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This report is intended as a basis for discussion only. Whilst every effort has been
made to ensure the accuracy and completeness of the material in this report, the
author, Consensus Research and the City of London, give no warranty in that regard
and accept no liability for any loss or damage incurred through the use of, or
reliance upon, this report or the information contained herein.
November 2011
© City of London
PO Box 270, Guildhall
London
EC2P 2EJ
http://www.cityoflondon.gov.uk/economicresearch
Table of Contents
Foreword ..................................................................................................................................... 1
1. Executive Summary ........................................................................................................... 3
2. Background and Methodology ...................................................................................... 9
3. The Impact of the Migration Limits ................................................................................ 14
4. Recruiting and Retaining Global Talent....................................................................... 23
5. The Outlook for London and the UK ............................................................................. 34
Appendix 1: New migration limits process .......................................................................... 40
Appendix 2: Global Talent ..................................................................................................... 41
Appendix 3: UKBA allocations of restricted certificates of sponsorship (CoS) April to
October 2011 ........................................................................................................................... 46
Appendix 4: Summary of Tier 2 General after April 6, 2011 .............................................. 47
Endnotes ................................................................................................................................... 48
Foreword
Stuart Fraser
Chairman, Policy and Resources
City of London
The City of London – the principal hub for UK and international financial and
professional business services – has always prided itself on its openness towards and
expertise in international trade, inward investment and global finance, welcoming
the benefits these deliver to our national economy. Indeed, in the current
economic climate, it may be that now, more than ever, our ability to remain open
to the global skills and talent necessary for these businesses is key to supporting the
UK’s economic recovery.
The imperative to manage the UK’s net migration figure is clear and HM
Government's commitment to doing so is respected. However this must not limit our
ability to attract skilled workers from the international pool of increasingly mobile and
talented people. This is not just a financial services issue or one that is limited to
London: an absolute, rigid or even reduced cap on migration is potentially
damaging to areas drawing on international talent, such as IT and life sciences. This
issue is therefore about economic growth throughout the UK rather than just the
needs of City firms.
This valuable report is published at a time when, once again, there will be further
reviews of existing limits on skilled and highly-skilled workers entering the UK. The
research not only highlights the impact that the points based system currently has on
businesses, but also illustrates why future constraints should not be based on
demand during a time of depressed economic activity. The findings also
demonstrate the need for certainty around the reviews, with a predictable
operating environment for business being essential in planning business activity and
promoting economic growth.
Against this backdrop of continuing uncertainty, some global firms are reported to
be considering whether they could move key business areas out of the UK.
International companies such as these are also likely to employ large numbers of
British workers, with relocation having the potential for negative effects on
employment levels, the UK’s pool of skills and the raising of taxes.
This report highlights serious business concerns relating to wages and other increased
operating costs as a result of the limits and considers how these factors will impact
on their ability to operate, both in London and elsewhere in the UK, where increased
costs may have a higher proportionate effect. It also notes that not only has the
experience of continual change left an endemic knowledge gap in businesses
regarding how migration limits work, it has, critically, also left a negative perception
of the UK as a business environment.
1
If immigration is to be capped, we must find a way for the UK’s firms to attract the
international talent they need. Un-capped Intra-Company Transfers remain one
such method. Therefore, it is in all our interests that there is a fair, transparent and
rational system which, in a competitive and mobile world market, can maintain the
UK’s openness to skilled people – regardless of their origin.
Stuart Fraser
London
November 2011
2
1. Executive Summary
Objectives
Following the significant changes to migration policy and the introduction of the
migration cap in April 2011, the City of London Corporation commissioned this
research to assess the impact of those changes on the attractiveness of the City of
London and of the United Kingdom, to businesses that rely on non-EU/non-EEA skilled
migrant workers.
This study seeks to provide an understanding of the initial impact of the limits to Tier 1
and Tier 2 migration on businesses since their implementation in April 2011. The
research reports on experiences of businesses, from April to October 2011.
Assess the impact of the new Tier 1 and Tier 2 non-EU economic migration
limits, implemented in April 2011, on a representative section of London
businesses. The research focused on the experience of businesses in the first six
month recruitment period in which businesses were operating under the new
rules.
The research was designed to investigate whether the new migration limits have had
any impact on the perceived attractiveness of the UK and London for businesses,
and whether there had been any impact on the perceived attractiveness of the UK
and London for overseas skilled workers.
Key findings
This study is qualitative and the research findings are presented as illustrations of the
experiences of the businesses interviewed. The analysis in this report is a combination
of the views of participants and highlights the central themes that emerged from the
interviews.
The research findings in this report do not necessarily represent the views of all the
participants and differing perspectives are highlighted where they exist.
While businesses had negative perceptions about the introduction of the migration
limits based on their experience under the interim period, the reality has been that
there were only a few reported problems with securing visas under the migration
limits, with most businesses able to secure the visas required from April to October
2011. This may in part be attributed to the addition by some businesses of resources
3
to manage migration, including external expertise, and increased familiarity with the
UKBA processes and the migration limits policies.
The businesses interviewed provided feedback on both Tier 1 and Tier 2. The
discussions focused on the Tier 2 General Route, although Tier 1, in particular the
Post-Study Work route, was also discussed.
The Tier 2 General Route was under-subscribed at the October 2011 midpoint in year
one. This has contributed to businesses reporting few if any problems. Uncertainty
over the number of visas available each month under the migration limits has eased.
The UKBA now provides online information on the allocations of restricted certificates
of sponsorship (COS), and this is updated monthly.
While businesses have been largely successful in securing visas, the migration limits
have had both immediate and pending impacts on UK-based businesses:
4
However, while these UK based businesses were not engaged in developing
their future planning because of concerns around migration policy, their
colleagues and competitors in other global locations have been able to
progress with future planning. This has provided these other global locations
with a planning advantage and prioritisation within organisations for
resources.
Both smaller and larger businesses have been able to adapt to the migration
limits; while the costs for both have increased, the proportional increase in
resources utilisation has been greater for smaller businesses.
Businesses that provide legal services have expressed concerns around how
migration limits will affect access to the UK trained non-EU/non-EEA talent
pool. In addition, those legal services that recruit talent two years in advance
of employing also expressed concerns over how Government continued
policy changes would affect their recruitment.
Global businesses require the mobility of staff to service their global clients.
However, global firms that require the movement of staff between
international locations on short and seasonal assignments (less than six
months), reported that the new PBS system and migration limits have inhibited
their ability to move staff.
The minimum income thresholds under the PBS for Tier 1 and Tier 2, whilst easily
achieved for those employees based in the South East and London, are more
difficult to achieve in areas beyond the South East.
Inability to bring in global talent for regional locations affects how businesses
diffuse knowledge across their operations. The benefits in having highly skilled
global employees locate in regional offices in the UK include but are not
limited to the increased skills-transfer to locally based employees.
5
In addition, there is a recognised regional skills shortage that could be filled
with global talent, were income requirements to be weighted to reflect
regional wage differences.
Businesses also reported that it costs them significantly more to recruit from
outside the UK or to move workers from other locations to the UK. All
businesses reported that they continue to recruit and hire local talent where it
meets their requirements.
Impact on competitiveness
Businesses are driven by economic factors and if they are unable to secure
the necessary talent in the UK, they will lose that talent and the associated
clients. Businesses will become less competitive, and this will affect their ability
to expand and grow their businesses in the UK.
Some businesses have reported losing internal teams to other global locations
and reducing their overall UK headcount of domestic and non-EU/non-EEA
talent. While this is not was not widely reported, it could be an early sign of a
silent and potentially devastating trend for the recovering UK economy.
