Employers experiencing labour shortages should be able to pay levy to breach immigration quotas

Employers experiencing genuine labour shortages should be able to pay levy to breach proposed immigration quotas ñ Philpott

With both Government and Opposition now arguing for some form of points based system or absolute quota to restrict non-EU immigration, some form of a quota now seems inevitable, according to John Philpott, Chief Economist at the Chartered Institute of Personnel and Development (CIPD). However, any such quota risks causing real problems for employers struggling with genuine labour shortages.

The CIPD remains doubtful that a workable quota system that avoids damaging employers can be put in place. However, if such a limit or quota is to be implemented then, to avoid it harming UK businesses or public services, Dr Philpott argues that the Government should legislate to allow employers the flexibility to breach the quota on payment of a migrant worker levy.

Dr Philpott said:

ìThe Governmentís admission that officials have seriously underestimated the number of foreign nationals working in the UK will undoubtedly intensify the increasingly vigorous public debate on how best to respond to record levels of immigration. But the additional heat generated by a highly sensitive miscalculation of the figures must not be allowed to do damage to employers struggling to fill vacancies in a tight labour market.

ìThe CIPD has previously been sceptical of the merit of an explicit limit or quota on immigrant workers. The ëmanpower planningí required to underpin such a quota is fraught with such difficulty that a quota always runs the risk of being set so high as to be meaningless or so low that it frustrates employers. Indeed, the Governmentís own mechanisms for operating the impending points system are likely to be hampered by the difficulties that beset any efforts to ëfine tuneí policy in this area.

ìHowever, it is clear that public and political concern about the costs associated with immigration at current and projected levels means that some numerical limit is now inevitable, either in the form of a single national annual quota on migrant numbers or a set of occupational or sector sub-quotas. But there are obvious pitfalls to this approach. To avoid individual employers being hamstrung by labour shortages by virtue of needing to recruit after the limit has been reached, any limit or quota should be accompanied by a migrant worker levy that would allow them to hire migrants in excess of the quota.

ìCIPD research has shown that employers hiring migrant workers are doing so to tackle genuine labour shortages, and in only a few cases is the primary motivation a desire to reduce labour costs. A migrant worker levy would inject flexibility into what might otherwise prove an overly-rigid and economically-damaging quota system. It would ensure that employers hiring migrants beyond the quota were doing so to fill genuine labour shortages rather than to simply cut labour costs, provide additional revenue to help meet some of the social infrastructure costs of immigration, and increase public confidence that migration is being managed in a way that maximised the overall benefits.î