migration and Population (EAG) was established in October 2018 to provide independent, expert advice to the Scottish Government on the impact of migration, population growth and demographic change on Scotland’s devolved competence.

403. The group has published two reports, UK Immigration Policy After Leaving the EU: Impacts on Scotland's Economy, Population and Society (February 2019) and Immigration Policy and Demographic Change in Scotland: Learning from Australia, Canada and Continental Europe (November 2019).

404. Both reports are relevant to this commission and have been referenced elsewhere in the Scottish Government’s response.

Salary Thresholds

405. The EAG state that given 63% of workers in Scotland earn less than the proposed £30,000 salary threshold for Tier 2 entry, this proposed threshold is too high for Scotland.

406. Even if the salary threshold were reduced to £27,500, 58% of workers earn less than this: and 53% earn less than £25,000. In occupations including textiles, social care, leisure and travel, sales and elementary occupations, almost no jobs would qualify for the £30,000 threshold.

407. Noting that the MAC’s Call for Evidence specifies that the ‘existing salary to be paid for an occupation is set at the 25^th percentile of the full-time earnings distribution measured using ASHE, or £30,000, whichever is higher’, and considering the most recent ASHE data, the EAG calculated how the proposed Tier 2 limit would affect the occupational spread of migrants in Scotland.

‘Tier 2 Gap’

408. The EAG observed the difference between £30,000 median annual salary for full-time workers at the 25^th percentile where that salary is less than £30,000 – the ‘Tier 2 Gap’. This shows that full time workers in skilled trades would need to be earning £8,000 above the 25^th percentile to qualify for the proposed limit. Those in caring and personal service occupations would need to be earning £13,000 above this percentile.

409. The threshold would have a pronounced disadvantage on the young and the female. Only 25% of 22-29 year olds meet the £30,000 threshold, and a far lower proportion of female employees meet the threshold; in many predominately female occupations, salaries do not even exceed £25,000. The proposed Tier 2 arrangements would thus create a gender disparity in the supply of future migrants.

410. The regional distribution of salaries in Scotland is such that specific areas would be more affected than others. For example, 49.5% of jobs in East Renfrewshire would meet the £30,000 threshold – versus only 16% in Na h-Eileanan Siar. Very few migrants would be able to move to those areas under Tier 2: limiting labour migration in areas that already experience low levels of productivity and face challenges of depopulation.

411. Relaxing the salary threshold to £25,000 would mean only five local authorities would have less than 40% of jobs meeting this threshold.

Exemptions

412. The EAG propose that the social care sector may need to be exempted from these salary thresholds. Less than 10% of those in caring personal service occupations earn above £25,000, and none earn £30,000. Budgetary pressures of local authorities mean there is little prospect of raising salaries in social care.

413. Therefore the proposed changes will exacerbate exiting labour shortages in many areas: with the effects felt on friends and family who have to assume (more) responsibility for care (and again, predominantly affecting the female family members).

High Public Value versus High Wages

414. The EAG also make reference to the consideration of the societal value of certain roles, which may exceed market wages.

415. For example, in relation to the maintenance of populations in rural areas: the EAG found the proposed threshold would have a particularly detrimental effect on remote and rural areas facing population decline. Mainly rural areas saw only small natural increase (between 2007-2017) but this was more than compensated by in-migration; remote rural and island areas, by contrast, experienced negative natural change, which was not balanced by in-migration.

416. They conclude that demographic challenges for these areas will be exacerbated by the end of free movement and the proposed Tier 2 threshold. For remoter rural areas and islands, attracting working-age migrants (from EU and elsewhere) is the only realistic option to avert a downward demographic spiral driven by the age structure legacy of selective out-migration during the last decades of the 20th century. The proposed changes to migration policy would have a ‘double’ demographic effect on these areas of Scotland, with far-reaching implications, for economic activity, provision of services, and well-being.

Points-Based System

417. As outlined above and elsewhere, remote and rural areas of Scotland are likely to face especially acute challenges in attracting migrants under the proposed Tier 2 threshold.

418. In their submission the EAG make reference to the intention of the Australian State Specific and Regional Migration (SSRM) Scheme, which is designed to address similar challenges in its non-urban and remote regions (which face a decline in natural population increase and lower rates of in-migration, similar to Scotland). Indeed, in recognition of the contribution of in-migration in mitigating these trends, the SSRM has recently been expanded: with the increase of the quote of permanent visas and the introduction of two new regional visas.