Business perspectives
6
After reporting on the challenges and the impacts of the migration limits, businesses
surveyed were asked for their perspectives following the first six months of the
migration limits. Some offered the following observations and recommendations on
migration policy:
The five tiers of the Points Based Systems replaced over 80 predecessor
migration routes. Future changes to migration policy will make it more
challenging for UK-based employers, who have just started to manage the
existing five-tier system, to comprehend the system.
ICTs are business critical and should remain outside of the quota system.
ICTs granted leave in the UK on shorter assignments (less than 1 year) are
subject to the same 1-year cooling off period as those ICTs who remain in
the UK for longer assignments (over 1 year). The cooling off period for ICTs
should be adjusted to reflect the duration of stay in the UK.
Improve employer collaboration with Job Centre Plus (JCP) and the Resident
Labour Market Test (RLMT)
In an internet age era where job openings are posted instantaneously and
applications completed online, the four-week posting requirement warrants
a review. If an improved online system were developed, the RLMT could be
reduced by one or two weeks.
7
Companies that show an exemplary record of compliance (through UKBA
audits) as well as prove that they contribute to the growth of the UK
economy could be pre-vetted and provided fast track applications. These
companies would still be required to undergo the RLMT.
While the right to settle in the UK is still under consultation, the settlement
issue is generally viewed as a large obstacle in attracting global talent.
Greater flexibility is requested around settlement and length of stay in the
UK, where any changes to rights to settle should be balanced with greater
flexibility around length of stay.
8
2. Background and Methodology
Introduction
One of the United Kingdom (UK) Government’s policy aims is to reduce net
migration to “tens of thousands”; placing limits on the number of economic migrants
admitted to live and work in the UK is a contributing factor to achieving this policy1.
Source: UKBA Impact Assessment Migration permanent limit (Tier 1 and Tier 2 of the points-based
system): impact assessment, available
http://www.ukba.homeoffice.gov.uk/sitecontent/documents/policyandlaw/ia/migration-perm-limit-
pbs/
The Tier 1 system was introduced in March 2008 to cater to highly skilled individuals
who do not require a job offer to immigrate to the UK. Tier 2 was introduced in
November 2008 to cater to skilled individuals who already hold a job offer in the UK.
This report focuses on Tier 1 and Tier 2 and their sub-categories, such as Tier 1 Post-
Study Work (PSW), Tier 2 General and Tier 2 Intra Company Transfers (ICTs).
In November 2010, the Government announced plans to modify how Tier 1 and Tier
2 of the PBS were applied3. The plans included introducing a limit of 20,700 work
permits under Tier 2 (General) and 1,000 work permits for Tier 1 (General) that would
take effect on 6 April 20114. Table 2.2 below show the Tier 2 monthly allocation of the
certificates of sponsorship (Appendix 1 provides a summary of the new migration
limits process).
9
Employment related settlement connected to the tiers was also subject to a
consultation that ran from June 2011 to September 20115. Following the migration
limits introduced in April, the Government is considering amending migration policy
on settlement.
The key driver behind the migration cap and limits is the Government’s concern with
net migration to the United Kingdom and the impact of this migration on:
Net migration is the “net total of migrants during the period, that is, the total number
of immigrants (those coming into the country) less the annual number of emigrants
(those leaving the country), including both citizens and noncitizens”8.
Government policy has focussed on one element of net migration, the non EU/EEA
migrants coming into the UK. However, the number of new long-term migrants in
2010 increased approximately 1% from 2009, while the number of new emigrants in
2010 decreased approximately 10% from 2009. The decreased number of emigrants
has resulted in increased net migration.
In addition, the Government has no direct control over certain aspects of net
migration, such the movement of British and EU/EEA nationals in and out of the UK.
Changes in these flows would affect net migration (positively – reducing net
migration, or negatively – increasing net migration), regardless of Government
migration policy toward Tier 1 and Tier 2 of the PBS9.
There has been no definitive conclusion on the economic impact of the skilled
migrants to the UK economy; Government has identified negative and positive
contributions made by highly skilled migrants in the UK.
According to the UKBA, the policy objectives and intended effects of the migration
limits are:
10
to ensure that the limit operates in a way that is fair and, so far as possible,
offers certainty to businesses and other users of the system;
to incentivise the skills system and encourage employers to give priority to
the training and recruitment of resident workers to meet skill needs10.
The City of London Corporation commissioned this research to assess the impact of
these migration policy changes on the attractiveness of the City of London and of
the United Kingdom, to businesses that rely on non-EU/non-EEA skilled migrant
workers.
This study seeks to provide an understanding of the initial impact of the limits to Tier 1
and Tier 2 migration on businesses, April to October 2011. The key objectives of this
research were to:
Assess the impact of the new Tier 1 and Tier 2 migration limits, on a section of
London businesses, focussing on the first six month recruitment period in
which businesses were operating under the new migration policies.
Investigate the changes in recruitment and operations, if any, during this
period.
Research participants
Representatives of 21 UK based businesses (see Table 2.3) were interviewed for this
study. A further 13 organisations were contacted but declined to participate during
the interview period. The participating organisations together employ almost two
million people globally, and approximately 136,000 in the United Kingdom.
Global UK
Industry / Sector Number of interviews Employees**
Employees
Financial Services -
9 1,370,551 100,300
Banking
Legal services 6 11,205* 21,070
Financial Services - other 3 48,722 9,200
Professional Services 3 320,000 5,470
Total 21 1,750,478 136,040
The majority of businesses interviewed were in the financial services sector and two-
thirds had their global headquarters in the United Kingdom or North America (see
Table 2.4).
11
Table 2.4: Profile of companies contacted in the study
Methodology
The research explored the views of different London based businesses. Most of the
businesses were multinationals in the financial or professional services sectors
located in the City of London and 11of the 21 businesses had a wider regional UK
presence.
We would like to thank all those who took part in the study.
The methodology used to collect the information was qualitative. There was also a
facet of the approach designed to collect quantifiable data on numbers of
applicants and recruitment of non-EU / non-EEA employees pre- and post-
implementation, but only a minority of participants (6 / 21) could provide this type of
hard data.
Most participants reported that they did not have the data requested or they did
not attempt to collect this data in order to comply with Human Resource regulations
and Employment Non Discrimination Law. However, it was noted that while many
employers did not have this data, the UKBA would have the records of all the
12
employer sponsors and the non-EU/ non-EEA skilled employees that they had
sponsored and any changes in visa status.
The main body of this report is presented in three chapters that outline key findings
from the research:
- Chapter 3 highlights the impact of migration limits on UK based businesses.
- Chapter 5 provides the outlook for London and the UK following the changes
to UK migration policy.
13
3. The Impact of the Migration Limits
This chapter explores awareness of and the perceptions towards the migration limits,
and the impact of the limits on businesses, including the direct and indirect costs to
business of adapting to changing migration policy.
The PBS has been subject to significant changes in April 2010, September 2010, and
April 2011. As a result, businesses are applying more resources to manage migration
matters for their non-EU/non-EEA skilled workers.
“Every time the system changes, our responses to it have to change as well,
so there has been quite a significant impact in the amount of resource and
time, as an organisation, that we have had to put into migration.”
While businesses reported increased direct costs in managing the applications under
the new migration policy, they also experienced indirect costs associated with
migration policy. A global bank noted that changes to Tier 1 resulted in a loss of
accessible talent, and that they now spent more time and resources, finding and
sponsoring talent of equivalent ability.
“The abolition of Tier 1 has meant individuals who would have had their own
immigration provision now need to be sponsored under Tier 2. Previously the
bright individuals that we were attracting would have already had permission
to work in the UK; we now have to sponsor everyone.”
Participant, Global Bank
Another participant noted that their capacity to fully understand and implement
policy changes had slowed due to the changes; as a result, there were delays in
providing their business with the correct advice on migration.
