UKBA quietly announced some changes

Yesterday , the UKBA quietly announced some changes to the tier 2 ICT route and section j (IT worker) minimum salaries for tier 2 general and ICT.

 

Tier 2 ICT can only be used for graduate level jobs.

 

The following SOC are no longer considered graduate level:

5242 Telecommunications engineers
3131 IT operations technicians
3132 IT user support technicians

3131 includes system administrators and 3132 includes DBAs.

 

The following are still allowed:

1136 Information and communication technology managers
2131 IT strategy and planning professionals
2132 Software professionals

 

Many of the minimum appopriate salaries have been increased in the section j code of practice. They were lower quartile before and it looks like they have gone up to the most recent median values. 

 

This is a significant change 

 

Details can be found at http://www.government-news.co.uk/border-agency/201103/annual-update-to-the-codes-of-practice-for-sponsored-skilled-workers.asp

 

Other details at Computer Weekly Offshore IT staff brought to UK have suddenly become a lot more expensive

Freedom of Information Request to UK Border Agency for Intercompany Transfers Visas

Recently one of my contacts used a Freedom of Information request to UK Border Agency to find out how many non-EEA workers companies plan to bring in over the next year.

This relates to my ongoing reports on IT contractors and other professional contractors (such as Accountants) whose jobs are being unfairly taken in the UK by lower paid foreign contractors from outside of the EEA. As the Bracknell Blog articles reported here, here and here.

Britain is celebrated as having one of the most versatile and effective IT sectors in the world. But this sector, like so many others in recent times is being eroded at an alarming rate in the name of a cheaper 'that will do' approach by many large IT employers. These figures below over all professions although these visa applications mostly affect the IT sector.

Just to explain the tier 2 category is the points based system for employer sponsored work visas. Within tier 2 there are the following sub-categories:

a) General – either for shortage skills or after a resident labour market test (RMLT) i.e. advertise the job to UK workers first

b) ICT – for intra company transfers (no job advertising required)

c) Sports Person

d) Minister of Religion

The sponsoring organisations use the computer based “Sponsorship Management System” (SMS).

They request a certain number of Certificates of Sponsorship for use during the following year. They can request more during the year. Once the anniversary is up then the current allocation vanishes and they need to request more for the next year. The renewals process can be read here.

When they need to get someone a tier 2 visa, then they assign a CoS to them on the SMS system. The visa applicant must then apply for the visa using the CoS (which is just a unique number)

Total number of sponsors who have requested CoS for Tier 2 GEN category (Points system) is 3,702 and they have asked to bring in 71,665 workers. Of this 2,597 companies were granted 52,649 so far, which is a percentage of 73% of total requests. Most of the remaining 27% are just pending approval and will probably be approved,

Total number of sponsors who have requested CoS for Tier 2 ICT category (Intercompany Transfers) is 1,704 and they have asked to bring in 62,589 workers. Of this 1,196 companies were granted 45,924 so far, which is a percentage of 73% of total requests. Most of the remaining 27% are just pending approval and will probably be approved.

The points based system started at the end of November 2008 and companies could start requesting certificates of sponsorship for their second year on 5th October 2009. The stats were generated on 26th November (so less than half of sponsors have requested visa's at that point). Sponsors can request more if they run out. However it is a rough indication of how many people employers think they will bring in between December 2009 and November 2010.

For the 2nd year of the points system, companies had asked for 134,254 CoS for tier 2 general and ICT visas, and so far been granted 98,573 CoS between 5-oct-09 and 26-nov-09 (with 25,740 pending approval).

As you can see companies have been approved to bring in almost 100,000 people to work in the UK and many will be for jobs normally conducted by UK staff. Some of these staff will of course be needed but is this system really working for the good of our economy. Many do not pay tax in the UK, and others are also unfairly treated and have little protection under UK employment law.

The UKBA require that the migrant workers be paid the “going rate” for the job. The going rate is usually the national lower quartile salary for the job. This means it is often more than a third less than a similar UK worker would be paid.

This area does need more control so that UK employees and non-EEA migrant workers are treated fairly.

Immigration Points System is Just Spin

I have been reporting on a number of visa issues relating too Intercompany Transfer Visas and foreign workers replacing the contracts of EEA with information provided to me from IT contractors, See these articles here and here on Lloyds are Being Investigated by the UK Border Agancy and Unfair Competition for UK and EU IT Workers?

Recently one of my contacts was on BBC Radio 4 on the program 'The Report' entitled 'Immigration 31st Dec 2009'. Steve can be heard from 21 minutes to about 26 minutes into the report here, although the whole report worth a listen. the report is about 'Phil Kemp investigates whether the government's new points-based system of immigration is actually working'. I am not surprised to discover that the government spin on the new points system working is just that, spin.

Unfair Competition for UK and EU IT Workers?

