The MAC report: what businesses need to be aware of

 Recommendations set out in Migration Advisory Committee (MAC) report will prove challenging for businesses reliant on low-skilled labour. 

18 September 2018

The Migration Advisory Committee (MAC) has today published its report on immigration reform.

As the MAC itself acknowledges, there will be “winners” and “losers” in any policy for immigration reform. On an initial reading of the report, it would appear the reforms proposed, while impacting all sectors, would be most challenging for those sectors employing a low-skilled workforce.

End of EU free movement and no provision for low skilled workers
While the report is careful to caveat, its advice is clear – if Brexit results in an end to free movement it sees no benefit in a preferential system for EU citizens. Furthermore, the MAC recommends against the introduction of schemes for low-skilled employees, other than the Seasonal Agricultural Workers Scheme (SAWS). 

The MAC’s view is such schemes are unnecessary as there is an existing pool of low-skilled workers, though this will likely be heavily contested by businesses in sectors such hospitality, food and drink and healthcare that have already faced labour shortages as a result of falling EU migration. It is difficult to see where such businesses, given current low levels of unemployment, are going to source the labour to meet their operational needs. 

Abolition of the RLMT & Tier 2 cap
Despite evidence submitted to the MAC highlighting the unpopularity of the Tier 2 sponsorship system, it recommends that sponsorship continue. However, there are two concrete proposals that will be widely welcomed by employers who hold sponsor licences.  

Firstly, the removal of the arbitrary Tier 2 cap, which means only 20,700 migrants can come to the UK from overseas on such a visa each year; and secondly, the removal of the Resident Labour Market Test (RLMT). The RLMT places a very large administrative burden on employers, who must prove they can’t find a suitably skilled settled worker for a given role in order to obtain a visa for a migrant. 

Although the MAC report is about European Economic Area (EEA) migration, there is clearly a silver lining here for non-EU skilled workers who will now find it easier to take up employment opportunities in the UK.   

Lowering of Tier 2 skill levels and maintenance of minimum salary levels
The MAC report recommends the skill level required for a Tier 2 visa be lowered from its current level – which only allows employment for degree-level roles – to jobs at NQF Level 3, which includes a much wider skill base and includes roles such as farm manager and hotel manager.  

The difficulty for employers is the MAC has also recommended the salary threshold for employees coming from overseas remains at £30,000. Businesses that could benefit from the lowering of skills levels, such as the hospitality and food manufacturing sector, will no doubt be concerned as to the viability of meeting these salary thresholds.  

Immigration Skills Surcharge (ISC)
Currently, employers have to pay a levy of £1,000 per year for non-EU workers who come to the UK on Tier 2 visas. The MAC report recommends this levy be extended to EU workers. If implemented, the cost implications for employers could be significant. 

The end of free movement will fundamentally change the way in which UK businesses source labour in a post-Brexit world. If the government follows the MAC’s recommendations, there will be particular challenges for some sectors in sourcing labour and likely additional bureaucracy and increased cost for all sectors.