14
“It is really hard to give out internal advice when there are so many changes,
and if HR get confused then how does it translate to the business - not very
well...We cannot build in long term policies because of all the updates and
the constant changes. When government makes a policy change, like the
one in April last year, we have to change everything about the way we think,
the way we work, and this is hindering rather than helping us.”
With the migration limits on Tier 1 (Exceptional Talent – 1,000 visas) and Tier 2
(General – 20,700 visas) introduced in April 2011, there was a perception that these
limits would cause problems for employers seeking to bring in skilled migrant workers.
"The perception, when it was initially supposed to come into force, was that it
will cause a problem - each month there was going to be a lottery system,
companies didn’t know whether they would be able to be successful with
their applications as the roles that they applied for were generally associates
(which are not on the shortlist of occupations).”
This negative perception was based on experiences under the interim period, from
July 2010 to April 2011, for the Tier 2 General route. General uncertainty around the
final migration limits policy added to this negative perception towards policy 12.
During the interim period, which itself was introduced quite quickly, businesses were
not always able to secure the required visas for their workforce and some expected
these experiences to be replicated when the final policy came into force.
“We were heavily affected by the interim period and didn’t have any licenses
that we could issue for an ICT [Intra Company Transfer], we appealed, but this
was turned down. There was a period of time where we couldn’t bring
anybody across and we couldn’t sponsor anybody.”
The Government rationale behind the migration cap, despite being fully explained
in Migration Advisory Committee (MAC) and UKBA publications, was not fully
understood by many of the participants.
15
One participant reported that his understanding of the selection of the 20,700 Tier 2
General certificates was that it was:
“.. arbitrary, and may have been based on 2009 figures. 2009 data was used
because that is the data the Government had, and the migration numbers
were higher than 2008. The 2008 data was further complicated by the
introduction of the points based system, so 2009 was used as the best
available data source”
The MAC report, Limits on Migration, mentions that the calculation steps to derive
options for limits on Tier 1 and Tier 2 start with the 2009 estimate of Long-term
International Migration (LTIM) net migration into the UK for all nationalities13.
The use of 2009 data does not reflect the complete skills and talent required by
global businesses in the UK. The global recession of 2008-2009 resulted in significant
downsizing across many UK based businesses. The use of a LTIM figure derived from
this period in developing the migration limits provide for a limit that would be lower
than one measured against pre-recession numbers. Pre-recession UK based
businesses reported higher overall employment figures, including employment of
both domestic and non-EU/non-EEA skilled workers.
Visa processing
Stemming in part from the changes and perceived complexity of the new migration
limits, participants reported that the overall time to process visa applications and to
bring skilled non-EU/non-EEA employees to the UK had increased since April 2011.
"The most significant impact has been the additional bureaucracy in the new
system; there are time delays in getting the employees permits. There is
increased uncertainty due to the consultations and changes that have been
implemented. Uncertainty makes planning difficult. The general moves to the
PBS added clarity, but recent changes (2010-2011) have complicated the
process.”
Participant, Global Professional Services
Participants reported that under the previous policy (the PBS without migration
limits), the average visa processing duration was four weeks. This has now increased
to an average of six to eight weeks.
Applications are processed once a month and the UKBA must receive applications
by the fifth day of the month. If an appropriate employment candidate from outside
the EU or EEA is found on the sixth day of the month, the company must wait a
month before they can make the application.
16
“Getting rid of Tier 1 and having a cap of 20,700 is obviously going to impact
the organisation and make us look closer at the resident labour market - and
this is not necessarily a bad thing. However, it means that bringing someone
on board becomes a very cumbersome process and we may not always get
the right person. So if you have a hiring manager who needs someone on
board immediately, we have to do the RLMT for 28 days, and then have to
wait for approval etc. it all takes 6–8 weeks, and that is if you can get the
application in before the monthly deadline. Sometimes the hiring managers
may not want to wait for that long and instead of going for a foreign national
they may go with someone who may not have been their first choice.”
There are obvious costs to businesses associated with having to wait four more
weeks to secure the talent they require for their operations: businesses may lose out
on talent due to long waits, or instead of securing the ‘brightest and the best’, they
may have to settle for less appropriate applicants in order to fill urgent openings.
The migration limits under the PBS combined with older migration routes have
created a complex system that is difficult to navigate. Changes to migration policy
have created exceptional visa situations that are not necessarily covered by UKBA
information accessible to businesses.
Information on these issues is not easily available from the UKBA. Participants
reported that it is very difficult to obtain clarifications of some of the details of the
policy changes, either on the UKBA website or on ringing the UKBA directly. One
participant commented on their efforts to resolve complex issues by contacting the
UKBA:
“There is no point. Anytime I have tried to contact them [the UKBA] in the past I
have got someone who has no idea, they just don’t know the specifics or they
refer you to a more specialist line and you spend ages waiting on the phone. It
is just not worth it. I may as well just use my adviser.”
Participant, Financial Services
The UKBA visa-processing schedule has had an indirect cost on business. Changing
migration policies combined with legacy migration routes into the UK have created
complex cases that are not easily solvable and require greater information from the
Government.
17
away from a system based on arbitrary judgement, was widely welcomed by
businesses.
A few benefits of the new migration limits system were also identified by businesses.
Under the old system (pre-April 2011), while businesses were required to provide
fewer documents during the application process, the waiting time for a work permit
was beyond control of the business.
Businesses had to send visa application details to the UKBA and then wait for the
work visa. Since April 2011 businesses have greater control managing the issuance of
the employer Certificate of Sponsorship (CoS).
“Now we have control over when the CoS is issued, because we have our
advisors apply for it, we have more control. This is a good point, we may have
to provide more documentation, but at least we have more control with
when the CoS is issued.”
Participant, Global Bank
The success of businesses securing the required visas is confirmed by a review of the
UKBA internet page on the allocations of CoS. The monthly migration quotas for the
Tier 2 General category are currently under-subscribed. Table 3.1 below shows that
April was the only month where CoS allocations exceeded 1,000 (see Appendix 3 for
more details).
The fact that businesses are not using the visas available could be attributed to the
economic conditions in the UK, where slower growth has resulted in reduced
recruitment of non-EU/non-EEA employees. This suggestion is aligned with the fact
that between August and October, 425 CoS were reclaimed as not assigned within
3 months of allocation by the UKBA (see Appendix 3).
18
This suggests that businesses conducted a Resident Labour Market Test (RLMT), failed
to secure the talent required in the local market, followed the new process, were
assigned a CoS, but failed to secure the non-EU/non-EEA talent within 3 months.
Participants also reported the negative perceptions associated with migration limits
and visa applications as having an impact on CoS allocations. The negative press
around the limits coupled with the unfavourable experiences during the interim
period may be dissuading companies from applying for visas thus further explaining
the current under subscription.
Many businesses were worried in the run-up to the ratification of the migration limits
that the monthly quotas would be reached before they would have had the
opportunity to apply for visas.
“People were a lot more scared and angry when it was first introduced. They
were saying ‘we’ll never be able to apply for a Tier 2 because there is going to
be such huge competition for it, the quotas are going to be filled in the first few
days’ but actually that has not been the case at all and the quotas have not
been met and have kept rolling over. It is not as much of a concern as we
thought it would be.”
Participant, Global Legal Services
While most businesses have been successful in securing the visas required, the
quotas for Tier 2 General have been under-subscribed because overall recruitment
has slowed down, in line with the UK economy.
A widely cited impact of the new migration limits is that the cost to employers of
managing migrant worker visa applications has increased. The new process does
ask more of employers when compared to the older system (see Appendix 1).
