High Skills, Low Pay

One policy announcement has huge implications for UK residents.

Image by Kheel Center via Flickr, shared under CC BY 2.0

Last weekend, the BBC reported from the Conservative Party Conference on details of a policy to end low-skilled migration for jobs that pay less than £50,000/pa. This is confusing for a number of reasons, but if taken to its extreme (which the Tories almost certainly will do) it is very, very bad. So does this mean no migration for all jobs under £50K, or just for the “low-skilled” ones under £50K?

Well played.

We need to set the scene. The last two decades have been focused on immigration as the great social ill of our time, with no evidence to back this up. In fact, University College London has analysed the data going back to 2000 and determined that:

“Our findings show that immigrants to the UK who arrived since 2000, and for whom we observe their entire migration history, have made consistently positive fiscal contributions”

Most UK citizens do not know, or care, about this because politicians and the media tell us a very different story. Immigrants to this country have been busy getting on with their lives: paying taxes, building our houses, cleaning our schools, performing surgery, running our shops, driving our buses, translating our documents, researching new technologies, dispensing medicines, emptying our bins, teaching our children, caring for our elderly; and the thanks they get is to be sent threatening letters from the Home Office, put into detention centres and separated from their families.

There is a shortage of British people qualified to fill the vacancies taken up by immigrants, yet the political narrative paints immigration as a universally bad thing. The “Hostile Environment” created by Theresa May as Home Secretary feels oppressive to me, even though I am a white person born in the UK. It’s so unfriendly, so harsh, so divisive. It pits communities and individuals against each other, and makes Britain feel like a horrible place — and we don’t need to do it.

These adverts, from the Home Office, contributed to a new wave of racism in the UK.

At the same time, Britain is currently experiencing low unemployment, yet high levels of poverty. Wages have gone down in real terms, and employment is less secure. Many people in work are also claiming benefits, and the Conservative government has tightened up the welfare system so much that people find it difficult to access the financial help they are entitled to.

But none of this has anything to do with immigration — although it is relevant to the concepts of ‘skill’ and the ‘living wage’. These are both terms whose meaning changes depending on who is talking, and what their motive is. But we can look to the definitions given by Oxford University’s Migration Observatory for some examples:

Low-skilled, e.g. cleaning and waiting
Lower-middle, e.g. drivers and care workers
Upper-middle, e.g. building trades and chefs
High-skilled, e.g. teachers and managers

There is overlap in wages across all four of these classifications — any of these professions could be compensated at less than £50K. More importantly, it could potentially be argued that only the highest category is “skilled”, or even all four. This is how those jobs are distributed between native British people and migrants:

Data from Migration Observatory, 2018.
22% of workers in the UK are from overseas.

The “Living Wage”

Data from Living Wage Foundation

If you’re over 25, your employer is legally obliged to pay you £7.83 per hour (before tax). But that’s not enough to survive on — for that, you’d need to be paid at least £8.75 per hour. These are the equivalent full-time salaries (37.5 hr/wk, 4wks holiday) of £14,094 and £15,750. Nowhere near £50,000. £50K is an extraordinarily high wage, and only 11% of employed UK residents earn this much.

What will £50K get me?

Let’s imagine you have £50,000 to spend on your very own [insert profession]. Whose services could you buy for less than £50K?

You’re in luck: the following professions all pay less than £50,000 per year: doctor, teacher, nurse, pharmacist, scientist, lecturer, police officer, firefighter, social worker, civil servant, statistician, journalist, mechanic, barrister, midwife, engineer and accountant — I could go on, but you get the idea.

All of these are skilled jobs.

There are plenty of jobs worth more than £50K/pa, that don’t require an undergraduate degree (mostly CEOs). There are many, many, jobs paying less than that which do. Understandably, there are a lot of people upset about being classed as “low-skill” workers.

Low-skilled Twitter is aflame tonight.

But lets get back to the numbers. What is the government actually proposing?

Are we really saying that only immigrants seeking work paying over £50K will be allowed in?

We don’t know. But there seem to be two possibilities:

1. Yep, if you’re worth less than £50K you’re not coming in;
2. Not exactly — if you’re “skilled” you can come in with a lower salary.

Option 1 is the equivalent of what is required to obtain a Tier-2 visa, an undergraduate degree plus a job offer with a starting salary greater than £50K (the current Tier-2 threshold is £30K, so this is a bit of a leap). The more extreme Option 1 would see the loss of about 4 million overseas workers from all but the elite professions.

Option 2 is slightly more difficult to quantify, but let’s assume it would involve workers defined by Migration Observatory as “low-skilled” and “lower-middle”. That is a reduction in the workforce of 2.7 million.

How will we make up for these missing employees? Maybe British workers could take these jobs?

Nope.

Even if we were able to exactly match unemployed British people with job vacancies created by this exodus, there just aren’t enough of us. The official unemployment figure in the UK right now is 4%, or 1.36 million.

However, underemployment is a big problem that is concealed by the employment figures. It includes people on zero-hours contracts, and part-time workers who want a better job, or who can’t get as many hours as they would like. These people make up an additional 2.72 million.

Even if they each take on a side gig, they won’t come close to filling the vacancies this will create.

We just don’t have enough skilled workers in the right professions. It’s not as simple as making the numbers add up. If there’s a shortage of heart surgeons, Bob from Maccy D’s isn’t going to be able to put in a couple of extra hours in the cardiology department.

Jobs paying over £50,000 per year aren’t necessary those that require the most skill and training. These are the 11% — the managers, CEOs and bankers. They’re highly competitive jobs that are way above entry-level and exclude most British people anyway. There might be a small reduction in overseas applicants because Britain is not exactly the most welcoming place at the moment, but we will see non-Brits over-represented in these positions — while the British are left picking fruit and sweeping the streets. Oh dear.

Congratulations, you just played yourselves.

The average level of education in the UK has increased, mainly in the last decade, with about 45% of 21–64 year olds having a qualification at undergraduate level or higher. Middle-class British families, having recently risen to a position of greater wealth and capability, are unlikely to encourage their children to aspire to cleaning toilets or nursing the elderly.

The “skilled” £50K+ positions will be filled, “low-skilled” ones won’t, and we’ll likely still have problems with under- and unemployment. Especially when the machines come for our jobs. All because we thought we could bring back the Empire and take Britain back to the 1950s.

I hope it was worth it.