Publication - Corporate report

Salary thresholds and an 'Australian-style' points-based immigration system: our response

Published: 22 Dec 2019
Directorate:
External Affairs Directorate
Part of:
International
ISBN:
9781839604485

Our response to the Migration Advisory Committee's call for evidence on salary thresholds and an 'Australian-style' points-based immigration system.

86 page PDF

1.6 MB

86 page PDF

1.6 MB

Contents
Salary thresholds and an 'Australian-style' points-based immigration system: our response
Sector-specific positions

86 page PDF

1.6 MB

Sector-specific positions

Health and Social Care

73. In 2018 there was an estimated 16,000 non-UK EU nationals and 10,000 non-EU nationals working in the Health and Social care Sector[20], representing 11.2% and 18.4% of employment respectively. It is widely recognised that the health and social care workforce will be significantly impacted by Brexit and tighter immigration proposals.

Salary Threshold

74. The UK Government’s proposed Minimum Salary Threshold of £30,000 (or the 25th percentile) is not suitable for Scotland’s health and social care occupations.

75. This policy position is indifferent to the fact that many health and social care staff may routinely earn less than £30,000 per annum, including care at home staff, care home and housing support staff, qualified nursing staff, allied health professionals (such as physiotherapists and radiographers) and healthcare scientists (such as cardiologists, neurophysiologists, audiologists and nuclear medicine practitioners).

76. A significant proportion of social care workers will obtain qualifications while in post. However, many health and social care staff with a number of years post-qualification experience may not be earning in excess of £30,000 and the existing threshold ignores the fact that public sector employers, who are subject to national pay guidance and collective bargaining, are unable to unilaterally adjust pay rates in order to attract overseas staff to fill vacancies and skills gaps. The ability of the third and independent sector to adjust salary rates is also heavily restricted. Equally, the (current) minimum salary threshold requirement for permanent residence (£35,800) would exclude many health and social care professionals from ever being able to settle in the UK.

77. Under the current system, for staff starting just above the existing new entrants threshold of £20,800, progression to what will be a £40,100 threshold for settlement in 2024, i.e. within the 5 years that an applicant can remain in the country on a Tier 2 Visa, is unrealistic. This rate of pay progression would be extremely unusual on NHS Scotland (or other public sector) pay scales.

Table 3 – Proportions of healthcare staff earning less than salary and settlement thresholds.

Staff category Proportion of WTE
earning current <£30K
Salary Threshold
Proportion of WTE earning
current <£35.8K
Settlement Threshold
Healthcare Scientists 40.5% 55.1%
Nursing staff 45.5% 77.2%
Physiotherapists 33.5% 52.9%
Radiographers 33.4% 55.7%
Occupational Therapists 35.7% 57.2%
Speech & Language Therapists 27.2% 47.8%

Notes:
Source: ISD national workforce data (WTE) as at 30th June 2019
These calculations are for basic pay (ie. without allowances, awards, bonuses and employer on-costs) using the 2019/20 pay scales.
Nursing staff exclude Midwifery staff.
Radiographers include Diagnostic and Therapeutic Radiographers.

78. There is evidence to suggest that staff earning entry level salaries will often represent the young, mobile elements of the workforce for whom relocation may pose fewer challenges. These prospective staff have the potential to settle and establish careers within health and social care. Restricting the flow of entry level staff negatively impacts on international recruitment initiatives. However, this is caveated by the fact that the social services sector workforce is on average older than would be expected given Scotland’s age profile[21].

79. We would recommend that any points-based system has sufficient flexibility to support new entrants, including providing new entrants reasonable time to progress towards any salary threshold for settlement.

80. We would similarly endorse any approach that awarded points on the basis of multiple factors and as such allowed the immigration system to respond to needs meaningfully across the whole economy. Whilst there is a legitimate interest to recruit younger people, there is also a need to recognise the potential for portfolio careers and longer working age. Age must therefore not be the only factor and variant in a new system.

81. The Health and Social care workforce has an ageing workforce. For example, NHS Scotland has an ageing workforce, and the proportion of staff aged 50 and over has increased from 28.6% to 38.9% in the last 10 years. In Nursing and Midwifery, the median age is 46, and 20% of staff are aged 55 or over.

82. To illustrate the importance of attracting a young workforce, in their most recent report on UK wide registration data the Nursing Midwifery council demonstrate the different age profiles of respondents depending on their origin:

  • Most people who had trained in the UK were aged 51 years and over (80%)
  • Whereas most people who had trained in the EU were aged between 21 and 40 years (72%)
  • Most people who had trained outside of the EU were aged between 41 and 60 years (56%).

83. In the context of the ageing workforce in NHS Scotland and social care, we continue to benefit from the opportunity to attract a younger international workforce. This younger group of EU Nursing and midwifery staff are most likely to be affected by immigration rules changes post-EU exit, including the imposition of a salary cap where one does not currently exist.

84. Under current arrangements the Settlement Threshold remains prohibitively high. This will be a disincentive for migrants investing in local communities, and will also dissuade entrants from working in regional areas with reduced opportunities for pay progression. Whilst many roles within Health and Social Care will be exempt from the threshold, because they feature on the Shortage Occupations List (SOL). Relying upon an occupations presence on the SOL, contributes to uncertainty about future supply, and Health Workforce Planning. For instance for physiotherapists, who do not feature on the current Shortage Occupations List, more than a third would not meet the existing £30,000 threshold, and more than half do not meet the current settlement threshold of £35,800.

85. There remains considerable uncertainty about the future of the SOL in any new points-based system. The Scottish Government’s previous points about increasing the role of devolved administrations in the SOL process remains relevant.

86. We note that the MAC in this commission have also asked whether there should be a separate salary threshold for SOL occupations. The significant current uncertainty about the future role of the SOL itself makes responding to this difficult. The advantages of the SOL in that it removes the need for a Resident Labour Market Test (RLMT) and gives preference if the Tier 2 cap is met (currently at 20,700 places a year). However the UK Government’s White Paper proposes abolishing the need for a RLMT and the cap, and therefore it is not clear what the role of the SOL in a future system would be. This uncertainty removes this safeguard and would have a significant impact upon the health and social care sector.