“Our workload has increased under the new system. The onus is now on the
employer – not UKBA to assess the documentation and verify it, placing
additional responsibility. We work with [migration] advisors, who are assisting
us but it has become more expensive to use advisory services under the PBS.
Our workload has increased; there is more documentation to provide under
this system”.
Participant, Global Bank
19
Whereas in the past, companies may have used in-house employees to process and
secure work permits, the changing Government regulations coupled with the lack of
detailed and up-to-date information have now made this an increasingly difficult
task.
“Changes in the last five years mean I can’t navigate the system without
having a legal advisor supporting me in my opinions. As a small company [in
the UK], we would not entertain the idea of running work permit related
matters without the guidance of a lawyer. Processing people coming from
China into London can be problematic, but as a bank we have deep
pockets.”
Larger businesses, which have higher numbers of non-EU/ non-EEA skilled migrant
workers, have mostly managed to build up existing internal or external capacities at
additional cost in order to adapt to new migration policies.
However, smaller businesses have been affected more than larger businesses as
they often do not have the equivalent levels of in-house migration expertise. They
have had to invest comparatively more in establishing or securing this expertise.
Most participants agreed that the PBS and the changes to migration limits have
created a spin-off migration industry where employers are investing in migration
related services to manage visa applications and to meet compliance
requirements.
“The complexity is painful, they are always changing, and we are always
behind the curve. There is nowhere on the UKBA website that I can find the
information [that I need]. The accommodation we can include in the
certificates of sponsorships to meet the minimum payments thresholds; that is
all changed, is it on the UKBA website? No. Can I find it written anywhere? No.
So the only people who have this information are the migration advisers
because we as companies cannot stay on top of it.”
Participant, Financial Services
There have been increased costs for businesses under the new migration limits, with
smaller companies having to invest a larger proportion of resources to manage the
migration of their non-EU/non-EEA skilled workers.
20
Stability in migration policy
Businesses reported that continual changes in migration policy were having a cost
impact, both directly and indirectly, managing migration within companies.
“We need stability – [Government should] set a number and stick to it. Every
year we don’t quite know where we sit and it’s very frustrating”.
Participant, Financial Services
Businesses need to be able to plan in terms of their locations, staffing and training,
but the continual changes combined with Government consultations, add to the
uncertainty, making planning difficult to do.
“Uncertainty affects business, and the annual [migration limits] cap brings
uncertainty. Businesses plan far in advance, and we need to in order to be
successful. So, any element of uncertainty makes that planning more difficult.”
Participant, Global Legal Services
Businesses involved in the knowledge and services industries are dependent on their
talent for growth. The availability of and access to talent is critical to facilitating
business growth. Almost all the businesses associated certainty about access to
talent and talent mobility with planning and growth.
“Uncertainty of the system has a direct cost impact on the business. Entry
delays of staff has a knock-on effect on the business, and the company
growth agenda e.g. applications due by a certain date only - missing out on
that date, requires waiting into the next month. This is a bigger challenge for
larger companies with high numbers of visa/permit requirements.”
Migration has now become more important, moving higher up the strategic
agenda. Business decisions around employee mobility and non-EU/non-EEA talent
has moved from being the domain of human resources and human capital
management into the Boardroom due to the direct and indirect business costs
associated with complying with migration regulations and securing work visas.
The business costs associated with the new system come largely from the frequency
of changes made to the regulations, but another major concern for businesses is the
perceived lack of clarity and up-to-date information about the regulations.
21
Participants did not necessarily disagree with the PBS: their qualms lay with the lack
of information on which they need to base their business strategy and calculations.
Companies now face longer administrative processes and new levels of uncertainty
because of on-going changes to migration policy.
Although the majority of companies interviewed had a 100% success rate with their
visa applications, they reserve optimism over the migration limits, because no
quantifiable data of the impact of the migration reforms has been made available.
In addition, businesses are aware that the limits were introduced at an atypically
slow time for recruitment and talent needs. Therefore, the current under-subscription
in the migration limits is a greater reflection of the challenging economic climate
and the slow growth experienced businesses rather than the migration limits forcing
businesses to scale back their need for non-EU/non-EEA skilled workers. The economy
appears to be regulating the labour flows of non-EU/non-EEA skilled workers into the
UK.
22
4. Recruiting and Retaining Global Talent
This chapter explains the key drivers behind the search by businesses for global
talent, explores recruitment and salary pressures around migration, and provides a
review of the Resident Labour Market Test (RLMT) under the new migration limits.
The chapter notes that some global businesses are responding to UK migration
policy changes by considering moving their recruitment and location of key talent
pools outside the UK in order to remain globally competitive.
For many global businesses, which have a range of options on where to site their
operations, the flexible approach to skilled migration has been a key factor in their
decision to locate in the UK.
There is a risk that some multinational businesses will reconsider the scale of their
presence in London and the UK, if they are no longer able to bring in those skilled
workers they require. Any resulting departures of those firms from the UK would lead
to a decline not just in the government’s tax take but also in UK employment.
The global recession of 2008 – 2009, and subsequent restructuring for many global
businesses resulted in reduced headcount in London and the UK. Businesses in the
study reported that over the past five years they had observed a decrease in overall
headcount and in the numbers in the numbers of their global workforce located in
London.
A report published by the World Economic Forum (WEF) in 2011 researched global
talent shortages following the recession and noted that despite high global
unemployment rates, global talent shortages were increasing15. Recognising that this
talent scarcity would increase competition between countries and global
businesses, this concluded that:
“Companies and countries will compete for the best and the
brightest...Competition for talent will come not only from the company down
the street, but also from the employer on the other side of the world. It will be
a seller’s market, with talented individuals having many choices. Both
countries and companies will need to brand themselves as locations of
choice to attract this talent.”
World Economic Forum16
23
The WEF report proposes seven responses to address this Global Talent Risk:
introducing strategic workforce planning; easing migration; fostering talent
circulation; increasing employability; developing a talent “trellis”; encouraging
temporary and virtual mobility; and extending the talent pool (see Appendix 2)17.
The report recognises that despite the economic downturn, it will be crucial for
governments to attract a diminishing global talent pool through migration friendly
policies.
“The economic downturn and rising unemployment rates have further soured
attitudes toward migrants, with countries reducing quotas, setting tougher
entry requirements, refusing to renew temporary work permits and even
paying workers to go home. Innovative points-based migration systems and a
“migration-friendly” branding by states and companies are necessary to
attract the right talent globally.”
“We have a very open recruitment process, this is important from a legal
requirement; it is about the skills and the type of people you want to recruit.
We want to draw in people with an international focus. It is purely on merit
though; you cannot recruit in any other way. The resident labour market
testing would suggest that the skills aren’t here and that is the reason why you
have to bring in people, because they are a critical resource that you can’t
get from the local market.”
Participant, Global Legal Services
In addition, businesses often need foreign nationals in the UK because they help the
businesses develop their client and partner networks across global markets. If a
multinational based in London wants to attract clients or investors from a specific
market, they are more likely to be successful if they have employees who speak the
language and are familiar with the culture.
24
“A lot of our growth is in emerging markets so it is useful for language skills,
cultural awareness, plus we have an entire group called the US group who
only practice the US law (finding somebody who is British but qualified under
US legal system is remote).”
Participant, Global Legal Services
One global bank with headquarters in Asia provided a specific example about how
they were servicing their international clients in London. This bank had recruited
highly skilled financial workers from India because they have a private banking
business in London that looks after non-resident Indians nationals in the UK; they
therefore need staff based in London who can better connect with their clients from
India.
“We need to expand our private banking business in the UK. And one of the
ways we are doing that in the UK is to find non-resident Indians who can take
care of our non-resident Indian clients [based in London] for that part of the
business.”
