Is the £40,000 minimum pay threshold enough to stop IT firms abusing the ICT immigration loophole?

The Migration Advisory Committee (MAC), on behalf of the government, is calling on people’s views whether the minimum pay threshold for businesses to be able to bring overseas workers into the UK on Intra Company Transfers (ICT) is set at the right level.

This is part of a wider call for evidence to help the government set its immigration limits for 2012/13.

Last year the government introduced a policy where overseas workers entering the UK on ICTs would have to be paid a minimum of £40,000. This was an attempt to stop businesses using this immigration route to bring in cheap labour. The ICT route is one which allows multinational companies to move their staff between the countries they operate in.

ICTs were left out of the government’s immigration cap that set the numbers of overseas workers allowed in the UK, which was worked out by analysing where there are skills gaps in the UK. About 80% of non-EU workers in the UK are on ICTs and a high proportion of these are IT workers, with a large chunk from India. See the figures for the last ten years here.

IT firms, including the Indian IT suppliers, are heavily criticised for allegedly using this route to bring low cost labour into the UK to work on customer contracts. It is part of the reason why these companies can offer large cost reductions to customers.

IT workers from India make up a huge proportion of the number of ICTs in the UK, while there are thousands of UK IT professionals out of work. As a result the exclusion of ICTs from the immigration cap has been controversial.

UK IT workers claim that £40,000 is too low because many IT workers earn more and the fact that tax free expenses can be included in the salary is unfair.

The government has now asked the Migration Advisory Committee to call on anybody with an interest to give there views.

The questions regarding the pay threshold were:

– Is the £40,000 minimum salary threshold for intra-company transfers seeking to stay for 12 months or longer an appropriate proxy test to ensure that migrants meet the General Agreement on Trade in Services (GATS) definition of senior Managers and Specialists?

– Should the £40,000 be a national rate or allow for regional variations in pay?

– Because current policy allows the £40,000 threshold to be met through a combination of salary and allowances does the inclusion of non-salary remuneration undermine the use of the £40,000 threshold as a proxy test of skill level?

What do you think? I am keen to get a debate oing on this blog so please leave your comments.