87. The focus on a salary threshold does not recognise the important social value of many jobs which while they are skilled and crucial within society do not necessarily come with a high salary or qualifications. There is a clear risk that an exclusive focus on salary will stop recruitment into these sectors. The MAC’s own report has accepted that this is likely to have an acute impact on particular sectors of the economy, including social care.

88. While social care, in the context of an immigration system, would not qualify for ‘skilled migration’ routes but is instead regarded as a ‘low-skilled’ occupation, the Scottish Government does not consider social care occupations as low skilled. The UK Government proposals for a ‘skilled migration’ route do not take account of the social value of public sector employment.

89. A migrant’s financial contribution cannot be conflated with the value that individuals bring to Scotland. Migrants to Scotland working in Health and Social Care roles make public contribution, that greatly exceeds their net financial contribution. It is essential that financial information is not the only metric used to measure value within our migration policy. Any points-based system should account for the positive externalities of roles in Health and Social Care, in our rural communities and across Scotland. Given its unique structure, there is a strong case that wages paid to care workers are an inadequate reflection of their contribution to societal welfare.

90. In its report on EEA migration of September 2018 the MAC advised that the salary threshold should remain at £30,000. The stated rationale behind the £30,000 threshold is that it the average level of household income at which taxes exceed benefits is estimated to be about £30,000. Analysis presented by the MAC indicated that an EEA national, aged around 20 and with no dependents, would only need to earn between £10,000 and £15,000 to provide a net fiscal contribution. This is supported by the Scottish Government’s own analysis, which found that on average each additional EU citizen working in Scotland contributes a further £34,400 in GDP.

91. Whilst we welcome proposals to reduce the skills threshold to RQF3+, this will have minimal benefits for this sector under the existing salary threshold. Less than 10% of those working in “caring and personal service” occupations earn £25,000, and none earn more than £30,000. No jobs below graduate level feature on the Shortage Occupations List and the majority of non-graduate roles within NHS Scotland and the social care sector would routinely fall below the existing Salary Threshold of £30,000, particularly for entry level roles.

92. The Scottish Government is also concerned about the absence of alternatives to Tier 2 arrangements for lower paid staff. Existing migration proposals do not provide suitable entry routes for lower paid roles in health and social care. The proposed transitional Short Term Workers Route will not provide a sustainable model to meet the needs of Health and Social Care. Any proposals should take into consideration the benefits of continuity of service for the people who use these vital services. The design of our migration system should promote long term security, and encourage migrants to transition towards settlement.

93. The existing route for new entrants is restrictive. Entrants have to be under 26 or switching from Tier 4. This would need significant expansion to meet the needs of Health and Social Care in Scotland. The reduced salary threshold for new entrants of £20,800 would still exclude individuals entering the UK to work in band 2 or band 3 roles, which include: clinical support workers, healthcare assistants, pharmacy support workers, ambulance drivers, domestics, porters and security officers. A significant proportion of staff working in care homes, care at home and housing support are also likely to be below this threshold.

Points-Based System

94. NHS Scotland Workforce Vacancy Rates in Rural Areas Figure 4 below is taken from an Audit Scotland report in 2017 and clearly illustrates that health boards in remote and rural areas are more likely to experience high vacancy rates in AHP, Consultant and Nursing Vacancy Rates.

95. Significant regional elements are integral to both the Australian and Canadian points-based immigration systems, and we would welcome approaches to the salary threshold and points-based system that recognise Scotland’s distinct needs.

Figure 4 - NHS Scotland Workforce Vacancy Rates in Rural Areas

Figure 4 - NHS Scotland Workforce Vacancy Rates in Rural Areas

Source: Audit Scotland Report “Scotland’s NHS workforce” 2017[22]

Table 4 - NHSScotland – Agenda For Change Job Family - Gross Annual salary (£) - 2019

Job family / Sub-job Family No. of filled posts Median Mean Percentiles
Salary Annual% change Salary Annual% change 25 75
Allied Health Professionals 14,334 33,139 0.5% 34,261 3.0% 26,713 38,046
Paramedics 1,615 33,139 7.5% 32,746 5.3% 30,401 33,139
Physiotherapy 3,699 37,570 6.5% 34,449 2.6% 24,670 39,495
Radiography (Diagnostic & Therapeutic) 2,711 34,220 3.8% 33,492 3.0% 24,670 38,046
Speech & Language Therapy 1,270 38,046 2.8% 36,408 2.8% 28,892 44,688
Occupational Therapy 2,761 33,139 0.5% 33,311 2.9% 24,670 38,046
Nursing & Midwifery 68,826 30,742 2.8% 29,847 3.2% 21,947 34,220
Healthcare Science * 6,828 33,139 -2.7% 32,983 -1.7% 21,947 38,046
Medical & Dental Support 2,485 24,258 2.8% 27,553 2.3% 24,258 30,742
Emergency Services 2,664 24,670 4.5% 24,912 2.9% 21,947 26,713
Administrative Services 29,149 23,229 1.1% 27,215 3.4% 20,015 30,742
Other Therapeutic Services 5,612 38,046 2.8% 40,368 2.6% 30,401 51,883
Optometry 123 39,495 6.7% 40,611 5.1% 34,220 44,688
Clinical Psychology 1,971 45,446 4.5% 47,010 2.3% 34,220 53,291
Pharmacy 3,405 37,570 13.1% 36,871 3.0% 24,670 45,446
Personal & Social Care 1,577 30,742 2.8% 32,086 1.8% 21,947 38,046
Social Work 169 22,152 3.8% 25,319 5.8% 18,383 24,258
Support Services 17,753 18,937 0.5% 20,579 2.9% 18,383 20,015

Notes:
The "No. of filled posts" data is based on the June 2019 NHSScotland workforce data which is the most recent available.
Salary data therefore represents gross full-time annual basic pay and it is not pro-rata'd for part-time staff.
*The annual drop in median and mean salaries for Healthcare Science may be partly as a result of the reclassification of Sterile Services from Support Services to Healthcare Science in December 2018.

96. Pay information set out within Table 4 above indicates that the 25th percentile for NHS Scotland would routinely fall substantially beneath the existing salary threshold of £30,000 for roles almost all existing job families.