Participant, Global Bank
A few global companies mentioned that they have lost teams that would have
been based in London to internal competitors in other EU countries because of the
uncertainty around of obtaining a UK visa. There were also a few mentions that
uncertainty around right to settlement may have also contributed to this talent
choosing other EU locations over the UK.
“I think that the biggest adverse impact has been a view worldwide that the
UK is now has a closed quota system. That could be a disincentive for some
very bright individuals taking roles that we cannot fill within the resident labour
market.”
Participant, Global Bank
A few participants mentioned that they sought to build relationships with foreign
firms that did not have UK presence by receiving and hosting trainees seeking to
gain professional experience in the UK. This route is now considerably restricted,
however. These networking opportunities between companies are important as they
provide a way for UK based companies to meet and develop partnerships that may
contribute to increased investment.
There is recognition that certain specialist areas require non-EU / non-EEA skilled
workers. One participant noted their recent need for English-, Kazakh- and Russian-
speaking financial analysts with a strong knowledge and experience in the Russian
oil and gas market. This particular skill set would be challenging to find in the
domestic labour market and this role would help expand an existing London based
team.
25
“Certain specialist business areas require skilled non-EU workers. If those skills
are unavailable, that business will not have the impact on the market, as it
would have done. We have regional specialists and if the recruitment of
these regional specialists, for example from the Middle East, were limited, that
would affect the company’s ability to grow in that region. Or the company
may need to possibly change the role of the London office”
Participant, Global Bank
A few participants reported that there were skills shortages in certain occupations
that could only be filled by non-EU/non-EEA skilled workers. Some of the occupations
mentioned included actuaries and auditors.
All the participants agreed that the key driver behind a global workforce was the
pursuit of global talent, “the brightest, and the best”.
“Locating and recruiting the best talent, wherever they are located is what
drives our recruitment. Even though the UK is our main target for recruiting, we
do not limit ourselves to the UK, as some of the best talent is overseas. In
addition, we often need the language skills as well as qualified lawyers in
different jurisdictions. So if we were not able to employ these people then that
work would have to move overseas.”
Participant, Global Legal Services
There was a strong feeling among businesses that the migration limits reflected that
the Government did not understand their recruitment processes.
Companies advertise posts in the UK before they advertise abroad, not least
because it is a mandatory requirement but because it is more cost-effective to
secure talent locally. Moreover, sometimes the job in question requires specific skills,
such as cultural awareness of foreign countries, which cannot be taught in the UK
education system.
26
A leading global financial institution disclosed that it was considering relocating a
UK-based team to Moscow. This institution was planning to grow their business in
Central Asia, but they were not confident in their ability to base this team in the UK.
This move to Moscow from the UK would cause a loss of jobs for UK nationals in the
team, who would be unable to emigrate to Moscow.
“It is frustrating as the government seems to think that if you don’t have this
whole set of employees that need a work permit, a load of EU nationals will just
be able to come in and take their jobs, but actually they can’t. The business
will suffer.”
Participant, Global Bank
Most participants agreed that there were jobs that could be filled by an up-skilled
and trained resident labour force. However, many participants believe it is the role
of the government to train the national workforce and prepare it to enter a
competitive, and increasingly international, job market. Most of the participants
reported that they already engaged in comprehensive training programs that
contributed to developing the UK labour force.
“The training and up-skilling of UK workers is a long term objective that cannot
be catered for over the course of a year, it is more like a ten year plan”.
Participants also noted that the UK’s changing migration polices will affect how
companies recruit and train their employees. Companies bring trainees to the UK
and then engage these trainees in on-the-job training for up to two years before
they are assigned specific roles and functions. Changing policies will force them to
adjust training programs and the hiring process for these trainees.
“It is now a totally different playing field, we have to give our business partners
training, and they have to know what the implications are of potentially hiring
someone.”
Participant, Global Bank
In 2010 the RLMT increased to four weeks, which delayed the whole process, but
made jobs available for a longer period for resident workers. Under the current RLMT,
businesses are required to advertise positions through the Job Centre Plus (JCP) for
four weeks before they can offer the job to a non-EU/non-EEA worker on a Tier 2 visa.
Participants noted that the RLMT requirement was a good thing and that it was
important for them to recruit talent from the resident labour force. Businesses
27
recognised that the RLMT was implemented to widen employment opportunities in
the UK, and one participant noted that the RLMT has achieved some successes.
“The migration advisory committee (MAC) analysis on Tier 2 (done in 2010) had
evidence that it [the RLMT] worked; 25% of vacancies filled in 2 weeks, 75%
vacancies filled in four weeks.”
Participant, Global Legal Services
Not all types of vacancies have been affected in the same way by this requirement.
For posts where the skills sought are general, the RLMT has often increased the
number of applicants. Where more specialised skills are required, such as specific
linguistic fluency and cultural awareness, then there has not generally been a
benefit to JCP postings. Overall, the RLMTs four week requirement has increased the
overall application process.
Some businesses complained that in the case of certain specialist job roles, the RLMT
slowed the recruitment process with very little chance that applications received will
fit the required skill-set.
One company mentioned that they were currently working directly with JCP to
speed up the job posting process. This direct access to the JCP site is enabling them
to upload job openings faster, thus speeding up their compliance process should
they fail to find a suitable recruit from the resident labour market and then proceed
with a recruit who would need a Tier 1 or Tier 2 visa.
For example under Tier 2 General, the minimum salary is £20,000; for the Tier 2 Intra
Company Transfer – Long term it is £40,000; while the Tier 2 Intra Company Transfer –
Short term it is £24,000 (see Appendix 4 for more details).
Most of the businesses interviewed were larger companies based in London who
pay a salary in excess of the required threshold. A couple of participants were quite
opposed to the idea of increasing salaries to secure visas for non-EU/non-EEA
employees.
“No. We are quite strict with salary guidelines and stick to market guidelines.
We would not consider hiking salary unless it reflected market trends.”
28
Conversely, a small number of companies interviewed admitted to having artificially
inflated a salary offer in order to adhere to the criteria to get a visa; however, these
companies also mentioned that as quotas filled up, the danger was that it would
become a more frequent occurrence.
Several businesses admitted that raising salaries to secure roles had been raised in
senior level meetings and this was a complex issue since it triggered other questions
such as “what do we do about the salary of UK employees in that same wage
band?”
Companies interviewed also reported a lack of clarity over what expenses could be
included in the income threshold calculation rather than the amount itself. This was
related to the need for more clear and accurate information.
“Why can’t the UKBA include an example of how to calculate the income that
can be included for meeting the requirements? For instance, use the example
of a person earning £40,000 a year; this is the accommodation, these are the
other allowances- what can you include, here is an example of what you
should include and put on the CoS [Certificate of Sponsorship].”
Participant, Financial Services
Since companies in London tend to pay higher wages than in other parts of the
country, firms outside London seeking sponsorship will be disadvantaged, as will
companies in sectors in which salaries are generally lower, such as the public sector.
A leading multinational financial services corporation stated that some of their non-
EU/non-EEA skilled workers in Belfast and Derby were on work permits that were on
the borderline in terms of their salary meeting the minimum requirements. These
regional offices are less likely to be able to pay salaries high enough to obtain visas
once the pressure on quotas mounts.
One participant pointed out that the allocation of points as an increasing function
of salary would concentrate global talent geographically in areas of higher
remuneration within the UK. This would result in depriving some areas of the benefits
that have been identified with non-EU/non-EEA workers, especially in filling key
occupations that have shortages in resident labour market.
The difference in regional salaries is not a problem as the caps are under subscribed.
However, once the quotas begin to fill, individuals in lower paid job sectors or in
regional locations will be at a disadvantage even though they may meet the
Standard Occupational Classification (SOC) code19.