419. SSRM schemes vary across regions, and many regions have multiple channels of entry. Relevant to Scotland is where the schemes relax various dimensions of the selection criteria for regions (entry criteria at federal level), through, for example:

• Including a wider range of occupations for regions – including some at lower skilled levels
• Relaxing requirements for age and language skills (like the Regional Sponsored Migration Scheme (RSMS)).

420. Most SSRM schemes offer pathways to permanent settlement, which may be conditional on resident and work in the relevant region.

421. Recent reforms have strengthened residency conditions for regional visas, through increasing the required length of stay in regions. For example, the new Skilled Employer Sponsored Regional (Provision) visa, replacing the RSMS, requires entrants to live and work in the region for 5 years before earning permanent residency, including having a taxable income at a minimum level for at least 3 years: the goal of this is to promote retention in remoter regions.

422. The Canadian Provincial Nominee Programs (PNPs) are similar oriented towards attracting and retaining migrants in remoter areas of the country – but do not have a residency requirement. Instead, settlement is promoted through selection based on propensity to settle in the region (‘adaptability’ - points) and a concerted programme to promote integration and settlement.

423. Both programmes have increasingly acknowledged the importance of specific job offers as a criterion of selection.

424. The Australian and Canadian regional programmes imply absorbing additional complexity (in terms of the number of schemes) and a generous package of rights and pathways to settlement. They reflect a recognition of the importance of immigration for flourishing local communities in more peripheral areas, and a political commitment to addressing challenges of depopulation.

Tech UK

425. Tech UK represent over 850 businesses within the digital and technology sector, ranging from FTSE 100 companies to start-ups.

426. Employment in the digital technology sector is increasing, with 2.1m jobs in 2017 (ref), yet faces challenges in the domestic labour market with a chronic skills gap. Migration from EU and the rest of the world is key to the sector’s continued success.

427. In their response, TechUK and their members argue that salary is not proxy for skill level and the salary threshold is too high and should lowered in line with the change in skills threshold.

428. They also state they see no clear benefits to a new points-based system.

Access to Talent

429. SMEs in the technology sector report access to talent as their principal concern, and currently face significant problems recruiting talent due to a combination of: extreme competition for domestic talent; difficulty bearing the costs and administrative burdens of recruiting non-EU talent; and depressed recruitment from the EU, cited reasons due to Brexit uncertainties and UK no longer a ‘welcoming country’. This is causing a major impediment on growth, where companies “cannot get the talent they need”^[106].

430. Linear modelling by Tech UK using existing trends suggests that should the pace of job growth continue at the current rate, an additional 1.5 million new tech jobs would need filling by 2030^[107]. Non-EU workers make up a greater proportion of the tech workforce and could grow by up to 750,000 by 2030^[108], meaning the UK would need to add an average of 92,000 non-UK nationals per year by 2030.

431. In some ‘cutting-edge’ technologies where even global level expertise is scarce, UK tech firms face strong competition internationally and the simplicity of migration systems can be a decisive factor. Securing this talent can be the decision maker for tech businesses on where to place their investment. For example, between 2004 and 2015, 234,000 jobs in “advanced industries” (inc. tech) created a further 147,000 “non-tradeable” jobs within the local area^[109].

432. Thus EU and other migrant workers do not only ‘fill a gap’ but create opportunities for domestic workers.

433. The Migration Advisory Committee report’s own into EEA migration in the UK found that migrants, particularly those employed in the tech sector who tend to be high-skilled and well remunerated, make a net contribution to the UK economy^[110].

434. Despite this, TechUK have found we are discouraging talent away from the UK because of ‘mood and narrative’, which has ‘just as much of an impact on decision as immigration rules themselves’.

435. Migration has been, and continues to be, a primary driver of growth within the UK’s tech sector and is critical in delivering continued innovation and competitiveness. The European contribution to this growth must not be underestimated and a conversation about migration driven by an unrealistic expectation of the skills available domestically will inevitably damage the sector and the wider economy.

Tier 2 (General) Visa

436. IT roles account for 35% of all Tier 2 applications for year ending June 2019^[111] and TechUK welcome the proposals to improve the Tier 2 (General) visa including the abolition of the Resident Labour Market test, removal of the cap of numbers, and lowering of the skills threshold.