97. Similar detailed data on salaries is not readily available for the social service sector, but for social care staff, estimates from stakeholders and employers indicate that with the exception of social workers and nurses working in care service providers, a significant proportion of social care staff earn less than £30,000. A reduced skills threshold would benefit the social services sector (over 22,000 of the care and managerial workforce in social services in Scotland have to gain qualifications at RQF6, while from 2020 the majority of the care workforce will have to gain qualifications to RQF3).

98. Over the next 4 years it is anticipated that demand for health and social care staff will increase. Initial estimates suggest that demand for health care staff will rise by as much as 7,500 whole time equivalents (WTE) and 10,500 WTE for social care staff. With the majority of staff working less than full time hours, the headcount requirement to meet this need will be significantly more. The majority of new jobs in the social care sector are likely to fall below the £30,000 threshold (estimated 85%), and using current average salary ranges for health care staff shows that between 30% and 40% of these roles will earn less than £30,000. We continue to investing in training opportunities to develop our own NHS Scotland workforce. It is essential that we have a migration system with the flexibility to recruit the right people at all levels to help us sustain this growth in the health system.

Summary

  • A simpler and less punitive system would be in the best interests of Health and Social Care within Scotland.
  • Stakeholders from across the Scottish Social Care Sector, have shared their concerns about the Salary Threshold and the Points-based System. These are set out in greater detail within their own independent responses.
  • Doctors, nurses and healthcare professionals from across Scotland, have shared concerns with the Cabinet Secretary for Health and Sport, stating that they can already see the damage that Brexit is inflicting on the NHS. The free movement of people is vital for us to continue to attract dedicated professionals to help deliver health and social care services. We urge the UK Government to revisit the significant shortcomings of their proposed policy approach.

Culture and Tourism

99. Citizens of non-UK EU countries play a highly important part in Scotland’s culture and tourism sectors, with tourism and creative industries forming two of Scotland’s key growth sectors. In 2018, around 11.5% of Scotland’s tourism workforce were non-UK EU nationals.

100. The culture sector is highly varied – in 2018, 7.2% of the Scottish creative industries’ workforce was made up of non-UK EU nationals, but the proportion is much higher in certain sectors. For example, Scotland’s national performing companies have a particularly high proportion, with 38% of Scottish Ballet’s employees non-UK EU nationals.

Table 5 – Employment in Scotland’s National Performing Companies

UK nationals EU nationals Others % of EU nationals
Scottish Chamber Orchestra 22 7 5 21%
RSNO 58 7 6 10%
Scottish Ballet 17 14 6 38%
Scottish Opera 145 6 1 4%
Total 242 34 18 12%

101. Freedom of movement allows workers from EU/EEA countries to move around Scotland and take up different jobs at different times of the year. Culture and tourism stakeholders have indicated that this may help to facilitate the availability of seasonal labour, which is vital to some sectors, particularly tourism.

102. Seasonal labour in the tourism sector is also vital to many remote and rural economies in Scotland, where there is not a sufficient permanent resident population to support the sector. The imposition of visa requirements is likely to make this significantly more difficult to maintain.

103. The imposition of visa requirements may also discourage EU/EEA workers from coming to Scotland both through the increased administrative and cost burden, and through reputational damage. Concerns have been raised by stakeholders that the imposition of visa restrictions on EU/EEA citizens could make Scotland appear less open and welcoming, therefore discouraging vital applicants. Concerns have been raised that the current process for obtaining a visa can be onerous and humiliating, which could exacerbate this further.

104. While the UK Government suggest the culture and tourism sector workforces would be catered for through existing or proposed visa routes other than Tier 2, it is our view that these routes have major flaws or present major obstacles that mean the Tier 2 route could be the main route for much of the non-UK workforce in these sectors.

Salary Threshold

105. The minimum salary requirement of £30,000 is not appropriate for the Scottish culture and tourism sectors.

106. Feedback from culture stakeholders makes very clear that, overall, a £30,000 salary threshold for workers on a Tier 2 visa could be damaging as such a threshold is fundamentally not reflective of salaries in the sector, and would significantly impede access to the skills and talent that the sector relies on.

107. A reliance on non-UK workers is a reflection of the skills requirements of the sector in general. This is an area where many roles are highly specialised and there are a limited number of individuals globally who have the skills required by occupations in the sector. Organisations must therefore compete internationally to access these skills and talent, and imposing such a salary threshold would make this far more difficult.

108. While jobs in this sector are highly specialised, they are not necessarily highly paid. For example, many orchestral musicians earn below £30,000, and stakeholders have been clear that this is common among orchestras, particularly outside of London.[23]

109. Given the limited numbers of individuals with the skills required in sub-sectors such as performing arts, music, computer games and screen, organisations must compete globally to attract individuals with these skills. A restriction of a £30,000 salary threshold would make it far more difficult for these organisations to access the skills and talent that they require, could limit their international competitiveness, and ultimately harm the sector as a whole.

110. Growth sector statistics for 2017 indicate that the tourism sector has by far the lowest median gross pay of all of Scotland’s key growth sectors. The median weekly pay is estimated to be £372.70, or £19,344 per year.[24]

111. This is further supported by the fact that it is likely that a significant proportion of occupations in Scotland’s tourism sector will fall into the occupation groups of ‘Caring, Leisure and Other Service Occupations’, and ‘Sales and Customer Service Occupations’, as defined in the Annual Survey of Hours and Earnings. As the table below demonstrates, wages in these occupation groups are likely to be significantly lower than £30,000. While this will not apply to all occupations in the sector, the prominence of areas like hospitality means it is likely that this will be the case for many.

Table 6 – Annual pay in Occupation Groups associated with Scotland’s Tourism sector

Major Occupation Group Code (Scotland) Median Annual Gross Pay Mean Annual Gross Pay
Caring, Leisure and Other Service Occupations £20,725 £21,850
Sales and Customer Service Occupations £19,411 £21,942

Source: ONS Annual Survey of Hours and Earnings 2018

112. These are sectors where it may, at least in the short-term, not be viable to increase salaries to meet a £30,000 threshold where necessary. For example, the Association of British Orchestras have raised concerns that at a time of reduced public funding, orchestras have been unable to increase salaries to the level required to meet salary thresholds for visas[25].

113. Tourism, as a people centric sector, also benefits from migrant workers’ linguistic abilities – the EU represents 6 of Scotland’s key overseas markets, with workers bringing language skills.