Many businesses mentioned that non-EEA citizens who are earning salaries closer to
the minimum thresholds (£20,000 and £24,000) were going to be the worst affected
by these limits. This could potentially deprive the UK of valuable skilled individuals
29
simply because they work in relatively lower paying industries or for smaller firms
located outside London.
“[Employees earning close to the minimum] don’t earn enough to get a Tier 1
independently and are heavily reliant on someone sponsoring them – these
wages are competitive and they could still make a valuable contribution to
the economy.”
A few companies reported concerns about their ability to obtain visas for their
trainees once the quotas begin to fill, since these employees are not in senior
positions and have comparatively lower salaries.
"The only issue we have had with it was when we wanted to bring in someone
from a specialist office from overseas but they had not been employed by
[participant firm] for over 12 months, hence were not eligible for ICT.
Therefore, we were not able to do a transfer even if it was for a week or two.
The system has to be more flexible in these cases - sometimes we have very
specialist needs and need to bring in someone for a very brief period like a
week, but have not been able to do so under the current ICT rules.”
There are strict policy guidelines on grants of leave in the UK for ICTs. However,
project delays and re-scheduling are a reality in business, and under the current
regulations, businesses are sometimes forced to lose key team members before
successful completion of the project.
Companies generally felt that any hypothetical reduction of ICT sponsorships would
be a critical handicap in terms of the UK’s international competitiveness. The direct
response to this would be that businesses would have to rethink their business
strategy in the UK. For example, a global bank reported that approximately 70% of
their non-EU/non-EEA staff in London were ICTs and that any policy changes on ICTs
would significantly affect them to the extent that they would have to reconsider
their presence in London.
There were general concerns about the introduction of limits for ICTs, but the impact
of these was also dependent on the nature of the limits that would be applied.
30
Any cap on ICTs would greatly affect those businesses that use staff on short-term
global assignments, where the concern is around how quickly those firms would
achieve their quotas. Businesses dependent on talent mobility within their global
organisations are more concerned.
One business reported that reduced talent mobility as a result of limits on ICTs would
make it very difficult for the business to continue in London.
The combined effect of the existing migration limits with any limits on ICTs would
contribute to further detracting from the UK’s global competitiveness. Recognising
that ICTs for many firms would not meet the income thresholds for Tier 2 General, this
talent pool would be heavily diminished.
“The London office would be forced to act in a different way. Not only if there
were to be a limit but also if there was a fear and uncertainty of another
change and for the business to keep changing then they might just go for
path B and send their people overseas which might be easier."
Overall, companies were relatively satisfied with the current ICT regulations. The
recurring discussion point was a call to increase the flexibility of ICTs to align them
with the realities of global project management. However, if a limit were imposed on
ICTs then future talent and leadership programmes would be significantly influenced
and some businesses reported that they would have to revise the entire people
strategy in London and the UK.
“Limits to ICTs would impact the business directly. The inability to move talent
within the global business and might lead to decreased reciprocity within
company offices. If our global offices are unable to send employees to London
office, they may not want to take on London based employees.”
31
While businesses reported concerns about reciprocity and restricted mobility at the
company level, the escalation of this to a national level would be unfortunate but
plausible if UK migration limits affected key industries and stakeholders. Reciprocal
action on visas between EU and non-EU/non-EEA has made the headlines in the
past few years20.
There were also concerns about the cooling-off period for ICTs on longer-term
assignments as well. One participant noted that:
“To tell them [ICTs] after 5 years that they have to go home because of the 12
months cooling off period is a bit ludicrous because you bring them over
because they are top talent, business critical, and top performers. What tends
to happen is within the 5 years they are here they are promoted. If we then
have to say to them ‘we cannot keep you here for longer than 5 years, as we
have to send you home for 12 months or someplace else’, this is disruptive to
our internal team.”
ICTs remain business critical and companies had very strong opinions on the need
for Government to leave outside the migration limits. Approximately half of
businesses said that they would seriously consider relocating parts of their businesses
outside the UK if they were unable to bring the ICTs required to the UK.
“In terms of bringing managers from America - if we could not get the
required number of people on internal transfers then it will impede business
growth, which would mean that in order to fulfil that function then we would
have to move the function to a different location.”
32
However, the migration limits will reduce the number of highly skilled candidates
from overseas who could potentially contribute to the prosperity of UK businesses.
This may result in UK businesses losing their edge in the increasingly competitive
global market.
Businesses feel that once the visa quotas begin to reach their limit, regional offices
that pay proportionally lower wages than London offices, will be handicapped. In
the end, this may encourage a north-south division of international talent and overall
skill level.
33
5. The Outlook for London and the UK
This chapter examines how businesses view the prospects for London and the UK
following the changes to Government policy and the introduction of migration limits.
The team built around the skilled migrant worker would require further support staff,
such as administrators and information technology staff, who would be recruited
from the resident labour market. The development of a skilled team in the UK
servicing a global client could then lead to other global clients coming to the UK to
use the services of that team. This is the inward multiplier effect, the creation of
multiple jobs around individuals.
The opposite of the inward multiplier effect is the outward multiplier effect, where
instead of jobs being created in the UK, the UK would lose positions by not being
able to secure the visas of skilled migrant workers wanting to come and work in the
UK.
“There have been instances when a Bank in the City of London has said, they
will not bring employee X into London because it is so difficult, they can
reorganise themselves and send employee X to Zurich instead and they will
base employee X and his department out of Zurich.”
One research participant shared the experience of their global bank, which had lost
an entire team to a division of their company based in Amsterdam because they
were unable to secure the visa for a skilled non-EU/non-EEA team lead. As a result,
the bank decided to relocate the entire desk associated with that team leaders
financial products, from London to Amsterdam. This demonstrates a direct loss of
several UK based jobs and tax revenue because of the inability to secure the visa for
the skilled non-EU/non-EEA employee.
34
The impact of migration policy on perceptions of the UK
The perceived attractiveness of London and the UK is being negatively affected by
the migration policy debate and accompanying headlines around right to settle in
the UK. This developing negative perception extends beyond non-EU/non-EEA
individual workers, to foreign companies based outside the EU/EEA.
For companies in emerging markets such as China, the migration limits are
challenging and conflicting with their existing and future UK investments, in particular
because they see knowledge of their business culture and linguistic skills as key. One
participant noted that:
“China and India and places like that see London as closed for business.”
The review of migration policy and the new migration limits must be placed into the
wider context of perceptions of the broader UK offer. Of course, migration policy
and the migration limits are not the only factors that influence perceptions about
the UK, but they are a high profile consideration.
“The introduction of the quota system when the Government is saying the UK
is open for business is very contradictory. The UK is seeking to attract overseas
investment; however, it is also saying we do not want you to stay here. This is a
challenge of balances.”
Of concern to many businesses is that London’s status as the global business centre
may be eroded under a more restrictive migration policy.
“There has been strong impact on perception. If you talk to someone who is
not aware of migration rules then the perception is that it is very complicated,
messy, and expensive - getting to the UK has become difficult. Therefore, it is
potentially putting people off. It is certainly putting people off who would
come here for work, looking for an employer to sponsor them; they might
prefer to go to the USA or China.”
35
danger migration limits have given a perception that London and the UK are not
open for global business.
In one example, multinational financial services reported that their Asian offices
have proportionally employed a greater number of new recruits this year. The
reasons for this included the growth in emerging markets, lower tax rates but also a
highly accessible visa application process; “it takes under 24 hours to be issued with
a visa in Singapore”. Faster access to visas in Singapore was given as the reason this
company was employing larger numbers staff and growing the Singapore office.
There may also be an effect on individuals, in terms of ease of the visa applications
process.
