There has been a lot of insight put forward by worker's rights advocates around the debate on advantageous aspects of lower net migration over the fourteen years of a Conservative government. What springs to mind is 2019, when it published changes to freedom of movement just before Britain's rather messy withdrawal from the European Union, and during the lead-up to the 2024 General Election. The United Kingdom’s net migration rate hovered at a precariously high level relative to much larger economies such as Canada or Australia (approximately 1.22 million people migrated to the United Kingdom, while 532,000 people migrated from the United Kingdom, resulting in a net migration figure 685,000). How is a figure of 685,000 treated by policymakers and what, if anything, is the effect of the previous government's selective migration policy on the aggregate wage level of natives?
There are two models and associated policy effects I would like to discuss here:
- The United Kingdom’s ‘Selective Migration’ model
- The Canadian ‘Human Capital’ model
- The Australian model (not mentioned)
- The U.S. model (not mentioned)
These models (UK and Canada) are very similar but also very distinct. The UK’s employer-led model is perhaps the most recently revised approach in the above. Indeed, the ‘skilled worker visa route’, which is a points-based immigration system (PBS) came into force on 1 December 2020.
However, my concern is that pressure has been placed on Canadian Prime Minister Justin Trudeau recently to assess and revise the Canadian ‘Human Capital’ model used by Canada in recent months (Yousif, 2024). Since Trudeau’s announcement in October, stating his government's intention to reduce immigration to Canada by 21% to 395,000 from a net migration rate of 500,000, the UK has yet to lay down the gauntlet or respond with appropriate unilateral measures.
Are we aware of the Canadian plight or the predicament of the Canadian economy? Where will defected skilled migrants go if they are turned away by both the UK and Canada? The UK’s selective migration model has come under criticism for its focus on maintaining employer rather than worker interests. If the UK is going to lead on immigration policy globally, then the new Labour government must ensure worker’s interests are protected and that another Windrush scandal is avoided (Crawford, 2020).
We already know the migration of skilled workers from the UK to Canada and Australia can affect labour supply in entire sectors and therefore create domestic labour market gaps due to what is usually seen as a domestic skill shortage or a similarly oriented problem. With efficiency wages, what my theoretical economics paper aims to highlight is the threshold for global skills-based migration (Mayaki, 2024).
Look at this table. My question here is - is the threshold to qualify high or low given the points criteria? Is the wage level high or low given the threshold, and are our criteria relevant criteria?
Table 1: Selective Migration – Points Criteria for Skilled Worker Route (2021)
Source: Migration Observatory analysis of Statement of changes in Immigration Rules, HC 813, p. 221–222
What, if anything, does Table 1 tell us about UK skills-based immigration? According to Leonida (2023), the Conservative government enacted a 'point-based immigration system, similar to that adopted in Australia, according to which citizens of EU states would not be favoured over non-EU citizens, and priorities would include securing a job offer, having the necessary skills to secure that job and speaking English.’ However, was there any consideration by the migration policy advisory committee responsible for deriving these thresholds on the wage effects of this policy? Especially in lieu of what policy the Canadian government intends to pursue (reduce permanent residency to 365,000 by 2025).
According to this presentation, immigration in France has markedly decreased the wages of highly educated natives and increased those of low-educated ones. Has such a study been conducted on our PBS? In the presentation, Ottaviano and Peri (2012) argue in ‘Distributional Effects of Immigration on Native Wages’ that there are limited but sub-optimal effects on the wages of native workers when PBSs are enacted domestically. Is UK wage growth optimal given its immigration level? Will this be the case in 12 months if Canada’s net migration level falls in 2025?
References
Crawford, R. (2020) ‘Why the new points-based immigration system threatens everyone's rights at work’, Trade Union Congress, Available at https://www.tuc.org.uk/blogs/why-new-points-based-immigration-system-threatens-everyones-rights-work (Accessed on 04 November 2024)
Koslowski, R. (2014). Selective migration policy models and changing realities of implementation. International Migration, 52(3), 26-39.
Leonida, L. et al. (2023) ‘Britain and BrExit: Is the UK more attractive to supervisors? An analysis of the wage premium to supervision across the EU’, British journal of industrial relations, 61(2), pp. 291–312. Available at: https://doi.org/10.1111/bjir.12675 (Accessed on 05 November 2024)
Mayaki, A.A. (2024) ‘Pareto-Nash Reversion Strategies: Three Period Dynamic Co-operative Signalling with Sticky Efficiency Wages’, arXiv preprint, Available at https://doi.org/10.48550/arxiv.2406.18471 (Accessed on 05 November 2024)
Ottaviano, G. I., & Peri, G. (2012). The effects of immigration on US wages and rents: A general equilibrium approach. In Migration impact assessment (pp. 107-146). Edward Elgar Publishing. Available at https://ferdi.fr/dl/df-DbyEeT4AskUvL6DEjZ2Chudx/presentation-selective-migration-policies-and-wages-inequality-edo-a.pdf (Accessed on 04 November 2024)
Yousif, N. (2024) ‘Trudeau announces sharp cuts to Canada's immigration targets’, BBC World News, Available at https://www.bbc.co.uk/news/articles/cd7n3rqyjqzo (Accessed on 05 November 2024)