Should India have influence over UK immigration policy?

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The UK government is going to offer India a say in its new immigration policy, according to a Guardian report.

According to the report a Downing Street source said the prime minister was keen to offer reassurances to India. "We want to work with India and other countries to ensure that high-skilled people can still come to Britain," the source said. "We are going to talk to these countries about how to implement the cap."

Has David Cameron cottoned on to the fact that Indian workers play an important role in providing services to UK businesses or is he just pandering to one of the world's fastest growing economies.

In the lead up to the election the Tories pledged to cap the number of work permits given to non EU citizens. This is a guaranteed vote winner as thousands of unemployed UK citizens feel they are being overlooked.

At the time shadow immigration minister Damian Green said: "It seems extraordinary that when British workers can't find jobs we are bringing foreign workers from halfway round the world. This is another sign that Gordon Brown's 'British jobs for British workers' was a meaningless sound bite," said Green. What was that last bit Damian?

The IT sector is the biggest contributor to Indian Labour immigration to the UK. Indian IT workers make up a vast amount of immigrant labour in the UK It seems that the Indian authorities are making it clear to the UK government that it does not approve of a cap on the number of work permits granted.

Indian IT companies have become critical components of IT departments of the UK's biggest companies.

Many IT workers that contact me are not against Indian workers being given permits but do think it is unfair that these workers are paid less. This makes UK workers uncompetitive.
Cameron wants closer ties with India because he knows its economy will continue to grow and it is a massive potential market for UK goods and services.
It seems he is prepared to compromise on a major election promise.

For the figures for labour immigration to the UK over the last decade see a recent blog I posted.

14 Comments

I don't understand India. What sane country actively fights for its brightest and best people to leave?

The UK spends £300million on aid to India, much of it going of health projects, and UK doctors volunteer to go out and help with medical care for the poor. But India wants to send its doctors to the UK.

Surely India should be pleased that the UK is cutting back on stealing the very people India needs to grow.

'Many IT workers that contact me are not against Indian workers being given permits but do think it is unfair that these workers are paid less. This makes UK workers uncompetitive.'

Now you now how working-class people feel about unlimited immigration.

BTW: any idea what the average wage differential is between a UK IT worker and an Indian worker coming in to do the same job?

ArgieBee, it is very simple. People working in IT or doctors are not as highly skills as claimed. They are not real scientist. There are so many of them there, it is doesn't really matter if a few of them leave. Also these people play a very important role in out sourcing jobs to that country. Also these IT professionals come to UK on a project ranging from 1 months to 3 years, leave economically and save a lot of money. They spend this money on a new car, or home when they return, boosting internal economy in India.

This is why India is asking UK to allow more people from India.

Someone, yes, remittances are very important to India. I think they were worth over $50 billion in 2008. So they help the Indian economy at the expense of the target country.

If any company wants to bring over any worker from overseas, surely it make sense to check if the skills are already available in UK.

Additionally, a minimum salary e.g 40K a year, paid in the UK should be conditions before a permit is awarded. Any salary should attract the same level of taxation, that a UK worker would pay.

Surely companies that use ICT's cannot object to the above.

Seymore

"They spend this money on a new car, or home when they return, boosting internal economy in India."

Why should we encourage this? Little or no tax is paid on that money in the UK, especially if the Indian worker was onshored via the ICT scheme, and these workers contribute little to the local economy. Meanwhile, they replace a UK-based worker, who is unable to contribute to the UK economy and ends up having to claim benefits, not just now but quite possible for the rest of their lives.

Any country that can afford its own space programme does not need our charity.

"any idea what the average wage differential is between a UK IT worker and an Indian worker coming in to do the same job?"

The main route into the UK for Indian IT staff is not via the controlled work permit/visa system, but via the uncontrolled intra company transfer (ICT) scheme, where there is no real check on experience/qualifications and certainly no control on salary rates etc.

The main traffickers of ICT workers are the major consultancies who have offices in India from which to transfer these staff. So when you are comparing costs, it's worth bearing in mind how much the consultancies charge for these generally inexperienced staff on the UK market e.g. on public sector projects the current charge-out rate for a developer seems to be £500+ per day.

So when the consultancy has to fill a role like this on a client's project, they have several choices:

1. Hire a UK-based contractor at e.g. £300-350 per day for an experienced developer, leaving them with a gross margin of £150-200 per day or 30-40%.

2. Hire a UK-based employee on an annual salary of e.g. £35-40K or so, which would probably equate to around £200-250 per day, allowing for NI/taxes etc etc, leaving a margin of £250-300 or 50-60%.

3. Ship an an ICT worker, who is paid maybe £100 per day in tax-free subsistence allowance in the UK, plus their salary at home in India (guessing this might equate to maybe £80 per day?), leaving a gross margin of around £320 or 64%.

It's not rocket science to see which option the consultancy gangmasters are going to choose, or indeed to see that their preferrred option is the one that is worst for the UK economy. A UK-based worker would be paying taxes and spending/saving most of their earnings in the UK. An Indian ICT will spend little and pay no taxes at all.