“I think there will be an impact especially for the graduates and attracting
the brightest and the best to work in the UK. For example, during campus
recruitment if there is a bright individual who is non-EEA deciding between the
UK and the US, then the fact that they can apply for a green card in the US
after 5 years may sway their decision to take the job in USA."
As well as the direct impact on businesses and individuals, the continuing changes in
UK migration policy should also be considered in a wider global context, as
international companies will also be considering other site locations around the
world.
Global businesses do not feel that there is or will be any direct reputational damage
to their own brands because of the migration limits or the UK migration policy. If
businesses were unable to bring people to the UK, they would likely move them to
another location. The inability to secure a visa is not seen as an organisational
problem, but is instead associated with government policy.
Global firms with multiple locations are confident that despite changes to migration
policy and the introduction of migration limits they will still be able to secure the best
and the brightest because they will be able to move talent across locations ,
although they may not settle this talent in the UK.
36
Continued attractiveness of London and the UK
All participants cited the benefits of being located in London and their preference
to have a presence in the UK. London and the UK remain attractive locations for
businesses. However, businesses who depend on the mobility of their global talent
reported contemplating moving some of their existing operations from London if
they encountered significant difficulties.
Those businesses whose recruitment has not yet been affected by the migration
limits reported they had managed the changes to migration policy through
significant investments in in-house and external specialist resources. These businesses
reported that London remained attractive locations for them, as they did not
foresee any problems in managing migration and their access to global talent.
“We have stayed up-to-date, getting updates from our [immigration] law firm.
That is how we know that the system has been under-subscribed, and we
have been told that as long as the applications that we submit until April
meet the points [requirements] then there should not, in theory, be a
problem.”
Participant, Global Legal Services
“If it had turned out that the cap had become a barrier to us or limited us
from recruiting people from overseas or bringing in people from other offices
through internal transfers, then it [relocation from London] would definitely
have been considered since the firm needs to continue and it is an
international firm. So if it could be done overseas then it would be. However,
since there has not been too much of a limitation on whom we can bring it
has not been done yet."
The majority of businesses mentioned that the ease with which they could bring
desired employees into the UK was a point of discussion in strategic meetings aimed
at developing their medium to long term planning. Businesses want to be located in
London and the UK, and decision on business strategy on the future of their
37
operations in London and UK would be based on a variety of issues, including
migration policy.
During the recruitment process most of the businesses reported they adopting blind
recruitment, only asking for Right to Work (RTW) status in the UK after the candidates
had been made an offer of employment.
However, a few businesses reported that they had changed their evaluation of RTW
following the migration limits, and now made asking RTW status a pre-requisite to all
job applications.
Some businesses adopted a more cautious approach and are still evaluating at
what point they should ask candidates about their RTW. This is more challenging for
businesses in Legal Services who sometimes recruit talent up to two years in
advance.
“We are currently looking into at what point should we could ask [applicants]
about their right to work, because even though in no way would it influence
our recruitment as we have the Certificate of Sponsorship, we have to make
sure that we protect the firm. It would be horrendous if we recruited trainees
and were not be able to get a visa for them. In addition, the training contract
is such that it cannot be pushed back year after year because it is a
structured two-year program, where candidates need go through the two
year programme to qualify as a lawyer."
Asking applicants about RTW is a sensitive subject that employers tend to be wary of
due to concern over discrimination. However, current migration policies are forcing
employers to consider RTW earlier on in their decision process.
Overall, the new limits on Tier 1 and Tier 2 visa applications have not pushed
employers to recruit further UK workers because they already pursue UK based talent
in their recruitment. One participant summed the sentiment of most participants:
38
not taken lightly. This further showed the commitment of business to remain in
London and the UK despite the high costs
“For a locally based [UK] employee the most we pay is the recruitment fee
[usually] 25% of the base salary. For everybody else we have to pay the fee
for [migration consultants] so about £600, then we have to add in the airfare,
find them accommodation for the first few months till they find their own
accommodation, [and then] any spousal visas have to be factored in. So the
cost of bringing someone in [to London] and how we structure our
recruitment package is significant versus what we need to do in terms of a
local.”
Under the migration limits, the general perception is that London is no longer open
for business; businesses and skilled workers are considering other global locations. It is
too early to comment on the full impact of the migration limits. However, businesses
do feel that there will be an eventual negative impact on attracting and retaining
the brightest and the best to work in the UK.
Businesses feel that Government’s introduction of a quota and cap system while
claiming that the UK is open for business is contradictory. During this push for
economic growth, the UK is seeking to attract overseas investment but is also seen to
be saying ‘we do not want you to come to the UK’, and following the June 2011
consultation on settlement, ‘we might not want you to stay here’.
With the current under-subscription of the migration limits under Tier 2 General, the
Government may consider a further reduction of visas under this PBS scheme. If
Government proceeds with the logical extension of its migration policy and reduces
the quota again next year, it will only get tougher in the near future for UK based
businesses to recruit and retain global talent, in particular once economic activity
increases. In this era of increased competition for global talent and global
investment, UK policy needs to balance migration policy with the wider economic
needs.
The UK’s migration policy has been based on attracting the brightest and the best
and this has contributed to boosting the UK’s global competitiveness. However,
changes to migration policy may negatively affect whether the ‘brightest and the
best’ want to come to the UK.
39
Appendix 1: New migration limits process
Migrant self-assesses
against points table
Migrant applies for EC using
supporting CoS within 3
months of receipt of CoS
Note: CoS (Certificate of
Migrant applies for Entry Sponsorship)
Clearance within 3
months of receipt of CoS Source: UKBA, Tier 2 of the PBS,
Statement of Intent, Transitional
Measures and Indefinite Leave to
Remain, available
http://www.ukba.homeoffice.gov.u
Entry Clearance Issued Entry Clearance Issued k/sitecontent/documents/aboutus/r
eports/soi-tier2/tier2-soi-transitional-
measures?view=Binary
40
Appendix 2: Global Talent
One of the measures of how a country is perceived by the global workforce is the
Global Talent Index. The index measures indicators that influence the ability of talent
to thrive across 60 countries. Of the top 15 destination countries in 2011, eight were
located within the EU/EEA and seven were located outside the EU/EEA. Country
options for global talent were almost equal within EU/EEA and non-EU countries.
The UK is one of the top 15 destinations for global talent in 2011; however, the UK
ranking is projected to drop two places by 2015, despite an increase in overall score
from 58.20 in 2011 to 59.30 in 2015 (see Table A2.1). This projected fall in ranking is
due to improvements by Canada and by Germany in positioning themselves as
attractive locations for global talent.
Although the UK is projected to increase its overall attractiveness for global talent
score higher in 2015 and, other countries improving their positioning for global talent
as well. There is increased competition for global talent and countries are adopting
policies to attract this talent.
Table A2.1: The Global Talent Index, countries ability to attract global talent – Top 15
in 2011 and 2015
41
Responses to the Global Talent Risk
The World Economic Forum, in collaboration with the Boston Consulting Group
(BCG), interviewed and brought into dialogue more than 100 experts and
practitioners; reviewed more than 300 good practices in the area of talent mobility;
and aggregated the best solutions into universally applicable blueprints to propose
responses to the global talent risk. The responses developed were:
2. Ease migration. The economic downturn and rising unemployment rates have
further soured attitudes toward migrants, with countries reducing quotas, setting
tougher entry requirements, refusing to renew temporary work permits and even
paying workers to go home. Innovative points-based migration systems and a
“migration-friendly” branding by states and companies are necessary to attract
the right talent globally.
3. Foster brain circulation. Brain drain has long been a nagging concern of
developing countries. However, there are strategies that can help turn the brain
drain into a brain gain, as students and professionals come home to apply skills
learned abroad.
