Belfast Telegraph

Could a new points-style migration system really work in Northern Ireland?

Economy Watch

By Neil Gibson, chief economist for EY Ireland

Migration is a very emotive subject and, in my opinion, was very poorly debated during the EU referendum in the UK.

Views were portrayed as polar opposites - migration is good for the economy or bad.

No persuasive arguments were made to convince people why migration controls may be needed, or conversely why they might be damaging.

A wrong word or phrasing in an article can cause great offence and so this is an article I approach with some trepidation.

However, it was a factor in the Brexit vote and the future UK migration system will have a major impact on the NI economy so it is a subject we must be able to discuss and debate. Critically we need to ask, what will work for Northern Ireland?

Migration is clearly a requirement in any economy, especially one as small as Northern Ireland.

It would be naive to suggest that any labour market has all the talent it will ever need to succeed and the evidence clearly demonstrates the positive impact migrant labour has had throughout the world.

In my time as chief economist I have met many firms and almost all rely on a diverse multinational workforce to meet their needs.

Similarly, no matter where I have travelled in the world of meetings, I will encounter a cheerful Northern Ireland person living the commercial dream. The question is not that migration is valuable and important, but rather should there be any controls on the levels and if so how would you design them to be fair and reasonable?

There is a need for some form of control, not least because of the simple pressures of volume and pace of change. If the number of people arriving in any location outstrips the housing supply, the infrastructure capabilities or the capacity of schools and hospitals then there will undoubtedly be pressure points.

Left unaddressed these can create significant social tensions and lead to a wider range of policy problems and this is without heading into the more complex waters of national identity.

Northern Ireland has a much smaller proportion of migrant labour than the UK average, just over 10% compared to 17.4%, according to figures from the Ulster University Economic Policy Centre. The proportion has been growing rapidly in recent years and in certain sectors the concentrations are much higher.

Manufacturing, administration and hotels/accommodation all have more than one-fifth of their workforce born outside the UK and Ireland.

In client conversations I have been having recently that number can be over 60% in certain activities within firms. Typically, though not exclusively, the high concentrations are in factory or production line work.

This sectoral profile is striking and highlights just how critical the supply of migrant labour will be for particular parts of the economy.

Starved of this labour supply, firms would be faced with a difficult challenge to remain viable. They may try to automate more or perhaps restructure certain elements of the business but clearly some businesses would be forced to move operations overseas (as happened in a previous era to textiles, for example).

Many sectors that do rely on migrant labour are not mobile, the care industry for example. In these sectors the situation is more complex with the possibility of unfilled vacancies damaging service delivery. It has been argued that a higher salary would draw more local workers into jobs but many of the exporters are operating on the world market and are price takers not setters and public sector pay levels are generally set at the national level.

So even assuming pay would attract more workers, which is far from certain, it is not in many firms gift to alter salaries.

There are important skills messages that do result from the observed pattern in where firms locate their labour from. Sadly, despite improvement, NI continues to turn out a significant level of young people without an acceptable level of education (circa 30% of year 12 pupils, do not achieve 5+ GCSEs at grade A-C including English and Mathematics, a basic requirement for most jobs) and there are still pockets of high unemployment across the region. It needs to be an important policy priority to ensure the flow of low skilled people into unemployment and inactivity is addressed if at all possible.

The argument could be made that with access to global labour markets there is less impetus to address underachievement and there are examples of training places in areas such as healthcare being cut or capped to save costs.

This can only be done safe in the knowledge the staff can be imported to meet demand. This is not a desirable way to structure the economy - turning people away from training that they are sufficiently qualified to do, in areas that have employment opportunities, with imported labour 'saving' the cost of local training.

Post-Brexit the most likely outcome is that the UK will adopt some form of points system to moderate migration levels. Although levels are currently falling back from historically high levels, probably as a result of the Brexit vote, they are unlikely to fall low enough to convince the public that sufficient border control has been achieved.

So will a UK points system work for NI? It is highly likely that NI will have a number of areas in which it would want to vary from national policy.

Agreeing a regional migration policy is unlikely to be a huge political obstacle for most parts of the UK, though London may argue it too needs localised powers. There are some complications; care would need to be taken to ensure people cannot enter under one regional policy and then re-locate to somewhere else in the UK which operates a different policy.

Issues of congestion and population density are not as acute in NI as they are in most of southern England and the desire to ensure a steady supply of workers for industry, care and tourism may be of higher priority in NI than in other places.

It is highly unlikely that high skilled workers will not be able to migrate to the UK under any points or quota system so it is in lower formal skill activities that the divergence may be needed most.

Fortunately, with the work NI has carried out on improving its skills information and the enhanced business organisations that have spoken up on this issue there is a good chance that regional migration policy could become a reality. It goes without saying that it would be nice to have an Executive to argue for such a power.

In next week's Economy Watch, we hear from Esmond Birnie of the Ulster University economic policy centre

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