Meanwhile, the consultancy will be able to ship the profits offshore and pay little or no tax in the UK simply by charging themselves an inflated rate for the internal transfer from India (or wherever).

So the UK taxpayer is subsidising the export of jobs, skills, experience and indeed our own taxes through this process. Brilliant, eh?

"3. Ship an an ICT worker, who is paid maybe £100 per day in tax-free subsistence allowance in the UK..."

Actually, after asking around I think this is an over-estimate: weekly subsistence of maybe £225 or £45 per working day, plus monthly rent on a shared flat of maybe £300, or £15 per working day, means the daily cost of an ICT within the UK could be as little as £60. Add the estimated £80 Indian daily salary and you're looking at a daily cost of only £140, so the gross daily profit to the ICT's gangmasters could be as much as £360 or 72%. Ker-ching.

All you IT professionals: We're in the wrong business!

The Indian salary is probably closer to £50/day, but I think most of the big ones just pay uk salary and allowance including TCS since April.

Not at anyone's expense. They work, they are paid, they save some. Even a little money goes along way in India.

Coming from European countries which believed in exploiting other countries, enslaving them, looting them, why worry about someone who makes an honest living? After spending on daily needs, rent, travel and some gadgets, s/he carefully saves some. Do u grudge even that?

Perhaps saving, waiting for gratification or choosing to remain medication/doctor free with exercise, home cooked food, and avoiding cigs or alcohol is alien to some westerners. Many Indians believe in this lifestyle and are able to save a little.

Only a small no of Indians work or live in the west. The entire S Asian pop including Indians, Pakistanis, S Lankans, etc is around 2.5 mill in, for eg the US with its approx 400 mill people. This is a v small no or %.

Most of India's remittances come from the blue collar folk in the M East, not from UK or Europe. Educated Indians keep most sterling savings from working in the UK in UK/US banks, usually for travel, for further education for themselves or their children.

@bharati:

Tens of thousands of intra-company transfers (ICTs) have been trafficked into the UK in the last 10 years, many of them to work on expensive UK government projects paid for by the UK taxpayer i.e. they cost UK taxpayers a lot of money, thanks to the huge margins charged by their crooked gangmaster employers and the fact that they pay little or no tax here.

"Coming from European countries which believed in exploiting other countries, enslaving them, looting them..."

Not my problem. My ancestors didn't loot India, and I'm damned if I see why today's young Britons should face a bleak future of unemployment just so some bloated multinational consultancy can exploit Indian workers and UK workers simultaneously. And I don't agree that we somehow owe Indian IT workers a living: we should provide opportunities for our own citizens first, just like India does.

Meanwhile, the use of imported ICTs - at a time when many UK-based IT workers are losing their jobs - is not solving the alleged "IT skills shortage" in the UK; it is making it worse.

In my experience, most ICTs lack the skills/experience to take on senior roles, although they are often used as cheap short-term replacements for more experienced/skilled staff, eliminating jobs for UK-based workers. By the time the employer/client realises they're not competent enough for the job, it's too late because the people who do have the skills have been lost from the organisation.

ICTs also take up a lot of the junior roles that would otherwise be available to young UK-based IT staff, who find it increasingly hard to get started in their careers because these opportunities are no longer available.

The long-term future of the UK IT industry is threatened by the short-termism and greed of a small number of gangmaster consultancies, in many cases heavily subsidised by UK taxpayers who fund their gross profiteering on public sector IT projects.

Of course, this is not the fault of the individual ICTs, but of the whole rotten system that permits this. We should eliminate this corrupt loophole: if an Indian IT worker wants to work in the UK, they can compete on the basis of their real skills/experience and pay the same costs/taxes as the rest of us, instead of being sneaked into the country through this crooked backdoor scam.

Why is the UK so bent on its own destruction?

Personally I wish we would be free of India, I don’t like seeing our jobs and business go out there. If I owned a company I would keep it all in the UK as I would be helping the UK economy.

The reason why this happens is the same reason the West no longer manufactures textiles,toys etc

Without some major breakthrough in automation it simply not economically viable to pay a USD 50,000 salary for such jobs.

Despite the hype about IT the fact remains that 90% of the IT work on the planet is commoditized application maintenance etc that anyone with some basic intelligence can by and large pick up withing a year or two.

That is pretty much the strength if Indian IT industry.The only IT jobs that are outsourcing safe are the really high end stuff like writing algorithms for google etc, designing advanced microprocessors and the like.The rest are destined to go to low wage countries just like textile manufacturing did in the 80s and 90s.

You can put immigration caps,bring legislation,deport a few but as they say money has its way of finding its own course as long as an average UK salary for an IT professional with 2-3 years of experience is roughly $50,000 and for India it is roughly $8,000 companies will almost always try to get people from India for their IT needs.

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This page contains a single entry by Karl Flinders published on July 28, 2010 2:16 PM.

Could a flurry of private sector IT contracts offset public sector quiet? was the previous entry in this blog.

Businesses have cut too deep and are too disorganised to recruit effectively is the next entry in this blog.

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