7. Extend the pool. Large pools of developed talent are currently under-utilized.
Countries and companies need to establish policies to tap into the skill sets of
women, older professionals, the disadvantaged, and immigrants. Easily available
childcare, flexible work schemes, mentoring and advisory roles, and improved
options for licensing and recognizing credentials represent solutions to barriers
faced by these groups.
Source: World Economic Forum, Global Talent Risk – Seven Responses, available:
http://www.weforum.org/reports/global-talent-risks-report-2011
42
The Global Talent Index and the UK
The Global Talent Index incorporates data analysis of sixty countries, measuring
global talent in 2011, and anticipating future realities in 2015.
The variables used to measure the mobility and relative openness of the labour
market focus not only on the number of people studying outside of their home
country and their language skills, but also on a country’s tendency to hire foreign
nationals to add diversity to its workforce. These characteristics along with openness
to other cultures are crucial to creating and maintaining talent flow:
43
Perhaps the most difficult area to define because of its cultural nuance is a country’s
proclivity to attract talent. In other words, why would anyone want to work there? In
assessing this final pillar of the research, the project team looked at the following
variables:
Source: The Global Talent Index, Heidrick & Struggles International, Inc., available
.http://www.globaltalentindex.com/Resources/gti-map.aspx
The UK is a recognised leader in the fields of creativity and innovation, and is the
sixth largest economy in the world, providing an unrivalled and highly cost effective
environment where global companies thrive21. London is a leading global business
and financial centre and a key attraction for global companies and global talent.
The tenth Global Financial Centres Index (GFCI) published in September 2011,
examined the competitiveness of major financial centres, and identified London as
the top global financial centre; however, there was no significant difference
between the top three centres, London, New York and Hong Kong in their ratings22.
More importantly, while New York and Hong Kong increase their rating (+4 and +11
respectively), London showed a minor decrease of one23.
Of the top 30 financial centres listed in GFCI 10, ten centres demonstrated greatest
improvement in ranking. These were Wellington (+11 positions); Montreal and
Melbourne (+6 positions); Osaka, Seoul, Stockholm and Vancouver (all with an
increase in rank of 5 positions); San Francisco (+4 positions), Washington D.C. and
Munich (+3 positions). Eight of these ten centres are located outside the EU;
Stockholm and Munich were the only financial centre in the EU that showed an
increase in ranking.
It will be imperative for London to expand financial relationships with these growing
centres and this will include the exchange and transfer of global talent.
44
Overall, despite the economic downturn, there is a global talent shortage and
countries who recognise this are adopting policies to attract this talent. One of the
recommended policy responses for businesses and countries is ease migration and
to ensure that the talent is not dissuaded from a location because of public or
private policies.
The Global Talent Index and the Global Financial Centres Index are reporting a
similar trends; the UK is facing competition in its positioning an attractive location for
talent. Even London, ranked the premier global financial centre, is no longer viewed
as significantly different from New York or Hong Kong.
Businesses in the UK and in the City of London require global talent to compete with
and to collaborate internationally. While the migration limits have focussed on
reducing net migration, Government still aims to attract the best brightest to the UK.
Government must recognise that other countries have a similar aims and
Government policies that affect the mobility of and access to global talent needs to
be balanced against this reality.
45
Appendix 3: UKBA allocations of restricted certificates of
sponsorship (CoS) April to October 2011
The data below has been compiled from the UKBA Allocations of restricted
Certificates of Sponsorship (COS) webpage.
COS reclaimed as
not assigned within 3 N/A N/A N/A N/A 282 40 103
months of allocation
Balance of COS
carried over to next 3,181 3,885 4,552 5,205 6,223 7,086 7,821
month
Number of COS
available for
4,681 5,385 6,052 6,705 7,723 8,586 9,321
allocation in the
next month
All valid applications
6th 6th 5th 5th 5th 5th 9th
received by
Monthly allocation
11th 11th 13th 11th 11th 8th 11th
took place on
46
Appendix 4: Summary of Tier 2 General after April 6, 2011
Certificate of
Sponsorship
Tier 2 for continuing
Intra period.
£40,000
3 years Control tests
Company including
Exempt followed by including
Transfer – permitted
2 years. appropriate
Long allowances.
1 year rate. Cannot
Term Staff after extend
leaving beyond 5 This route
the years. does not
UK upon Certificate of lead to
expiry of Sponsorship settlement.
Tier 2 leave for continuing
Intra period.
£24,000
Control tests
Company including
Exempt 1 year only including
Transfer – permitted
appropriate
Short allowances.
rate. Cannot
Term Staff extend
beyond
1 year.
Sources: Tier 2 of the Points Based System: Statement of Intent UKBA, available:
http://www.ukba.homeoffice.gov.uk/sitecontent/documents/aboutus/reports/soi-tier2/tier2-soi-
transitional-measures?view=Binary; and Tier 2 of the Points Based System – Policy Guidance, UKBA,
available: http://www.ukba.homeoffice.gov.uk/sitecontent/applicationforms/pbs/tier2-guidance.pdf
47
Endnotes
1 UKBA Impact Assessment Migration permanent limit (Tier 1 and Tier 2 of the points-
based system): impact assessment, available at
http://www.ukba.homeoffice.gov.uk/sitecontent/documents/policyandlaw/ia/mig
ration-perm-limit-pbs/ Last Updated: 16 March 2011
2 Ibid
3 UKBA, Tier 2 of the Points Based System: Statement of Intent, Transitional Measures
and Indefinite Leave to Remain, February 2011, available
http://www.ukba.homeoffice.gov.uk/sitecontent/documents/aboutus/reports/soi-
tier2/tier2-soi-transitional-measures?view=Binary
4 UKBA, Policy and Law, Employment related settlement, Tier 5 and overseas
domestic workers, available
http://www.ukba.homeoffice.gov.uk/sitecontent/documents/policyandlaw/consult
ations/employment-related-settlement
5 Ibid
6 UKBA, Migration permanent limit (Tier 1 and Tier 2 of the points-based system):
impact assessment, available:
http://www.ukba.homeoffice.gov.uk/sitecontent/documents/policyandlaw/ia/migr
ation-perm-limit-pbs/
7 UKBA, Migration permanent limit (Tier 1 and Tier 2 of the points-based system):
impact assessment, available:
http://www.ukba.homeoffice.gov.uk/sitecontent/documents/policyandlaw/ia/migr
ation-perm-limit-pbs/
10 UKBA, Migration permanent limit (Tier 1 and Tier 2 of the points-based system):
impact assessment, available:
http://www.ukba.homeoffice.gov.uk/sitecontent/documents/policyandlaw/ia/migr
ation-perm-limit-pbs/
11 UKBA, Policy and Law, Employment related settlement, Tier 5 and overseas
domestic workers, available
http://www.ukba.homeoffice.gov.uk/sitecontent/documents/policyandlaw/consult
ations/employment-related-settlement
48
12 UKBA, News and Updates - Immigration limit for Tier 2 (General) of the points-
based system, available:
http://www.ukba.homeoffice.gov.uk/sitecontent/newsfragments/28-intro-limit-for-t2-
pbs
13 Migration Advisory Committee (MAC), Limits on Migration, available:
http://www.ukba.homeoffice.gov.uk/sitecontent/documents/aboutus/workingwithu
s/mac/mac-limits-t1-t2/report.pdf?view=Binary
16 Ibid
17 Ibid
18 Ibid
19 The SOC code refers to the SOC 2000, the classification of occupations in the
United Kingdom into the job- the kind of work performed, and the skill - the
competent performance of the task and duties. More information can be obtained
from the Office for National Statistics website at
http://www.ons.gov.uk/ons/guide-method/classifications/archived-standard-
classifications/standard-occupational-classification-2000/about-soc-2000/index.html
23 Ibid
49