MAC not convinced that the list provides a sensible immigration solution to shortages in low-wage sectors
The independent Migration Advisory Committee (MAC) yesterday published its latest comprehensive review of the Shortage Occupation List (SOL).
The review and accompanying documents can be accessed from here. The main 130-page report is here.
As we reported on EIN last September, the Government commissioned the broad-ranging review of the SOL in August 2022, saying that the time was right to review labour shortages against the latest available evidence. The MAC's previous review of the list, which allows more relaxed visa conditions for some jobs, was published in September 2020.
The MAC's notable headline finding from yesterday's review is that the SOL should be abolished. According to the MAC, the SOL increases the risk of exploitation, undercuts wages, and has high administrative burdens.
"We are not convinced the SOL provides a sensible immigration solution to shortage issues in low wage sectors and so we recommend that it should be abolished going forward," the MAC said in a covering letter.
The report's foreword provides a helpfully brief overview of the report's complex and lengthy content and is reproduced below:
The MAC has completed a major review of the Shortage Occupation List (SOL). The most substantive change compared to previous reviews is that this review has been conducted on the basis of our recommendation that no employer should be able to pay below the "going rate" regardless of whether there is shortage. The going rate is the full-time annual salary for each occupation that we estimate only the lowest quarter of workers are paid less than. The going rate helps to protect resident workers from undercutting and reduces the exploitation of migrants. Previously, being on the SOL allowed employers to pay 80% of the going rate. As a result of removing this discount, most occupations currently on the SOL are ineligible going forward. This does not mean that they may not be facing shortage – just that the Skilled Worker (SW) route is already providing the appropriate immigration response. Our focus has been on those occupations where the going rate is below the binding general salary threshold of £26,200, and so being able to pay below this threshold is a clear benefit. Many of the occupations we have reviewed have a going rate of around £20,000 to £22,000. If they were not on the SOL they would not realistically be able to recruit internationally because they would need to pay the general threshold of £26,200.
There are, however, risks to allowing these low-wage occupations more liberal access. First, and in our view most important, low-wage employment is where the most serious exploitation of workers occurs. We know that the risk of exploitation is particularly significant for migrants. Migrant workers on the SW route are reliant on being employed by a sponsoring firm to remain in the UK and that makes them vulnerable to unscrupulous employers who may use that vulnerability to make them work in conditions that no decent society should accept. Using the SOL to make it easier to recruit low-wage workers increases the risk of this exploitation. We must not shy away from this – it is an inevitable consequence of such a decision. Second, low-wage migrants are more likely to lead to a net fiscal cost for the UK, particularly where the visa route allows dependents – such as the SW route. These costs are generally ignored by those stakeholders arguing for inclusion on the SOL, but they cannot be ignored by those responsible to the taxpayer. Third, the route simply does not work for most low-wage employers. The administrative burdens are high, and the associated fees mean that the total cost of hiring a migrant through the SW route are well above the thresholds. For many it will simply be uneconomic to use the route.
These concerns mean that we are not convinced that the SOL provides a sensible immigration solution to shortage issues in low-wage sectors, and so our preference is for the Government to abolish it. Instead, we suggest that in future the MAC could be commissioned to examine individual occupations or sectors where labour market issues seem particularly acute, possibly in collaboration with other bodies. We could report on these broad labour market issues and focus in particular on the extent to which immigration policy may, or may not, be helpful. Such recommendations could include preferential access to the SW route as the SOL currently allows, or suggestions for alternative immigration routes. Importantly it would also focus on changes to wages, terms and conditions, training and education and investment in technology that are likely to be a more sustainable response to the problems. If, however, the Government wishes to continue with the operation of the SOL as it is, we will conduct a minor review in Spring 2024.
Our review has recommended that 8 occupations be added to the SOL, and that a further 2 occupations be added to the Scotland-only SOL. Although we also considered RQF 1-2 occupations that are currently ineligible for the SW route because of the skill threshold, we concluded that none had provided sufficiently strong evidence on the steps they are taking to improve domestic recruitment. The Government were clear to us that the inclusion of such occupations should be exceptional, and this is reflected in our recommendations.