IT workers have been subject to usually high competition from lower paid professional Non EU Workers (mainly Indian) within their industry. I expect this is not the only industry that is affected the same issue. This is of course an issue for all the EU nations but the UK seems to be effected by this problem to a higher extent.


This extract of a letter to Andrew Mackay Bracknell MP from A Bracknell blog reader explains the problem quite well;

Despite the worsening economic climate and the wave of redundancies affecting IT departments across all industry sectors, 35,430 UK work permits were granted to non-EU technology workers during 2008. Relocation of staff to the UK by companies with offices based in different countries represented around 80 per cent of work permit applications issued last year.

According to APSCo (Association of Professional Staffing Companies) the recession and a more restructive immigration system introduced in 2008 has “barely dented the influx of non-EU foreign IT workers coming to the UK”.

The intra company transfer system is being massively abused to bring in Indian IT workers at lower than local market rates.

Some company's "UK" staff must consist almost entirely of company transfers e.g. providing services to other companies and directly replacing local UK staff. Offshoring sucked the blood from the UK economy from the outside, this is doing it from the inside.

Indian work permits are harder to get than UK ones, shorter and need to applied for again if you exit the country. Other countries like Germany put a minimum 40k on the salary to avoid undercutting local rates and ensure the skill is in demand and unavailable (rather than a cheap replacement).

Would you agree with my view that the British Government should now seek to protect the British workforce as other countries protect their nationals. Inward investment is commendable, but not at the expense of hardworking British families and those who choose to live here and engage in the British way of life.

If the UK government does not want to have many more families consigned to living on the dole something needs to be done. Our heavy industry has been destroyed, leaving Britain a service sector country. Now our services are being "out sourced" and "off-shored". The cost of living means we cannot compete on price with countries where the cost of living is lower.

Shouldn't the British government have a policy that if a non-UK business wishes to acquire a UK business, then they may do so only if they guarantee that a large percentage of the current British workforce will be maintained? There should also be a limit on the ability of UK businesses to outsource. Protectionist perhaps (only within Europe though), but how else can the British workforce compete, survive this economic crisis and retain a skilled workforce in a vital sector?

Why am I writing to you about this? I'm sure the UK is not the only nation in Europe to suffer from such an influx. So I would like to understand what is being done to address this issue and protect jobs for nationals primarily in the UK, but also across Europe. What is the Conservative party doing to address these issues at home and in Europe? Are you putting pressure on the current government to do something about it?


Of course I can not agree with protectionism as I believe in free trade but it appear to me that a number of things can be done, like enforcing the law with regards to work permits and ensuring that IT workers are paid at least the market rate so that UK/EU IT workers are not undercut and therefore a level playing field within the UK is ensured.

In another letter to Steve Webb (Lib Dem MP) by a different Bracknell Blog reader the more complex issues are examined.


As a UK IT worker, I am concerned that weaknesses in the current UKBA Point Based System (PBS) are leading to the undercutting and displacement of settled workers by non-EEA(European Economic Area) IT workers via employer sponsored tier 2 visas. The tier 2 Intra Company Transfer visa is the most used route for this purpose, and in 2008 alone there were over 35 thousand tier 2 ICT visas issued to non-EEA IT workers (mainly Indian nationals).

This route is not for shortage skills and it does not require any resident labour market test. The majority of these non-EEA IT workers are brought in by IT Service companies and sent to work at client sites i.e. they are not used internally by the sponsoring company.

I would like to know the Liberal Democrat position on the following:

a) the current main protection for UK settled workers is the requirement for employers to pay the "going rate". The UKBA set this rate for different occupations and it is typically set at the 25% percentile salary. This is too far too low to prevent undercutting and displacement, and is not aligned with allowing employers to bring in the "best and brightest" from the global pool of talent. I believe the "going rate" should be set at the median salary as a minimum, but the 75th percentile salary would better reflect the migrant worker's status as "best and brightest".

Should the "going rate" be set much higher?

b) the new PBS has been operating for almost a year and from 5th October employers have been able to request next year's allocation of certificates of sponsorship (COS) i.e. they must estimate how many tier 2 visas they will sponsor in the next year and request that allocation of COS's from the UKBA. The biggest users of tier 2 visas (other than the NHS) are IT Service companies.

Many of these companies have made UK employees redundant in the last year.
Should companies that have made UK employees redundant in the last year be allowed to bring in large numbers of non-EEA workers?

c) I have a great respect for the UKBA and its difficult and growing role. The recent Migration Advisory Committee report on "Tier 2 and Dependents" mentioned the issue in resourcing the policing of the tier 2 system. It was intended to be self-policed by employers, who are also one of the main economic beneficiaries of the system. The UKBA need more resources to uncover and tackle abuses. In the US, there is a $500 "Fraud Prevention and Detection Fee" added to employer sponsored visa application charges.

