Immigration is one of the key issues in the context of the UK’s EU membership referendum, with several politicians advocating a shift away from free movement within the EU toward an Australian points-based system for managing immigration. But would such a system help or hinder the UK economy? Randall Hansen writes that while the system has a mixed record of success in Australia and Canada, it would be unlikely to meet the UK’s economic needs.
UKIP, and Eurosceptics in general, have argued in favour of Australia’s points system as the anchor of a post-EU immigration policy. The appeal is obvious. By associating themselves with Australia’s relatively open immigration policies, they can make the unconvincing claim that they are not opposed to immigration whilst turning their guns on the types of immigrants they really don’t like: East Europeans. Once Britain painlessly leaves the EU it will slam the door on East European immigration and open up to skilled migrants. The strategy may or not be good politics, but it’s definitely bad policy.
The Canadian, then Australian, points system
The points system was first adopted in 1967 not by the Australians but, rather, by the Canadians. The Australians copied it several years later, but managed to secure all the credit (as Canadians excel at flying under the radar, this was perhaps not surprising).
Points systems attempt to attract large numbers of migrants of a particular category by rewarding them for possessing desired attributes. These attributes can be anything: age, past work experience, language competency, education, a job offer, and so on. The different attributes are weighted depending on what the country wants to do, some minimum threshold is chosen, and if an applicant passes the threshold, he or she is admitted. Australia’s ideal migrant is 18-25, English speaking, with a doctorate and several years of work experience. This much is reasonably understood.
What’s the point of the points system?
The system is not designed to match highly educated people with jobs. Skills-based work permits systems do that. It rather has two goals. The first and most important is to bring in massive numbers of young, educated, and English-speaking (or, in the case of Canada, French-speaking) migrants with the aim of increasing population. Canada targets 250,000 migrants per year, and there is general disappointment when that figure is not reached.
The second objective is to increase the overall level of human capital (essentially, higher overall educational levels) on the assumption that higher levels of human capital lead to higher productivity and thus faster economic growth.
In evaluating the appropriateness of the system for Britain, we need to ask two questions:
- does it work for Australia and Canada, and
- would the programme, as it is designed and intended, serve British interests?
The answer to the first is a highly qualified yes; the answer to the second is no.
Australia and Canada have increased their population through migration, but the economic record of migrants has been mixed. Studies by my colleague, Jeffrey Reitz, have shown declining earnings and employment levels among recent cohorts of migrants to Canada, and new migrants frequently report a difficulty finding positions in sectors for which they were trained.
At the same time, the education yardstick is a crude one: a Russian national with a PhD in Russian literature would secure the highest number of points on an education scale, but their chances of securing a job on the back of the degree would be no higher than those of a Canadian with such a degree – which is not high at all.
By contrast, the great advantage of the UK’s current system – which mixes work permits for non-EU nationals with a job offer, intra-company transfers, and the free movement for EU workers – is that migrants who come to Britain come for a job. Indeed, Canada and Australia have moved in the British direction: Australia has abandoned the points system and Canada, while formally retaining it, has moved over to matching immigration to employer demand.
The record on human capital is even more concerning. After almost 50 years of highly skilled migration, the fundamental problem with the Canadian economy is low productivity, which is the same problem that plagues the UK economy (indeed, the two countries compete for the bottom of the productivity growth league tables). Immigration has almost certainly not worsened productivity growth, but it hasn’t improved it much either.
The design, aims, and outcomes of the points system do not serve British interests or meet the challenges of the British economy. The UK does not need immigration to increase its population, as its demographic trajectory is, along with France and Ireland, among the best in Europe.
There is little evidence that a human-capital model would increase UK productivity as it has done little in the case of Canada. And the UK already has an efficient model for dealing with cyclical unemployment: work-permits are not renewed, and EU migrants, whether from Limerick or Lublin, return home.
UK points system
It is often forgotten that the UK had a points system, the Highly Skilled Migrant Programme, from 2003 to 2008. It was a complete flop. Almost no one applied, and the vast majority of non-EU migrants were pulled into London through work permits and intra-company transfers.
The UK’s economy is based on a London-centric service (above all financial) industry, a small and not conspicuously productive manufacturing sector, and a low-wage service economy for everyone else. It needs an immigration policy that brings in high-skilled workers from within and outside the EU to work in London, in the universities, and in other sections of the service sector; a certain number of trained workers for industry; and flexible, low- or semi-skilled labour for its large, low-wage sector.
