Skilled migrants increase UK productivity

UK-born professionals need to “up their game”, according to research which shows productivity increases when businesses employ skilled migrants

UK-born professionals need to “up their game”, according to research from the National Institute of Economic and Social Research (NIESR) which found that productivity increases when businesses employ skilled migrants.

NIESR revealed a “positive and significant” link between increases in the employment of migrant workers and productivity. The research was funded by Nasscom, the organisation that represents Indian and multi-national IT services providers.

The report said: “Between 1997 and 2007, the presence of immigrants has been increasing in most sectors, with immigrants being, on average, more educated and tending to work longer hours than natives.”

Focus group participants in the research said the UK-born need to “up their game” as labour markets become increasingly global.

The research revealed a positive correlation between the share of immigrants and labour productivity, and a “positive and significant association” between increases in the employment of migrant workers and labour productivity growth in the time period analysed. 

“Even after controlling for changes in the skills mix of the workforce, a 1% change in immigrant share in employment is associated with an increase in labour productivity of 0.06% to 0.07%," it said.

But one source questioned the findings: “The association does not give any causal relationship and [that] higher productivity may attract more immigrants – for example, rising productivity sectors will have rising salaries and profits that are more attractive to the internationally mobile.

“The 0.06% increase, with 1% increase in immigrant share, is small, especially as [NIESR] chose to look at 1997-2007 [pre-crash], which was a period of rising labour productivity and growth. Labour productivity rose by 28% on a per capita basis, or 22% on a per hour worked basis, in this period.”

Skilled migrants in demand

IT immigrant workers make up a large proportion of skilled workers in the UK. This has increased as large businesses outsource IT work to suppliers based in countries such as India to take advantage of lower wages.

These companies have UK operations and can bring staff to the UK for periods using the Intra Company Transfer (ICT) route, which avoids the stricter rules for visas.

Many UK IT professionals believe this practice exacerbates the IT skills shortage as UK graduates cannot compete with offshore workers for entry-level jobs to begin their careers.

The government is trying to cut net migration to tens of thousands a year, rather than hundreds of thousands, and has implemented a cap on work visas, but did not cap ICTs 

Migrant workers' skill levels are on average higher than those of the native born

NIESR/Nasscom research

One of the report's authors, Heather Rolfe, said: “We hear a lot about public opinion and concern about migration, but our findings suggest that the need for skilled migration is more widely accepted than is often believed. People enjoy working alongside migrants and feel they personally benefit in terms of their own skills and the services they are able to provide.”

The research found that while employers see skilled migration as most important in meeting their needs, the public see migrant workers as being low-skilled and low-paid.

“Public concern and knowledge about migration is largely focused on low-skilled work, yet it is only part of the picture. In fact, migrant workers' skill levels are on average higher than those of the native born,” said the report.

IT skills shortage needs addressing

Study participants accepted that employers sometimes need to source skilled employees from outside the UK, but they also said changes to the education and welfare systems are needed to address skills shortages. The report said employers and education must be clearer about what they are doing to develop UK skills. 

"Employers and the education sector do not appear to articulate clearly their efforts to develop skills within the UK,” it stated.

Nasscom vice-president Ameet Nivsarkar said: “We welcome the findings of this report, which has filled a gap in knowledge about the impact of migration on the UK economy, labour markets, and workplaces. We are pleased that the research has concluded that diverse teams provide companies with commercial advantages, helping to increase productivity through diversity and creativity.”

He defended the use of ICTs in the IT sector. “The findings of this research are particularly relevant for our members, and other organisations operating in a global marketplace where the transfer of knowledge and sharing innovation needs to happen swiftly. The ability to bring specialists to the UK on intra-company transfer visas for short periods is essential to making this happen.

“We hope that the findings of this report will contribute to the understanding of the impact of migration, and ensure that the value of high-skilled migrants is fairly reflected in public debates and the immigration policy-making process.”

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