Should a "Fraud Prevention and Detection Fee" be added to UK tier 2 employer sponsored visas?

d) The inability to find specialist skills in the UK is often quoted by companies as a reason for sponsoring non-EEA workers. These same companies either do very little training of UK staff or have been cutting training. In the US there is a $1500 "Scholarship & Training Fee" added to employer sponsored visa application charges. This is invested in training US citizens in shortage skills.

Should a "Scholarship & Training Fee" be added to UK tier 2 employee sponsored visas?
There are a number of misconceptions propagated by employers benefiting from sponsored visas for non-EEA IT workers (primarily tier 2 ICT visas for workers from India), and I hope some of the following will help debunk these:

a) Employers can't find people with the right skills in the UK...

No. The sector skills council has stated that there are no skills shortages in IT. Independent research by academics such as the highly respected Professor John Salt of UCL has shown that the vast majority tier 2 ICT IT workers are junior staff with standard IT skills. In the US, they have 4 "skill" levels for H-1B "employer sponsored visas for skilled workers" and 80% are at the lowest level (i.e. only have a couple of years experience) and the biggest users of H-1B visas are the same IT Service companies. The real issue for these companies is that they cannot find people with the right skills that are willing to work at below average salaries.

b) At least the workers are paying taxes here...

No. the large IT Service companies get dispensation from HMRC so they do not pay income tax or national insurance in the UK as long as they stay for less than 2 years. The employer also avoids employer national insurance contributions, the median stay is 18 months (according to NASSCOM).

The MAC report on "Tier 2 and dependents" said: "We were also told that, currently, an employer can issue a three-year certificate of sponsorship while the employee simultaneously tells HMRC that he or she is coming to work in the UK for under two years.

We understand that it is common for immigrants in receipt of allowances to claim that they intend to stay in the UK for one year and 364 days."

This probably costs the UK in the order of £1/2 billion in taxes every year, and the migrant workers gets free primary healthcare and education for their children.

c) Allowing multinational companies to transfer workers from offices around the world makes the UK an attractive location for businesses to invest, and creates wealth and jobs in the UK.

Yes, it does. Most companies transfer a small number of senior managers and unique specialists between offices, and this must be allowed under the GATS agreement. However the intra company transfer route was never intended as the main source of employees, nor as a route for supplying services to clients "onshore". Some large IT Service companies have 4 times as many tier 2 ICT workers in the UK as permanent UK employees. Unlike "well behaved" users of the system, many of the large (primarily Indian) IT Services companies do not invest much or create many jobs in the UK. In fact research by many sources (including Professor John Salt) has pointed out that many of the "tier 2 ICT" IT workers from India are brought across to learn the job in the UK from the UK workers and then the job is outsourced to India and the UK workers are made redundant.

d) if we reduced the number of non-EEA IT workers allowed to work here, then the work would just move offshore to India, and it is better to have the workers doing the job here
It is at least 3 times cheaper to do the work in India. The only reason the work is being done in the UK is because it cannot already be easily outsourced/offshored. As the workers do not pay taxes but consume resources in the UK, it is probably better for the UK if they were offshore.

These letters were provided to me by the IT workers who could not get a response from their various MP's see here. They are frustrated because they feel as if nothing is being done, therefore I decided to publish their letters to get the word out there on there behalf.

This story is also related to the report on Lloyds bank here who are being investigated by the Border Agency

Lloyds are Being Investigated by the UK Border Agency

Lloyds Banking Group who are supported by the tax payer are being investigated by the UK Border Agency for flying Indian staff to the UK to do the work of UK-based IT staff.

From a letter obtained from the Lloyds TSB Group Union to its members it states that "The Group has known for some time that 1,300 Indian contractors have been flown to the UK to do the work of IT staff and many of those have been moving from project to project and have worked for the Group for many months, if not years. Whilst some of those contractors will go back to India over the next few months there will still be at least 400 who will be permanently based in the UK doing work which could be done by displaced IT staff. The Group has admitted that displaced LBG staff will be redeployed into 300 of the roles that are currently filled by staff flown over from India. Whilst this is a welcome move the fact that this work was being done by Onshore staff in the first place makes a mockery of the Group's Offshoring policy. Some IT staff who could have done that work will have already been made redundant".

Last years system of work permits has now been replaced by a points based system. Indian staff working in the UK have been employed by Offshore contractors who are based out in India. Therefore these staff are employed in Indian and then flown to the UK.

This alleged act of employing non EU workers in a UK government supported bank is even made worse when you considers that Lloyds recently announced the 5,000 job cuts bring the total to 10,000 so far this year. See http://news.bbc.co.uk/1/hi/business/8352231.stm

I will be publishing over the next few weeks some more related storeys on this subject including how hard it has been for UK IT workers to get a clear response from MP's and MEP's on IT onshoring and Offshoring and More details as to the extend of this practice in other UK business.