114. It is also worth noting the particular importance of the culture and tourism sectors to Scotland’s economy as a whole – both are key growth sectors, with tourism worth around £4.1 billion in 2017 and the Creative Industries worth around £4.9 billion (GVA at basic prices)[26].

115. Some local economies in Scotland are particularly reliant on the tourism sector, particularly in remote, rural and island areas. For example, in 2018, tourism represented 15% of employment in Argyll and Bute, and 13% in both Perth and Kinross and Highland[27]. Given the extent to which some of these economies are sustained by tourism, there may be a further argument for sectoral or national variation in salary thresholds to ensure that Scotland’s specific needs are met, and Scotland’s culture and tourism sectors can access the workforces they require.

Shortage Occupation List

116. The recent review by the MAC of the Shortage Occupation List (SOL) notes that stakeholders raised significant concerns about losing access to medium and lower-skilled workers if freedom of movement comes to an end. There were reports that the overall availability of workers from the EEA has reduced since the EU referendum in 2016. It was also noted that seasonality in sectors such as hospitality generates a requirement for a flexible workforce which is difficult to access purely from the domestic labour supply[28].

117. It is notable, however, that there are very few occupations associated with the tourism sector currently included on the SOL. Therefore, as it stands, the SOL may be unlikely to address the requirements of the sector.

118. Having a lower salary threshold may be positive for culture and tourism sectors where occupations are included on the list, but this is unlikely to serve these sectors as a whole, or compensate for the ending of free movement of people.

Digital and Technology

119. Scotland is home to a vibrant digital technologies industry with over one thousand companies engaged in a variety of activities from software development and IT services to digital agencies, games development and telecommunications. The digital technologies sector contributes significantly to employment and economic growth in Scotland. It is estimated that the sector contributed £5.2 billion in Gross Value Added (GVA) to the Scottish economy in 2016[29], and more than 100,000 people are currently employed in ICT and digital technologies roles in Scotland[30]. Over half of employers (58%) recruited tech skills in the last 12 months, with high levels of tech skills recruited by financial services sector and tech sector employers when compared to other sectors.[31] An estimated 13,000 new digital/ICT workers are required each year to meet current – and future – demand[32].

120. Many of Scotland's digital technologies companies employ staff from other EU countries, some businesses are owned by EU citizens and EU students studying at Scottish universities are an important source of talent for the industry. Scotland's computer programming and consultancy businesses alone employed 3,000 EU citizens in 2016, which represents 5.8% of all employees in this sub-sector[33].

121. In a survey carried out by ScotlandIS, the trade association for the digital technology industries including software, digital agencies, telecoms and IT services in Scotland, 75% of respondents said they expected a negative, or very negative, impact on their access to skilled staff following Brexit[34].

122. The sector already faces a recruitment challenge. The Digital Economy Business Survey shows that only 26% of firms in Scotland were fully equipped in terms of having the skills to meet their digital technology needs[35], and a report by Ekosgen found 37% of businesses surveyed in Scotland had recruited Digital Technologies skills internationally, with 68% of those reporting Europe to be the top origin of recruits. Over half of those recruiting internationally report doing so to address a specific specialist skill or experience requirement[36].

123. A more restrictive immigration system would increase the existing difficulty in recruiting skilled staff in the sector, further restricting potential for growth.

Salary Thresholds

124. There is an ongoing need in Scotland for higher-level digitally skilled workers – generally SCQF Level 8 and above. The average salary for tech jobs is £36,900, 26% higher than the Scottish average of £29,200. However, this masks a range of salary levels.

Digital Connectivity

125. Data on salary levels is not available at a regional level, telecoms industry cite the commercial sensitivity around this.

126. Whilst Scotland does not have devolved responsibility over telecommunications, the Scottish Government has made a commitment to deliver 100% superfast broadband access across Scotland backed up by the substantial investment of £600 million in the Reaching 100% (R100) programme.

127. It is essential that the telecoms industry has access to a workforce with the range of skills to deliver both commercial and publicly funded digital infrastructure projects in Scotland, particularly highly skilled engineers.

128. Our Digital Scotland Superfast Broadband (DSSB) programme had to take steps to address a shortage of UK-based expertise, securing workers from Poland and Portugal in order to complete infrastructure build. Without access to these workers from other countries, the programme of extending fibre broadband access to over 940,000 premises across Scotland could not have been delivered.

129. Failure to supply the necessary workforce poses a significant risk to the R100 programme which is a vital investment in Scotland’s national infrastructure.

Housing and Communities

130. Scotland has a long and proud manufacturing heritage and manufacturing is seen as a key driver of our future prosperity. Manufacturing covers a diverse range of activities from engineering to textiles and represents over 54% of our international exports at £17.6 billion. [37] Manufacturing products accounted for 48% of business expenditure on research and development (BERD) in 2017 (£594 million).[38]

131. Manufacturing remains a high skills and high wage sector. The sector employed 181,000 people in 2018, accounting for 6.9% of total employment in Scotland[39] and contributed £12.0 billion in Gross Value Added to Scotland's economy in 2017[40].

132. The construction industry is another core sector of the Scottish economy, providing infrastructure to businesses across all sectors. It makes a major contribution to the economy, employing 143,000 in 2018[41] and contributing £7.6 billion in GVA to the Scottish economy in 2017[42].

133. Table 7 below shows the levels of employment in the manufacturing and construction sectors for non-UK EU and non-EU nationals. Many workers from other EU countries in the manufacturing sector are employed in the 'manufacture of food products' industry: 32.4% of employment in that industry is made up of workers from other EU countries, employing 8,000 EU workers, accounting for 5.7% of all EU workers in employment in Scotland.

134. The construction industry would be largely affected by the future immigration proposals set by the UK Government and in context of this report.

