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EEF response to MAC call for evidence on minimum salary thresholds
EEF has responded to the Migration Advisory Committee (MAC) call for evidence on increasing the minimum salary thresholds for Tier 2 job roles.
New and existing technology, manufacturing processes and process development requires ever-increasing skill levels from both the current and future manufacturing labour force. This in turn puts ever-increasing demands on those institutions who can work with business to ensure adequate supply of skills today and in the future.
Employees from outside the EEA play a central role in delivering the skills manufacturers need. A quarter of EEF members use Intra-Company Transfers (ICTs) to bring in new skills to their company, 11% bring in required skills by recruiting non-EEA workers and a quarter have recruited a non-EEA graduate in the past 3 years.
Manufacturers’ ability to respond to changing markets and circumstances has been dependent on the UK’s labour market which has to date remained relatively flexible. However, the drive by government to reduce employers’ reliance on overseas workers - by significantly increasing salary thresholds for example - risks eroding this flexibility and directly impacting companies’ ability to recruit the skilled workers they need to grow their businesses.
The current salary threshold, set at the 25th percentile, for experienced workers is reflective of the average pay for engineering occupations amongst EEF members. Therefore any shift towards a higher percentile will have a direct impact. Similarly, setting the entry-level rate at the 10th percentile is reflective of graduate level entry into the job market. A shift towards a higher percentile will ultimately abolish the entry-level rate. It may also impact on companies’ global graduate programme which are likely to set one rate for graduates across the board.
The consultation period of two weeks is inadequate. In-depth evidence is required to respond to such calls for evidence and such analysis is very difficult within a two week timeframe and may even be deemed irrational or unreasonable and as such susceptible to judicial review.
1) The entry-level salary threshold should remain at the 10th percentile. Moving towards a higher rate will effectively abolish entry-level rates.
2) The minimum salary threshold for experienced workers should remain at the 25th percentile. The 25th percentile already prevents undercutting of wages. Increasing the rate will have a knock-on effect on other employees and potentially wider business decisions.
3) Regional variations should be taken into account but there should not be different pay for regions. This risks complicating the system further. While there are variations in pay by region there are also differences by company size and sector which should also be considered.
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