In the U.K. a planned £30,000 ($37,331) salary threshold for skilled migrants looking to immigrate from the EU for work is becoming one of the most contentious parts of a post-Brexit immigration regime. A group of British businesses has called for the threshold to be lowered to £20,000, among other measures, to prevent crippling labor shortages.
The two candidates for leader of the Conservative Party, and by default the next U.K. Prime Minister, continue to indicate their premierships would involve a “no-deal” Brexit, meaning the U.K. just leaves the European Union without any interim trade arrangement. This has British businesses nervous enough as it is, but on top of that, if indeed the U.K. leaves without any kind of deal it will very likely mean freedom of movement for EU citizens will end. And this, of course, means the U.K. needs to design an immigration system for those who still want to come and work.
The Home Office, which is responsible for immigration, outlined their plans for a post-Brexit immigration regime in December 2018. Under that plan EU citizens will be treated just like any other foreigner, meaning if they want to work in the U.K. they will, in most cases, need to be offered a job that will pay them more than £30,000. With around 8% of the U.K. workforce currently made up of EU nationals, many of whom will be working for less than £30k per year, at least some disruption to British industry could be expected, especially at a time when unemployment in the U.K. has been at historic lows.
The £30,000 threshold began its life as a £20,800 threshold and traces its origins all the way back to 2010 when former Conservative Party Prime Minister David Cameron pledged to reduce net migration to the U.K. from the “hundreds of thousands” to the “tens of thousands”. This pledge became a central part of the Conservative platform, and the salary cap was one of many measures brought in to bring down migration to that “tens of thousands” mark (which it has been hilariously unable to do).
Up until 2015, a potential immigrant needed to make £20,800, and also be within a certain salary percentile for their occupation and career level. Then, the government raised the skills threshold of the Tier 2 visa scheme to include only graduate jobs, and under advice from the Migration Advisory Committee (MAC), an independent research body which advises the government, the threshold was brought up to £30,000 to reflect the higher average salary for graduate jobs. In September 2018 the MAC delivered its final report which recommended the threshold remain at that level, but this time with a different rationale: taxes on a salary of £30,000 are estimated to be around the point where the migrant “breaks even,” or pays more into the public finances than they take out (though whether it needs to be this high is contested).
In its September report, the MAC recommended the government lower its overall skills threshold to allow people in middle-skilled occupations to come to the country, not just those with graduate jobs. But the MAC also argued the salary threshold should be left where it is, both incentivizing employers to hire locals over migrants for middle-skilled jobs that traditionally pay less than £30k, and also making sure wages for migrants stayed at that “break-even” level. The MAC has since concluded that for some critically underserved occupations, those on the “shortage occupation list,” a salary of £30,000 is just unfeasible, threshold or not, and without some flexibility those sectors would be at risk of chronic labor shortages. And indeed, concessions have been made. Some 25% of Tier 2 workers in the country right now are earning less than £30,000.
All of this brings us to today and the concern that this £30,000 threshold, the legacy of an un-kept promise by a now-departed Prime Minister whose concessions to anti-migrant sentiment led to the U.K. leaving the EU in the first place, might do critical damage to U.K. industry.
Claire Nilson is an immigration lawyer at Faegre Baker Daniels. She says that though most of the clients she deals with earn above the threshold, there are concerns about what applying it to every foreigner after Brexit could do: “It will impact certain sectors more than others, where employees are known for being comparatively low earners but who nonetheless are critical to our economy and well-being, e.g., care workers, NHS support personnel, some teachers, and others.”
Nilson also points out there is a regional discrepancy to this, as London jobs typically command higher salaries, incentivizing potential migrants to seek jobs in the capital rather than other, already underserved, regions of the U.K. Nilson goes further, pointing out that those who do go for lower-paid jobs outside of London will be “the groups who can least afford to seek the assistance of a lawyer with their applications,” further skewing the incentive towards the capital. On top of that, many small businesses in the U.K. regions have been using EU labor for decades and will be relatively unaccustomed to visa application procedures in comparison to larger companies in London.
“Functionally, the salary threshold is likely to privilege London and the South East” says Nilson.
With all this, among many other concerns, in mind a group of around 200 British companies, under the banner of London First, have issued a call for the Prime Minister, whoever he ends up being (but it will be a he), to lower the threshold, as well as extend the term of a proposed temporary work visa to two years from one, and bring in other measures to make sponsorship and talent attraction easier.
London First CEO Jasmine Whitbread said: “London First, in coalition with other business and education bodies, is calling for the salary threshold to be lowered to £20,000, bringing it in line with the proposed skills threshold and better reflecting labor market realities. More than 60% of full-time jobs in the UK are currently paid below £30,000.”
This is not the first call of its kind, nor will it be the last. Home Secretary Sajid Javid has indeed asked the MAC to conduct another review into the threshold, and leadership candidate Boris Johnson said he will ask them to look into other options.
With Javid repeatedly signaling he wants a business-friendly immigration regime, and considering the myriad strategic exceptions to the £30k threshold, Whitbread said she thinks there’s hope the government will receptive to British businesses on this: “We’ve been actively engaging with the Home Office on the salary threshold, particularly since the publication of the immigration White Paper last year – and believe they are listening. We remain positive the MAC will land on a similar salary threshold to our £20,000 proposal.”
Nonetheless, October 31st (the current hard-Brexit deadline) is approaching fast. “The time for the business community to mobilize is now, before the new immigration system is introduced,” says Faegre Baker Daniels’ Claire Nilson. “Lobbying MPs now, so they understand the concerns of their business constituents, is more likely to influence this number prior to it being set.”
The £30,000 Migrant Salary Threshold Will Privilege London Over The U.K. Regions – Forbes