Table 7 – Levels of non-UK EU and non-EU workers in manufacturing and construction

EU Non-EU
Sector Level % of all in employment % of all employment in sector Level % of all in employment % of all employment in sector
Manufacturing 17,000 12.2 8.4 3,000 4.7 1.3
Construction 9,000 6.7 4.9 1,000 1.2 0.3

Salary Threshold

135. Of the 143,000 employees in the construction industry (Annual Business Survey, 2018) in Scotland, 42,000 are categorised as being in ‘skilled construction and building trades’. Office of National Statistics (ONS)’s ASHE data for workers categorised as being in ‘skilled construction and building trades’ in Scotland includes:

  • Steel erectors (RQF 3)
  • Bricklayers and masons (RQF 3/Lower Skilled)
  • Roofers, roof tilers and slaters (RQF 3)
  • Plumbers and heating and ventilating engineers (RQF 3)
  • Carpenters and joiners (Lower Skilled)
  • Glaziers, window fabricators and fitters (Lower Skilled)
  • Plasterers (Lower Skilled)
  • Floorers and wall tilers (Lower Skilled)
  • Painters and decorators (Lower Skilled)
  • Supervisors (Lower Skilled)

136. The 25th percentile annual gross pay for a worker in the ‘skilled construction and building trades’ was £22,700 in 2018, while the median annual gross pay was £27,400.

137. Thus only 30% of workers categorised as being in ‘skilled construction and building trades’ earned at least £30,000.

138. Data for the UK similarly shows a worker employed in ‘skilled construction and building trades’ would have to be in the 70th percentile to earn at least £30,000. UK-level data has a more detailed breakdown of salaries for each of the above occupations, and shoes that for the RQF 3 level occupations within this category, workers would need to be in at least the 60th percentile to earn a minimum of £30,000.

139. This evidence would suggest that a minimum salary of £30,000 could significantly restrict the ability of Scottish construction firms to recruit construction workers at RQF level 3 or above.

Regional Variation

140. While there is not a significant degree of variation between the UK and Scotland, there is noticeable regional variation across the UK. For example, the median annual gross pay for a worker in the ‘skilled construction and building trades’ category is £35.9K in London, compared to £27.4K in Scotland.

141. This supports the view that a salary threshold of £30,000 would not be appropriate for Scotland.

142. Evidence from the Construction Industry Training Board (CITB) shows that in 2018/19, bricklayers, labourers/general operatives and carpenter/joiners are the top three occupations amongst construction workers in Scotland. This reflects the profile across the UK, although there are fewer site managers within Scotland. There has been an increase in the proportion of labourers/general operatives since 2015 (from 21% in 2015 to 27% in 2018/19) and these workers form a higher proportion of the Scottish workforce than across the UK.

Financial Services

143. Scotland is internationally recognised as the most important UK financial centre outside London and the South East, with a breadth of services including global custody, asset servicing, banking, investment management, corporate finance, general/life assurance and pensions.

144. The sector’s international reputation is based on the skills of their workforce, boosted by access to the best international talent. For the sector to maintain its reputation it must be able to continue to attract talented individuals with the expertise to support both strong established businesses and the new opportunities emerging in fintech.

145. Financial services remains a vital contributor to the overall success of the economy of Scotland as a whole. This is due not only to its importance in terms of employment and direct contribution to output, but also because of the impact the financial sector has on economic growth.

146. Scotland's Financial Services industry contributed 6.6% of Scotland's Gross Value Added in 2017[43]. Out of the 12 UK regions and nations, Scotland ranked second on this measure in 2017. It employed 83,000 people in 2017[44].

147. In 2017 (according to APS figures), 5.9% of employment in the Banking, Finance and Insurance sector was made up of workers from other EU countries. The sector employed 24,000 EU citizens, accounting for 17.9% of all EU citizens in employment in Scotland[45].

148. The Financial Services Skills Investment Plan[46] notes that employment in the financial services sector in Scotland is expected to grow in the period to 2022. Driven partly by globalisation and technological advancements, there is a long-term trend towards higher level skills and qualifications in the industry, which is set to continue. 47,500 job opportunities are expected in the period to 2022 through a combination of expansion and replacing those who have left the sector; 62% of those roles are expected to be at managerial, professional and associate professional level.

149. The Skills Investment Plan notes that the financial services sector has a higher proportion of workers in managerial, professional and technical roles than the Scottish average - 52% in financial services compared to 41% in Scotland as a whole. The restructuring of the financial services sector since the financial crisis has led to a requirement for more individuals in highly skilled roles.

Scotland’s Rural Economy

150. Rural areas are home to one fifth of Scotland’s population[47]. The importance of migration in meeting Scotland's demographic and economic needs is felt in particular in our rural communities, where although numbers may be small compared to large urban concentrations, the positive contribution made by EU workers, and their families, can be especially significant.

151. Approximately one third of Scotland's registered small and medium-sized enterprises are based in rural areas, with some 51,000 businesses operating in a diverse range of sectors including agriculture and forestry, tourism, the manufacture of high-tech niche products and creative services[48]. Many are reliant on straightforward access to a workforce that includes workers from other EU countries, in order to meet their current and future labour needs and would be disproportionately disadvantaged by any restrictions which meant they were unable to hire the labour that they needed.

152. Low unemployment in rural areas mean workers often need to be sourced from out with the local area, driving the need for migrant workers. Scotland's unemployment rate is 4.1% but this varies significantly across Scotland: ranging from 2.1% in the Orkney Islands and 2.2% in Shetland to 6.4% in Dundee.

153. The impact of low unemployment is disproportionately felt on producers and industries primarily based in rural areas including agriculture, and food and drink. Data from the Federation of Small Businesses found that 1 in 4 (26%) of small businesses in Scotland employ EU citizens, rising significantly in rural areas, with 41% of small businesses in the Highlands and Islands employing EU citizens[49].

154. Some of the sectors in rural areas most reliant on non-UK workers include horticulture, dairy farming, fisheries and meat processing, often in casual and seasonal employment. On the 1 June 2018, there were 66,600 people working on agricultural holdings across Scotland. Worker-occupiers and their spouses made up 56%% of the total workforce; regular staff accounted for 31% and casual and seasonal workers 12%[50].

155. The section below sets out more evidence on the contribution of workers from other EU countries to primary sector rural industries, which employ more people in remote rural (17%) and accessible rural (12%) areas than in the rest of Scotland (0.4%)[51].

156. Many roles within these sectors are below the skill level required to obtain a Points-based System Tier 2 visa to work in the UK and are often seasonal. Around 9,300 seasonal workers were engaged in Scottish agriculture in 2017[52], particularly concentrated in fruit production. This sector has been an important source of growth within Scottish agriculture in recent years; with the value of its output growing to almost £140 million in 2017, and the volume of production more than tripled since 2003.

