Accelerating growth: are the brakes coming off global immigration policies?

Given the ever-growing skills shortage across the globe, it is small wonder that many governments are scrambling to liberalise immigration policies – while adopting programmes aimed at upskilling indigenous populations – in a bid to solve the problem.

David Sapsted

5 May 2023

This article is taken from the latest issue of Think Global People magazine.Click on the cover to access the digital edition.

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A recent nation-by-nation analysis by global management consulting firm Korn Ferry forecast that, by 2030, the planet would face a talent shortage of more than 85 million people, representing a loss of about $8.5 trillion in revenues per year.

Addressing demographic megatrends

Other estimates have put the skills shortage in Europe, the Middle East and Africa at 14 million-plus by 2030, and this when job vacancies in the United States currently exceed 9.9 million while the total of unemployed Americans stands at 5.8 million.Faced with ageing populations and falling fertility rates, nations around the world are beginning to respond. Recently, Germany committed itself to creating “Europe’s most modern immigration regime” amid fears that the worsening skills shortage would become a “real brake on economic growth”.Labour Minister Hubertus Heil told the Financial Times that many industries were “desperate” for staff and that the situation would only get worse as baby-boomers retired.“Germany will lack 7 million workers by 2035 if we don’t do something. And that could end up being a real brake on our economic growth,” he said.Similarly, the Australian government announced a far-reaching overhaul of its immigration system in late April to make it easier for skilled workers to get visas."If 'populate or perish' described Australia's challenge in the 1950s, 'skill up or sink' is the reality we face in the 2020s and beyond," said Clare O'Neill, the Home Affairs minister.Such a sentiment was already a familiar theme in Canada where boosting immigration has been a prime target since Justin Trudeau came to power in 2015. Last year, there was an unprecedented net increase in the Canadian population of more than a million, the bulk of it down to immigration.

Balancing upskilling with immigration policies

However, in the UK the attitude of the government seems, at best, lukewarm towards increasing immigration, even though in the year to June 2022, there was a record net migration figure of 504,000. This, though, was mainly attributable to exceptional numbers arriving from Ukraine, Afghanistan and Hong Kong.Although leading industry bodies have repeatedly stressed the need to increase the nation's attractiveness to overseas talent by – among other initiatives – increasing professions on the Shortage Occupation List, ministers have repeatedly declined to liberalise the system while repeatedly maintaining that the UK is open to "the brightest and the best" from around the world.Indeed, Home Secretary Suella Braverman has even expressed a desire to reduce net migration to below 100,000 a year, while Immigration Minister Robert Jenrick rejected calls from the Confederation of British Industry (CBI) to increase companies' access to overseas workers, telling the organisation's annual conference in the winter that firms should train UK staff to fill vacancies, rather than rely on hiring talent from other countries."Overall, our ambition is to reduce net migration. We think that’s what the British public want. That was one of the driving forces in the vote to leave the European Union back in 2016," Mr Jenrick said.“If I was a business manager, I would be looking to the British workforce in the first instance, seeing how I could get local people into my business, train them up, skill them to do the job.”But business leaders, while appreciating the pressing need to upskill or re-skill locals, insist there must be a review of policies to enable companies to attract overseas talent more easily.A survey of more than 5,000 companies, conducted over the spring by the British Chambers of Commerce (BCC), found that a chronic skills shortage continued to affect thousands of businesses, with four-fifths of the 59% of firms that had tried to recruit staff in the first quarter of the year encountering problems.The BCC's 'Quarterly Recruitment Outlook' concluded there was no sign of hiring difficulties easing, especially in sectors such as manufacturing, hospitality, construction, engineering and professional services.

Rising costs impact reskilling – and the economy

For the umpteenth time, the BCC repeated its call for a more liberal immigration system. Jane Gratton, the organisation's head of people policy, said: “People shortages are a massive issue and employers can see little sign of improvement. The high number of unfilled job vacancies is damaging businesses and the economy. Firms are struggling to fulfil order books and turning down new work.“While investment in training is part of the solution, it is being held back by rising overall cost pressures and a lack of time and resources at firms to mentor and support new recruits."At the same time, where there is evidence of urgent and critical skills shortages that are crippling business sectors, the government must adopt a sensible and pragmatic approach to immigration and ensure that the Shortage Occupation List reflects the reality on the ground."Additionally, the Institute of Directors has long called for visa reforms in the face of skills shortages. Even before the number of vacancies reached a record 1.3 million last summer (and has only slowly declined since then), a poll had suggested that 81% of directors would "support loosening immigration requirements as a way of easing the pressures on the labour market".The UK's technology trade association, techUK, has also made its position clear over tackling the skills shortage. Over winter, it presented ministers with five demands: four involved improved arrangements for training and upskilling, while the fifth urged the government to "enable businesses to access and attract high quality international talent by reducing costs of the immigration system and streamline the Shortage Occupation List".Even this, though, might not be enough, according to the think-tank, the Social Market Foundation (SMF). Its report, 'Routes to Resolution', suggests the UK could need a gross total of a million migrants a year because of the skills gap and an ageing population.Jonathan Thomas, senior fellow at the SMF, said that last year's high level of migration "could well be the norm rather than the exception". He added: “Over the longer term, the UK’s deep historical connections with some of the most populated countries across the globe – India, Pakistan, Nigeria, and Bangladesh – have the potential to create far more sizeable flows of people to the UK than the smaller and stagnating populations of the EU ever realistically could.”

The need for evidence-based debate

But James Kirkup, director of the SMF, said that while immigration "is going to be a major part of British national life in the decades ahead", he feared calls for a wider national debate were unlikely to be heeded "in view of the main political parties’ refusal to face obvious truths across issues from labour shortages to small boat crossings” by illegal immigrants, which exceeded 45,000 last year.In an article published online in May, Christa Rottensteiner, chief of mission at the UK branch of the International Organisation for Migration, and Claire Kumar, senior research fellow at the Overseas Development Institute, warned that the UK's "increasingly toxic" political rhetoric on migration – mainly as a result of the illegal crossings by boat from France – had real-world consequences that could cause all manner of harms."What is desperately needed in the UK," they wrote, "is a more balanced narrative and more evidence-based migration policies. And it is up to all of us to ensure a more balanced public narrative. Providing accurate data and facts is the basic starting point, although a focus limited to numbers can be easily manipulated to stoke uncertainty and fear.“We need a deeper and richer national debate about what that will mean and how we can approach migration issues in a way that meets our economic needs and acknowledges the concerns that some people have about population changes."The problem for the UK's politicians is that they feel obliged to focus on the latter: namely, the unease among the voters about the effects overall immigration is having on the UK's housing, infrastructure and services.For businesses, the problems are purely pragmatic: namely, the need to attract many more of the brightest and best from around the world to help fill that ever-widening skills gap.Of course, so many rival economies across the globe are facing exactly the same problem. The difference now is that many of them are adopting far-reaching policies to try and resolve that problem.

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