In other words, the UK needs what it has: EU membership (which provides both skilled and unskilled migrants) and a work permit system that links the permits with educational and/or skills requirements (which addresses any remaining shortages of skilled workers). And that system works well. The most recent econometric studies, published by Christian Dustmann of UCL, show that post-1997 migrants have been the most economically beneficial in Britain’s (admittedly short) immigration history.
The quotas for skilled workers are arguably too low (the Tier ‘2’ quota of 21,700 for 2015 was reached in June), and one can debate the weightings, but that is simply a matter of raising the quota and tinkering with the points, points which the UK already uses to assess candidates for these visas.
A full-blown points system aimed at expanding population and human capital would be wholly inappropriate and those who endorse it are really trying to provide an unconvincing liberal and cosmopolitan gloss to their weak arguments for leaving the EU.
Note: This article was originally published on the The UK in a Changing Europe blog.
Randall Hansen is Professor of Political Science and Director of the Centre for European, Russian & Eurasian Studies, at the Munk School of Global Affairs, University of Toronto.
Have you actually spoken with the eurosceptics and UKIP members that you reference in paragraph one that ” they can make the unconvincing claim that they are not opposed to immigration whilst turning their guns on the types of immigrants they really don’t like: East Europeans.” I guess you did not, being that you generalize all of these people into having one variable that lead to their conclusion(s). It is highly unfair (and academically wrong) to stereotype people.
Is it possible that UK has a huge annual deficit and a huge debt; or perhaps that there is a finite amount of money available (in other words, money from tax revenues, as opposed to borrowed money) for housing, education, healthcare, roads, public transportation, security, etc…; or perhaps that the UK is overly crowded? Did you know that the UK is just over 1/2 the size of California, yet it has almost double the population of California. (Quite dense). If the population gets too big, will the air get dirtier? Will the supply of clean water diminish? Will any trees or forests remain? Will farmland vanish to build homes and roads? Will cities turn into slums? Will homelessness and poverty increase? Or do people merely want answers first as to these questions before the UK increases it commitments. Is it wrong to want acceptable answers first?
As you can see, there are multiple reasons for people to have opinions on one specific issue. So please do not generalize people.
It would appear that the writer has produced this piece based on his own biased opinion, and has failed to address the reality of UKIP’s stance which is not anti immigration at all, in fact UKIP have made it clear that they would prefer to be able to take in migrants with the skills we need such as Indian Doctors something we used to do all the time and Phillipino nurses instead of the flood of unqualified migrants from parts of europe, non eu nations are equally discriminated against, the government have made it next to impossible for the former to migrate here due to the numbers of the eu migrants being more than we need or can cope with. A system that controls the influx and attracts the skill sets we need would be far better than the current ad hoc system biased towards 27 nations. The current system is highly inappropriate and needs to be abandoned.
It’s most certainly news to me (and the rest of the world) that UKIP is not anti-immigrant. However, leaving aside that contention, you seem to be advocating a return to State-controlled and directed labour recruitment policies — that is, the State deciding what jobs foreigners can fill, where the immigrants would come from, and managing the whole recruitment process. That is the basis of the old 1949 ILO labour recruitment Convention, in fact.
The problem with this argument is two-fold. First, it ignores the poor record of management in such labour policies — even in Germany — and the clear fact that the State is not competent to direct the private sector. There are decades of mismanagement across a wide range of countries, leading to mass unfilled vacancies and wage inflation alongside oversupply in other sectors. The minimalist modern state cannot cope with the complex modern world — and in fact, coped badly with it as long ago as the 1960s.
The second issue is that there is, more or less, a common labour market of the European Union. It has some restrictions for non EU citizens, but it is a common market for all Citizens of the Union. The premise of this is that it is the most effective mechanism for balancing supply and demand of labour in the EU — a premise contained in the 1957 Treaty of Rome. Very few EU citizens utitlise their rights, primarily because the difficulty and cost of relocating are very high. The main problem that the UK had, with the East European accessions, was a big mistake to open up the UK to free labour migration before Germany did so. That was simply UK government incompetence, poor research and poor planning.
As for your bizarre comment about non-EU persons being “discriminated against” — yes, that is what citizenship means. EU citizens cannot be discriminated against, others can be, in certain respects. What you are suggesting is merely that the UK should quit the EU, and discriminate against EVERYBODY! Quite how this represents an improvement is beyond any rational argument — unless the intention is actually to promote the extent of discrimination practised within the UK.
Why do you think it is morally acceptable for one of the world’s richest countries, too skinflint to train its own doctors and nurses, to poach these expensively trained professionals from the poor countries that paid to train them?