157. Providing comprehensive data on the contribution of seasonal workers from other EU countries to the Scottish agriculture sector is challenging, in particular given the short-term nature of their employment which means such workers are often absent from official statistics.

Horticulture

158. The Expert Advisory Group on Population and Migration analysed the impact of a £30,000 threshold by local authority area and found that remote and rural areas would find it very difficult to attract any migrants with the imposition of such a salary threshold. Regionally uneven population change represents an additional challenge. In Scotland while in-migration to rural areas has been less significant than to large cities, such mobility has helped to stabilise and even rejuvenate the local population age structure in many areas. It is important to note that this rural depopulation is a result of a legacy of out-migration. Reducing in-migration to those areas will thus have a significant negative impact. In rural communities small numbers of migrants can have a significant impact.

159. One of the sectors most heavily reliant on seasonal EU labour is horticulture. Taken together, horticulture and the potato industry account for £530 million of output in 2017. As above, the soft fruit sector in particular has grown across the UK and in Scotland.

160. The soft fruit and vegetable sectors are particularly reliant on seasonal migrant labour, with the vast majority of workers in the sector coming from overseas, and only a very small proportion (often only the business proprietors) who are permanent British workers. It is estimated that up to 22,000 non-UK seasonal workers are employed on Scottish farms every year, the majority of whom come from other EU countries[53]. 6,700 seasonal workers are needed annually in Scotland’s soft fruits sector alone.

161. Many growers in the soft fruit industry in Scotland have expressed serious concerns about the proposed limitations on easy access to seasonal labour will have on their businesses, and indeed are already facing significant labour shortages, with 48% indicating their difficulty to harvest due to labour shortages[54]. The tight timeframes associated with the harvesting of fresh food have led some to highlight the possibility of fruit going unpicked and 'rotting in the field'.

162. The evidence suggests that the need for labour could not be addressed by recruitment of local people alone, not least given the low unemployment that characterises rural areas.

163. Without a “lower-skilled” migrant route, the industry will be prevented access to reliable, seasonal labour. This will have a very significant and detrimental effect, reducing the size of the industry and reducing domestic production in favour of imports. Given the demand across Europe for seasonal agricultural workers, there is a risk that the UK Government’s approach is seen as unwelcoming.

Dairy farming

164. The picture is similar in the Scottish dairy sector. According to the Royal Association of British Dairy Farmers (RABDF) migrant survey, carried out in 2016, 56% had recruited staff from outside the UK. The overwhelming majority of farmers (93%) said that overall, the use of EU labour had been a successful option for their farm. This was an increase in the number of respondents recruiting overseas workers compared to the 2014 survey, when 32% of respondents had recruited from outside the UK. Migrant workers were not only recruited due to the insufficient levels of UK labour, also but because of their higher skill and qualification level.[55] Half of the overseas workers employed by respondents in 2016 were highly skilled or mainly highly skilled in dairy.

Meat processing

165. The red meat supply chain in Scotland generates an annual output of some £2.4 billion Gross Value Added, and employs more than 33,000 people, with migrant labour playing a key role in the sector[56]. Scottish abattoirs produce around 170,000 tonnes of beef, 26,500 tonnes of sheep meat and 25,000 tonnes of pig meat annually.

166. The role of non-UK labour is of fundamental importance in the slaughter and processing sector, including in veterinary inspection. According to Food Standards Scotland, across the UK 75% of abattoir vets are from other EU countries[57], and as abattoirs are unable to operate without a vet the contribution made by those roles to the meat processing industry in Scotland cannot be overstated.

167. This level is even higher in Scotland: Food Standards Scotland report that 95% of vets are EU nationals, and 45% of vets in the Government Veterinary service in Scotland non-UK EU nationals[58]. Any future shortage of vets would jeopardise the health and welfare of Scotland’s lifestock.

168. In a survey carried out amongst members of the Scottish Association of Meat Wholesalers, 52% of the unskilled workforce, 44% of the skilled workforce and 16% of supervisory and management staff were non-UK nationals.

169. As with many sectors in the rural economy, recruiting the necessary labour from the local area is challenging, with industry citing both a lack of suitably skilled local labour, particularly in butchery, and many roles perceived as undesirable by potential workers (due, for example, to shift-working and unsocial hours, the work being physically demanding and a work environment that includes working in chills or areas kept cool for food safety reasons, and a need to wear specialist personal safety equipment)[59]. Low unemployment in rural areas associated with meat processing is again another factor limiting the local labour supply.

Sea Fisheries, Aquaculture and Seafood Processing

170. Around 15,000 people were employed in sea fisheries, aquaculture and seafood processing in Scotland in 2014, generating £952 million Gross Value Added in the same year.

171. There are around 230 fish processors in Scotland, employing approximately 7,000 people, the majority in shellfish processing. The processing industry is concentrated in the Grampian region, which makes up 51% of all of the processing units and provides 62% of Scottish processing employment[60].

172. Dependency on non-UK nationals is higher in Scotland than the rest of the UK with case study analysis of Scotland's large processors estimating 58% of their workforce are EEA nationals[61] versus estimates of 46% of the UK seafood processing workforce coming from other EEA countries[62]. In some regions in Scotland this dependency is even higher, for example it is estimated that 70% of all staff in seafood processing in Grampian are non-UK nationals. Mixed species processing factories had the highest dependence on EEA workers, who represented 64% of those employed in the businesses. This survey focused on large processors only[63].

173. The sea fisheries industry is also highly dependent on overseas labour. A 2015 survey[64] from 222 vessels, representing 15% of the Scottish fleet, 71.9% of the crews came from the UK, 8.1% from EEA countries, and 19.3% from non- EEA countries. Of those reporting EEA nationality, most came from six countries - Ireland, Latvia, Lithuania, Poland, Romania and Spain. Crews from non- EEA countries came from four countries - Philippines, Ghana, Sri-Lanka and Belarus[65].

174. Most of the surveyed EEA and non- EEA crews worked on Scottish vessels as engineers (charged with the running of the vessel and its equipment) and deckhands (working on the deck with the fishing gear and clearing and sorting catch)[66].

