Tag: points-based system

The government has announced outlines of the new system of immigration controls from January 2021 when the Brexit transition period is scheduled to finish. It plans to introduce an Australian-style points-based system. This will apply to all EU and Non-EU citizens. The aim is to attract skilled workers, while preventing non-skilled or low-skilled workers from entering the UK for employment.

But even skilled workers will need to meet three criteria in order to obtain a work visa: (i) having the offer of a job paying a minimum of £25,600 per annum, except in designated jobs where there is a shortage of labour; (ii) being able to speak English; (iii) having qualifications equivalent to A levels.

To apply for a work visa, applicants must have at least 70 points according to the following table:

In certain jobs where there is a shortage of labour, designated by the Migration Advisory Committee (MAC), immigrants will be able to earn a lower income, provided it is above £20,480 per annum. They will earn 20 points for such jobs, which can offset not meeting the £25,600 threshold. Such jobs could include those in healthcare and farming. There will also be temporary visas for seasonal workers, such as fruit pickers.

The government argues that the new system will encourage employers to substitute technology for labour, with greater investment in equipment and computers. This would increase labour productivity and wages without reducing employment.

This is illustrated in the diagram, which illustrates a low-paid job which will be impacted by the restrictions. If there is a rise in productivity through technological change, the marginal revenue product of labour curve shifts upwards from MRP_L1 to MRP_L2 and offsets the leftward shift in labour supply (caused by the decline in immigration) from AC_L1 to AC_L2 and the marginal cost of labour from MC_L1 to MC_L2. Employment is where the marginal cost of labour equals the marginal revenue product of labour. This remains at Q₁. Wages are given by the supply curve of labour and rise from W₁ to W₁. (Click here for a PowerPoint of the diagram.)

Even if the upward shift in the MRP_L curve is not sufficient to offset the leftward shift in the labour supply curve, wages will still rise, but there will be a fall in employment.

In higher-paid skilled jobs where people meet the points requirement, there will be little effect on wages and employment, except where people are generally discouraged by a points system, even if they have the points themselves.

The government also argues that there is a large pool of UK residents who can take up jobs that would otherwise have been filled by immigrants. The Home Secretary referred to the 8.48 million people who are economically inactive who could fill jobs no longer filled by immigrants. However, as the data show, most of these people are not available for work. Some 2.3 million are students, 1.9 million are carers at home looking after relatives, 2.1 million are long-term sick and 1.1 million are retired. Only 1.9 million (22.1% of the economically inactive) would like a job and not all these would be able to take up one (e.g. the long-term sick).

One the biggest problems concerns low-paid sectors where it is very difficult to substitute capital for labour through use of technology. Examples include social care, health care, the leisure and hospitality industry and certain jobs in farming. There could be severe shortages of labour in such industries. It remains to be seen whether such industries will be given exemptions or more relaxed conditions by the government in line with advice from the Migration Advisory Committee.

More details will emerge of the points system in the coming months. It will be interesting to see how responsive the government will be to the concerns of employers and workers.

Videos

• Post-Brexit Immigration System Explained

Channel 4 News, Gary Gibbon, John Redwood and Faiza Shaheen (19/2/20)

• ‘Low-skilled’ migrant workers to be denied visas after Brexit

ITV News, Libby Wiener (19/2/20)

• Immigration: No visas for low-skilled workers, government says

BBC News, Vicki Young (19/2/20)

Articles

• The new immigration rules that will apply from 2021 – a guide for businesses

Lexology, Irwin Mitchell

• Low-Skilled Workers Need Not Apply In Post-Brexit Britain

Forbes, Frey Lindsay (19/2/20)

• The government is taking a gamble with its immigration reform

City A.M., Christian May (20/2/20)

• New immigration rules to ‘boost economy’ and
  ‘unleash UK’s full potential’

Business Insider, Simon Angear (19/2/20)

• The Conservatives’ immigration plan puts ideology before economics

The Guardian, Tom Kibasi (20/2/20)

• Will Boris Johnson’s immigration reforms work? That depends on the Home Office

The Guardian, Jonathan Portes (19/2/20)

• The Observer view on the government’s immigration plans

The Observer (23/2/20)

• Voters will see through Boris Johnson’s pointless immigration plan in the end

Independent, Thom Brooks (20/2/20)

Questions