UK immigration policy after leaving the EU: impacts on Scotland's economy, population and society - July 2020 update

2. Implications for Migration to Scotland

Overall flows

The 2019 EAG report estimated that the 2018 White Paper changes to Tier 2 might result in a reduction of net migration to Scotland of between 30 – 50%. The first scenario was based on HM Treasury analysis projecting a 80% decrease in net EU migration following the changes. The second was based on EAG analysis which assumed:

• 78% of EEA nationals entering under free movement would not meet the Tier 2 threshold
• However, removal of the cap, a lower skills threshold, and reducing the administrative burden on employers might also lead to an increase in non-EEA nationals entering via Tier 2
• The combination of these two effects were estimated as a 70% reduction in current EEA inflows for work
• Family migration and dependents under Tier 2 would be at a rate of 0.7 per Tier 2 entrant
• Return rates of entrants under Tier 2/family routes would be approximately 50%

The proposed lower salary threshold of £25,600, and the inclusion of RQF3 occupations exempt from this threshold (through the Shortage Occupation List), implies that a higher proportion of EEA nationals would in principle meet the Tier 2 threshold. At the same time, however, we need to take into account the steady and significant decline in EEA net migration since 2015, even prior to the introduction of new immigration rules. We note that there has been a simultaneous rise in non-EEA net migration, though most of the increase in non-EEA in-migration has been for the purpose of study.

Taking both considerations into account – the broadening of Tier 2, but the general decline in EEA migration to the UK – we would retain the original projected scenarios from the February 2019 report, i.e. anticipating a reduction of net migration of between 30–50%.

As before, however, we note that the key issue is how these changes will affect the occupational, geographic and gender distribution of migration to Scotland. Thus, we now consider in detail the effects of reducing the minimum salary threshold from £30,000 per annum to £25,600 per annum on the types of job in Scotland that might be accessible to migrant workers. As in the previous report, we present a selection of views of the Scottish labour market – by gender, occupation and local authority – to show how the probability of being eligible for different types of worker would be affected by the new, lower threshold.

Since the proposed regulation is based on annual salary, our analysis focuses on the distribution of gross annual earnings for selected groups of workers. Data on annual earnings are taken from the ONS Annual Survey of Hours and Earnings (ASHE), carried out in April 2019. All of our analysis is approximate because it is based on a curve fitted to data points. Note that these data include only employees: the self-employed are excluded. Under current UK Government proposals, the self-employed would not be eligible to migrate to the UK. The ASHE data provide an appropriate comparator group for potential migrants. The ASHE data identify points within these distribution – 10^th, 25^th, 50^th etc. percentiles. The figures presented in this section then show interpolated values for each point in the distribution constructed by fitting a quadratic function to these observed points. This allows us to compare the proportion of existing jobs that meet the newly proposed minimum salary threshold of £25,600 with those that met the previous threshold of £30,000. In each figure, gross annual earnings is shown on the vertical axis and the proportion of existing jobs which pay less than a specified level of earnings on the horizontal axis.

For example, Figure 1 shows the earnings distribution of all employees in Scotland – male and female in all occupations and local authorities – and shows that in 2019, 52.5% of all workers in Scotland earned less than £25,600. In contrast 60.9% of all jobs in Scotland pay less than £30,000 per annum. The reduction in the migrant salary threshold from £30,000 to £25,600 implies that migrants would be eligible for an additional 8.4% of all jobs in Scotland.

Source: ONS ASHE

Of course, there are variations across working time, gender, location and occupation.

For example, only 41.1% of full-time jobs have salaries below the £25,600 threshold and so would be unavailable to migrants. Since part-time work generally pays less than full-time work, migrants seeking full-time work would be excluded from a smaller proportion of full-time jobs. Under the previous threshold of £30,000, migrants would not be eligible for 51.8% of full-time jobs. An additional 10.7% of full-time jobs would be open to migrants under the lower proposed threshold.

Source: ONS ASHE

Now consider the role of gender. Addressing the long-standing wage gap between men and women is a key priority for the Scottish Government. Yet our analysis shows that 63.3% of jobs currently employing females would not be available to migrants. This is much larger than the corresponding percentage for males and is due to the lower wages typically earned by females – the gender pay gap. Although migrants would therefore be excluded from most jobs currently occupied by females, the reduction in the threshold would increase the range of such jobs available to migrants by 9%.

Source: ONS ASHE

Now consider the spatial effects of the new threshold. Table 1 is based on similar calculations to the preceding figures. It shows the proportion of jobs in each local authority that fall below the new and previously proposed migrant salary thresholds. Those local authorities with relatively high median salaries have the lowest share of jobs for which migrants would not be eligible. These include, for example, East Renfrewshire, East Dunbartonshire, Stirling and Edinburgh. In each case, the reduction in the proposed salary threshold would increase the set of jobs available to migrants by around 10%.

At the other end of the scale, local authorities where pay is typically lower have a much higher proportion of jobs for which migrants would be ineligible. These include, for example, Inverclyde, Clackmannanshire, Dumfries and Galloway and Na h-Eileanan Siar. The change in the threshold is more beneficial to these authorities because a larger proportion of jobs would now be available to migrants. Thus, for example, the reduction in the threshold makes an additional 15.5% of jobs available in Na h-Eileanan Siar and 12.4% of jobs available in Dumfries and Galloway.

Now consider the effects of the change in the threshold on the eligibility of migrants to access specific occupations. Table 2 shows the effects of the reduction in the threshold on broad occupations within the Scottish labour market. It uses the same calculations as in elsewhere in the paper and follows the same format as Table 1.

The occupations are arranged in order of decreasing eligibility for potential migrants. Clearly, a large proportion of jobs in protective service, science research and engineering, media and management would be available to migrants. In contrast, very few jobs in agriculture, caring, office and customer related occupations would be eligible. Nevertheless, the reduction in the salary threshold would allow migrants to be eligible for a small proportion of jobs in these sectors. Thus, for example, whereas under a £30,000 threshold no jobs in customer services, leisure and elementary occupations would be available to migrants, a small proportion of such jobs would qualify under the lower threshold.