175. Both seafood processors and sea fishing businesses have told us about the challenges of recruiting UK nationals to work in the sector. The low unemployment in many of the rural areas where seafood processing and sea fishing posts are based also contributes to the limited pool of available labour. Many business owners in both sectors have cited potential business failure if overseas labour could not be accessed. This was especially the case in sea fisheries. A few processors have suggested that there is some potential to shift to more technical solutions (more automation and use of robots) but this would require considerable lead in time and investment[67].

Salary Threshold

176. Stakeholders in the agriculture sector oppose the concept of a salary threshold. Without a lower-paid, lower-skilled route for workers, agriculture and food manufacturing industries are likely to be significantly impacted, and business will be unable to maintain the current provision of food to UK consumers.

177. The proposals would be particularly disruptive for rural and remote areas of Scotland, as seasonal and temporary programmes would prohibit longer-term settlement of immigrants working in key sectors.

Points-based System

178. For the vast majority of roles within this sector, including those that can attract a salary of over £30,000, academic qualifications are not a prerequisite. It is important therefore that any Points-based System does not prescribe points to individuals based solely on academic qualifications. A pragmatic solution might be to apportion points for job roles within these sectors where the kind of tasks needing to be performed can be defined on the basis of ‘manual’ or ‘technical’ skills.

Logistics and Passenger Services

179. The logistics sector employs approximately 2.5 million people across the UK. It is estimated that 11% of these are filled by EU nationals including 60,000 HGV drivers and 120,000 warehouse operatives.

180. There are already issues identified by stakeholders around the availability of skilled labour in the logistics sector, with a particular concern around recruiting qualified HGV Drivers where industry estimates that there will be a UK-wide shortage of between 35,000 to 60,000 drivers by 2020.

181. Existing skilled labour shortages are likely to be exacerbated by the proposals in the UK’s Future Immigration White Paper. For example, the logistics sector typically has a higher age demographic with the majority of UK HGV drivers aged 45 or over (approximately 99% of UK drivers are aged over 25). In comparison, the percentage of EU nationals working within the industry aged over 45 is significantly lower, and so a reduction in this part of the workforce could disproportionately increase labour shortages. Also, any proposals under the potential future salaries threshold could adversely affect the ability for EU workers to work in the UK logistics sector as the majority of posts available would not meet this threshold i.e. are less than £30,000 per annum.

182. There are also concerns regarding other essential occupations across the wider logistics chain such as fork lift drivers, warehouse staff, mechanics, as they also currently have a high proportion of EU nationals working in these roles, where the majority of salaries are unlikely to meet the threshold. Detailed in the matrix below as an approximate breakdown of EU nationals working within a number of areas across the wider logistics sector.

Figure 5 – Levels of EU Nationals Employed in the Logistics Sector in Scotland

Position Total Number of EU Nationals Percentage of Total Workforce
LGV Drivers 42,000 12%
Van Drivers 29,000 7%
Fork-lift Truck Driver 23,000 26%
Warehouse workers (non-managerial) 91,000 19%

Source: Repgraph analysis of ONS Labour Force Survey for Q2 2018

183. A number of other concerns have been raised by the Freight Transport Association, these include:

  • 90% of logistics jobs are classed as lower skilled and therefore would not meet the salary threshold;
  • 88% of logistics jobs have a salary lower than the £30,000 threshold under the proposals by the UK Government e.g. the average salary for a warehouse operative and forklift driver is £21,000 and HGV Driver is £28,000; and
  • Concerns regarding frontier workers within the industry; for example many touring hauliers employ EU nationals that don’t live in the EU, they work under a UK contract and come to the UK to collect the HGV then travel around Europe for several months. There is a question mark over whether this practice can continue.

184. Similar issues to the logistics sector were raised in regards to the bus passenger services. Again there are concerns about the impact of a high salary threshold but these services are crucial, particularly in remote and rural communities.

Scotland’s Public Services

185. Public services and those who work in them are vital to the success of our economy and our society. Across the public sector EU citizens and migrants from outside the EU make a vital contribution, frequently filling skilled vacancies in hard-to-recruit specialisms and geographical areas. There are 16,000 EU nationals in employment in the public sector, which is just over 1 in 10 (12.1%) of all EU nationals in employment[68].

186. The Employer Skills Survey 2017 highlighted that 3% of the public sector workforce are EU nationals and 15% of establishments employ at least one EU national. Although measures are being taken in many areas to increase domestic routes into these sectors, EU citizens continue to play an important role[69].

187. The Scottish Government's Public Sector Pay Policy for 2019-20 directly applies to just under 40,000 full time equivalent employees in 45 public bodies, around 6% of the Scottish public sector workforce. The policy also acts as a benchmark for all major public sector workforce groups across Scotland including NHS Scotland, fire-fighters and police officers, teachers and further education workers.

188. The 2019-20 pay policy set a 3% basic pay increase for those earning below £36,500 pay threshold. This covers around 70% of public sector employees covered by the policy. The policy also encourages employers to award a £750 underpin for those earning £25,000 which is around 30% of employees directly covered by the pay policy. Only around 50% of employees would be within a £30,000 threshold.

Salary Levels

189. The average base salary for all bodies covered by the pay policy is £34,090. However, average salaries for individual bodies range from £22,371 to £59,571 reflecting the different functions and roles in individual organisations, ranging from security staff to specialist analysts.

190. Some employers have indicated that they have difficulty in recruiting to specialist roles namely finance and IT due to lack of skilled employees in the market. Perhaps thought could be given to how a points-based immigration system could highlight specialist skills.

Primary and secondary education

191. The Scottish Government and the Convention of Scottish Local Authorities (COSLA) have previously submitted evidence to the MAC highlighting the challenges in recruiting teachers in Scotland. There are particular challenges in recruiting teachers to remote and rural areas.

192. The recruitment and deployment of teachers is the responsibility of local authorities in Scotland, who have the statutory duty for education expenditure. Providing accurate data on the numbers of teachers from other EU countries working in Scotland is difficult: while there are over 1000 teachers (523 EU) registered to teach in Scotland from EU or non-EU countries, we cannot identify how many of them are actually in post in Scotland.

193. Furthermore, current EU rules make it easier from teachers from other EU countries to work here - EU Directive 2005/36/ EC on the Mutual Recognition of Professional Qualifications allows for the straightforward registration of teachers qualified and registered in another European country. This Directive will no longer apply on withdrawal from the EU. The Scottish Government will however ensure that EU qualified teachers can continue to practice in Scotland post-exit from the EU.