437. They however further advocate that visa fees for the UK are too high (significantly more expensive than other EU hubs) and present as too complex and bureaucratic; placing unsustainable and unnecessary burdens on employers. They state that it must be streamlined and simplified (where employers have avoided this by recruiting EEA workers predominately, which they will no longer be able to do so).

Salary Thresholds

438. TechUK disagree with the assumption that salary is an appropriate proxy for skills level.

439. They further argue that the proposed £30,000 (or 25^th percentile) threshold is too high and must be lowered in line with the proposed skills threshold and the labour market.

440. Many jobs in the Digital sector do not earn £30,000 and yet are vital to the UK.

441. While the proposed Skilled Route makes possible to recruit medium as well as high-skilled EU workers, without lowering the salary threshold, employers’ ability in practice to recruit will be significantly limited. Overall, 60% of jobs held by EEA workers in London would not meet the proposed skills and salary threshold^[112].

442. TechUK cite Bristol as an example of a region which would be significantly impacted by the proposals.

443. Bristol became the UK’s leading tech hub in 2019 with £320,000 turnover per worker, and 26,999 digital tech jobs in 2017^[113]. However IPPR found that if the £30,000 proposed threshold were applied, 75% of EU employees in this region would be ineligible. This would leave businesses in the region struggling to recruit essential staff.

444. TechUK note the UK Government’s own evidence that a £30,000 threshold could contribute to between a 0.4% and 0.9% reduction in UK GDP by 2025.^[114]

445. Further, the ability to remain in the UK (for migrants) is a significant factor and the salary threshold for settlement would require significant pay increases in order to meet it.

446. TechUK also report concerns over the difference in the minimum salary threshold and for settlement, in that a migrant would have to increase their salary by nearly £6,000 in 5 years to remain (a 19.3% increase). This increase is unattainable.

447. They state the situation is ‘even worse for new entrants’, where the proposed threshold of £20,800 would require a 72% increase within five years to qualify for settlement.

448. Considering annual growth in average weekly earnings for employees in Great Britain was 3.8% in 2019^[115], TechUK argue that this is unfeasible and something the MAC should look into when considering the salary threshold.

Exemptions to Salary Thresholds

449. TechUK would argue for exemptions to the minimum salary threshold for new entrants, part-time workers, and have considerations towards salary.

450. The New Entrants exception to the salary threshold, currently £20,800 or the 10^th percentile, reflects that early career individuals cannot command the same salaries as those with several years’ experience. This threshold should be set at a level that actively helps companies bring new talent into the industry.

451. However TechUK argue that limiting the proposed route to only full-time highly skilled routes shuts out talented international part-time workers. The proposed threshold does not currently allow for part-time work, as is fixed and cannot be prorated.

452. Median annual earnings for all part-time employees in the UK digital sector was £11,500 in 2018, and part-time and flexible working is common in the UK tech sector. Thus the route is not reflective of modern working patterns, and ought to be revised to consider part-time workers.

‘Australian-style’ Points-based System

453. TechUK note that it is ‘not clear’ what aspects of Australian’s immigration system is being proposed for the UK, but that what has been confirmed is that a UK points-based system would require a job offer from a registered employer.

454. However, one of the key features of the Australian system is that a job offer is not required.

455. The Australian system has also been employed to increase migration above the level achievable by relying on employer sponsorship.

456. TechUK state they ‘do not see the benefits’ of a points-based system, and that it is unclear how it would differ from the Tier 2 skilled worker visa already in place; and that the UK’s previous points-based systems (the Highly Skilled Migrants’ Programme from 2002-2008 and the Tier 1 (General) Programme from 2008-2010) were shut down.

457. If the UK Government proceeds with a points-based system, TechUK and their members ague that age should not play such relative importance in comparison to other categories (as in Australia) as age often brings experience.

458. They further argue that the ‘satisfactory level’ of English language should be determined by the employer and not an arbitrary test (as for example, is less necessary in a technical role); skill level should be highlighted by work experience and not salary; and that additional points for having studied in the UK are not necessary.

Conclusion

459. TechUK conclude their submission by stating the need for trust and public confidence to underpin the future system, which will be delivered by a high-quality, effective system that works and is well understood.

460. They clearly argue that the system should redefine skills: where salary is not a proxy for skill level, and any determination for entry into the UK on the basis of ‘skills’ must acknowledged skilled jobs that are neither highly paid nor require particular academic qualifications.