Is the UK’s £35,000 Earnings Threshold for Non-EU Migrants the Panacea to its immigration problem?

hari raithathaby Hari Raithatha

As of April 2016, there have been significant changes  to UK Immigration Law. In order to satisfy the requirements for a Tier 2 (General) Visa, individuals from Non-EU countries wishing to settle in the UK are required to earn above £35,000 PA. While the law has been caveated to ensure that certain professions (such as nursing) do not have to comply with this change, the vast majority of professions will be subjected to the impending changes. While the aim of this change has been to cut net migration down from 60,000 to 20,000 people per year, it is arguable that the changes that are to be implemented have failed to fully consider a number of concerns raised by the Migration Advisory Committee 2015 Report .

A primary issue of  concern of the Migration Advisory Committee was the use of a a purely economic test as criteria for immigration to the UK. While the committee accepted  that salary is a basic, blunt  and in many respects and effective method for judging the economic value of an employee,the committee was reluctant it as the only factor that should be considered.The committee broadly supported the use of a wider criteria  as suggested by the Organisation for Economic Co-Operation and Development (OECD). This approach would take into account factors outside of salary such as the function of the employee (i.e  performing a public service).While the law has taken this into account shortage professions (a restrictive list comprised of technically skilled jobs such as engineers and medical professionals), the vast majority of  workers will not be subject to this exception.

An additional concern raised by the report was the effect that a £35,000 wage threshold would have on graduates and other younger workers who’s full economic value and potential would not realised under the current rules. Given that the average graduate salary stands at £20,000 PA, with the Top 100 graduate employers paying a higher average of £29,000 PA, the overwhelming majority of graduate jobs will not satisfy the requirements of the Tier 2 visa. While the current law has made exceptions for PhD level Jobs and certain protected professions, the changes to the Tier 2 visa will deny many students the right to settle in the UK post completion of their studies.

A final consideration that the report does not raise is the issue of the earnings threshold for Non-EU workers In relation to the national  average wage. The new £35,000 minimum earnings threshold is 33.4% greater than the current national median earnings figure of £26,244. While there are clear policy reasons for having a cap that is sufficiently high in order to limit migration to the UK, the current law creates a number of  problems.

A threshold of £35,000 may limit the areas in which Non-EU workers will be able to find work to London and the South East where a significant proportion of jobs will pay more than £35,000 PA. In certain circumstances, a within national company may pay significantly more to employees  simply because of geographical location (for instance, a Training Contract at a Law firm may pay employees in excess of £35,000 in London compared to  £27,000 in English Regions). As it stands, the current law fails to recognise this wage disparity and while the government remains committed to growing cities outside of London in line with the “Northern Powerhouse Policy” the current proposals stand to hinder these plans.

It is clear from the issues raised above, that there are a number of important issues with the new earnings threshold that should be addressed.The following solutions have been proposed to address these issues.

  In a report by the institute of Economic Affairs, it was suggested that migration may be curbed by means of increasing the price of an entry visa to the UK. The rationale for this would be that a higher visa fee would attract “only economically active migrants whose earnings would have to be sufficiently high to justify the visa fee”.By doing this, skilled migrants whose wages fall below the current threshold would be able to work in the UK.

While this system may be effective in practice, it is yet to be operated in practice and subsequently  it’s effectiveness has been questioned. 

Another proposal that has been made is to reduce the £35,000 threshold outside of London and introducing caveats to the current law  for graduates from UK universities. As has been previously addressed in this article the use of a blanket threshold “for all industries is inherently unfair” . By reducing the £35,000 minimum earnings threshold outside of London to a figure closer to the national median wage or by looking at wages for equivocal jobs in and outside of London, cities outside of London are more likely to benefit positively from Non-EU migrant labour. In addition to this change, a exemption (whether temporary or otherwise) from the minimum earnings threshold for graduates would allow the UK to realise the full economic value of graduates better then under the new regime. 

While Government has clearly tried to deter and control migration into the UK, it is clear that the the current proposals do not provide a finite solution to the issue. In imposing a £35,000 minimum earnings threshold, the UK stands to loose workers that the economy relies on.

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