194. Despite measures to increase the number of teachers from within Scotland, the sector faces significant challenges, which will be exacerbated by immigration changes. These serious ramifications on filling teacher posts would have a negative impact on the learning and teaching for all our young people and seriously impede our ambitions for closing the attainment gap and achieving excellence and equity in Scotland’s schools.

Salary Threshold

195. As of 1 April 2019 the starting salary for teachers in Scotland, who meet the GTCS Standard for Full Registration is £32,043. Therefore the £30,000 threshold would not normally be difficult to meet. However, teaching has a number of women workers within the profession. The failure of the salary threshold to recognise the reality of part-time working and the potential discriminatory impact of this on a profession which has a large number of women in the workforce must be addressed.

196. Further, should teachers from outside Scotland be required to undertake any element of probation period in order to achieve the full standard for registration the salary for probationary teachers is £26,697. A threshold of £30,000 may therefore be prohibitive.

Higher education

197. Scotland's higher education sector is home to 4 of the world's top 200 universities and a total of 12 in the Times Higher Education World University rankings[70]. Universities Scotland estimate that the sector generates around £7 billion GVA to the Scottish economy every year[71]. Scotland's 18 higher education institutions employ 48,330 staff directly[72].

198. In 2017/18 EU citizens accounted for 13% of all staff in Scottish higher education institutions (6,500 staff members), rising to 20% (4,570) of academic staff and 27% (1,685) of research-only contracted staff[73]. There are 14,940 EU domiciled undergraduates at Scottish Higher Education Institutions. EU domiciled students accounted for 16% of the postgraduate research students in Scotland[74]. In 2016/17, more than 2,500 students from Scottish institutions benefitted from the Erasmus+ programme for study or work[75].

199. Staff from the across the EU and beyond add to the quality and diversity of the research base and are crucial to the research undertaken in laboratories. Access to the widest pool of talent from across Europe, attracted by quality research, has helped to strengthen the quality and impact of our research and international reputation.

Salary Threshold

200. Russell Group analysis of HESA data shows that across all UK Government universities, 20% of staff are on wages less than £25,000[76].

201. However, this is subject to significant regional variation: The Russell Group estimate that 26% of staff across all Scottish Universities earn less than £25,000[77].

202. We fundamentally disagree with the restriction of movement for researcher mobility and exchange with the EU. Inflows and outflows of international talent and investment are vital in supporting Scotland’s position as a world learning research-intensive nation. Any reduction in freedom of movement with the EU compared to the current arrangements, including increased bureaucracy and costs for researchers, is likely to damage Scotland’s dynamic, outward-looking and globally connected research base. Talent is not confined to established researchers and it is vital that new visa arrangements make adequate provision for the pipeline of younger global research talent.

203. It is crucial that international talent, including that from the EU, can be both retained and attracted. Any future immigration system must allow for researchers to easily transition between roles, to move easily from one visa category to another, or from one UK employer to another (sponsorship routes), without unnecessary process.

204. Additional costs must not be loaded onto EU researchers or their families. Adequate provisions on being able to receive dependents of researchers must be properly established within the system.

205. Many researchers are globally mobile and need to be able to move freely in order to collaborate with colleagues elsewhere. There should be no assumption within the visa system that the primary aim of incoming researchers is to reside permanently in the UK. Many will intend to be here for shorter or longer stays, with the intention to return home or to move elsewhere after a period, although some may wish to stay. Any UK visa system therefore needs to retain sufficient flexibility to support researchers’ needs.

Early Learning and Childcare

206. The Early Learning and Childcare (ELC) sector is expanding rapidly in Scotland with the introduction of policy to increase the provision of funded early learning and childcare from 600 to 1,140 hours per year by 2020. Around 8,500 additional workers are required to meet the needs of expansion. There is an imperative therefore to ensure recruitment of skilled and qualified staff is as simple as possible for ELC employers.

207. This led us to request ELC to be included on the Scottish Shortage Occupation List, a request which was not granted.

208. Another challenge is the fact that 6.8% of the current ELC workforce are non-UK EU nationals, which represents the second highest proportion in the social care sector[128]. The uncertainties around Brexit could have significant consequences for those already part of the workforce, but also for the potential pool of candidates who may wish to work in ELC and live in Scotland.

209. The ELC workforce is registered with the Scottish Social Services Council (SSSC) under three categories of worker. Those roles and the relevant qualifications required to undertake them are:

  • Support Worker:
    • NC in Early Education and Childcare at SCQF Level 6 (RQF Level 3)
    • SVQ Social Service (Children and Young People) at SCQF Level 6 (RQF level 3)
  • Practitioner:
    • HNC Childhood Practice at SCQF Level 7 (RQF level 4)
    • SVQ Social Services Children and Young People at SCQF Level 7 (RQF level 4)
  • Lead Practitioner/Manager:
    • BA Childhood Practice – (RQF level 7)

Salary threshold

210. The review of the Scottish SOL this year did not include ELC workers. We do not have exception then, from the tier 2 requirements that inclusion on the SOL would bring.

211. The £30,000 would not suit the needs of the ELC sector.

212. If there was to be a salary threshold, the sector would instead support the consideration to lower the threshold to the minimum/living wage. This would allow many employers in the sector, who often pay the minimum or living wage, an additional pool of potential candidates to recruit from. The failure to acknowledge the impact of part-time working is also a key issue for this sector. The salary threshold should be adjusted where an individual is working part-time.

213. We support the change in approach of this commission to consider roles from RQF 3 and above, which thus includes the ELC workforce. However, there is a large variation in the salaries paid across the public, private and third sectors in ELC. Again, with many employers paying minimum/living wage, setting the salary threshold at this level would be preferable and allow every part of the sector a further route to recruiting additional staff.

214. Should salary thresholds remain, the ELC sector would benefit from a wide range of flexibility around these. Regional variation might allow thresholds to be set which would benefit, for example, rural and remote areas across Scotland. However, our view is that approaches that are designed to encourage and facilitate migration to Scotland, through tailored migration policies, are more likely to be successful.


Contact

Email: Mairi.Cameron@gov.scot