Migration - monitoring and regulation (P.25-2005) – amendment

STATES OF JERSEY

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MIGRATION: MONITORING AND REGULATION (P.25/2005) – AMENDMENT

Lodged au Greffe on 7th June 2005 by Deputy G.P. Southern of St. Helier

STATES GREFFE

MIGRATION: MONITORING AND REGULATION (P.25/2005) – AMENDMENT ____________

A t t h e end of paragraph 6, after the words"Social Security registration" insert the words "and to agree

that political responsibility for the office should not lie with the Economic Development Committee (or the future Minister for Economic Development) and to charge the Policy and Resources Committee to bring forward proposals for approval by the States on which other Committee (and Minister) should have this responsibility".

DEPUTY G.P. SOUTHERN OF ST. HELIER

REPORT

Nobody could fail to agree with the aims set out in part (a) of the Migration Policy, namely –

to a g re e in p rinciple that the States should monitor and regulate the factors that govern migration in

the context of the overall population to ensure a balance between economic growth and the demand for and supply of labour, accommodation, infrastructure and resources of the Island, and promote greater social inclusion, as set out in section  3 of the report of the Policy and Resources Committee dated 18th November 2004.

When my Scrutiny Panel decided to undertake the task of investigating the proposed Migration Policy, we were very aware that it formed one part of 5 interlinked policies of which the Strategic Plan, Fiscal Strategy, Economic Growth Policy and Planning for Homes are the others.

It was clear that the Migration Policy was to act as the safety mechanism to ensure that the drive for economic growth did not produce unsustainable demands on the island's infrastructure, most obviously, on housing. Accordingly the Panel examined evidence concerning the mechanism by which growth was to be obtained and the likely numbers of additional inward migrants that might generate. Of particular concern was the ability of the current and future RUDL mechanisms to control jobs in the non-locally qualified sector. Much of our work concentrated on growth in the finance sector as the lead operator in economic growth.

According to Senator Walker , the –

" M i g ration Policy is almost like a tap and the States can turn it on or turn it off at will".

When an employer is assigned a quota of 90 local qualified and 10 non-locally qualified, and comes to us to say –

" a c tu ally I can't find 90 local people to fill these jobs,"

will we say, in the words of the Chief Executive, Policy and Resources –

" W e l l, get lost"?

The question is "Can we?" and this in turn, breaks into two further questions "Do we currently?" and "Will we in the future?"

According to Deputy Voisin, "We are very strict about the numbers of non-locally qualified staff and that isn't going to change."

The Scrutiny Panel examined the evidence contained in Economic Development Committee minutes on applications for non-locally qualified staff, and found that far from being "strict" the Committee is rather generous.

• A c ro ss all sectors, requests for additional non-qualified staff are granted in 75% of cases leading to growth of 760 over 5 years.

• T h e sector ratios are often breached in practice.

• T h e reported numbers on non-locally qualified are theoretical rather than actual because businesses run under their official quota for locally qualified staff.

• C o n d itions applied to time-limited consents often fail to be met.

• T h e Economic Development Committees appear to put economic priorities above other concerns.

The evidence behind these conclusions is reproduced in the attached Appendix.

This evidence suggests strongly that across all sectors, whether high-skilled finance sector employees or relatively low-skill workers in the catering of fulfilment sectors, requests for additional non-locally qualified employees are usually granted, in the "best interests" of the island. These best interests are often in the form of additional tax revenue. The only change likely as the Economic Development Committee attempt to grow the economy in the future is that the number of these requests will increase, as will the number granted.

In the high-skilled finance sector, numbers of immigrants will undoubtedly increase. The Chief Executive of Jersey Finance stated that –

" t here are not the people on the island with the requisite skills and experience we will still need the flexibility to bring skilled and experienced people in from outside."

He stated that an additional 200 immigrants would probably be required by the finance sector. These employees, both licensed and additional non-locally qualified workers, will be new to the Island.

He called on the States to review and reset current regulations:

"  i n my view, push them (RUDL and Housing Policy) to one side and say what is the Economic Policy that we want and then bring in Housing Policy and a Migration Policy that support Economic Strategy."

Jersey Finance appear to have been listened to, the President of the Economic Development Committee says that there will be a need for:

" as much liberalisation as possible in the area of the importation of key financial services knowledge and capability".

The Housing President has stated that the intention is to reduce the numbers of non-locally qualified (Registered) heads of household by 1,750 over the next few years, by allowing easier access to transfer to the licensed sector. In addition, the increased numbers of high-skill immigrants, are to be given the right to buy "(a) – (h)" properties in their own right, adding further pressure on the three to four-bedroom owner-occupier property sector, identified by the housing requirement study as critical.

In the Panel's view the numbers outlined above, combining current practice, predicted trends and stated intentions are likely to bring us close to the "worst-case scenario" of 500 inward migrants. It is clear that the Economic Development Committee (and any future Minister for Economic Development) must have as the prime objective the fostering of economic growth, and as such will effectively be conflicted if it is to be placed in charge of migration.

There is a clear need to put in some form of check or balance to ensure that economic considerations do not totally dominate the other equally important elements such as infrastructure and public service demand. In the view of the Scrutiny Panel, the simplest and most effective way of incorporating this balance is to place the responsibility for the Population Office with a Minister other than the Minister for Economic Development.

There are no financial or manpower implications resulting from this amendment.

APPENDIX

Will the proposed mechanism for regulating migration enable the numbers of inward migrants to be controlled effectively?

1. T h e President, EconomicDevelopment, told the Panel that current controls were in fact strictly applied by his Committee –

W h a t w e d o is we grant licences that grant jobs for locally qualified and non-locally qualified,

non-locally qualified being people who have not been in Jersey for more than five years.  That is what we do.  So, you know, we can control the total number of jobs that are granted.. We are very strict about the numbers of non-locally qualified staff.  People really have to work very hard if they want an increase in their number, and that isn't going to change.  I certainly don't see that changing.

2. T h e Panelnoted that theCommittee'spolicy statement, dated March 2003, makes it clear that there is a balance to be struck between business growth and other States policies, particularly population growth.In relation tothe further development of the financial servicesindustryin particular, it is stated that the Committee  will pursue  a  policy  of  encouraging  business  growth  in  a  selective,  pragmatic  and sympathetic way'.
3. T h e Director ofRegulatoryServicesexplained that the Committee also had torecognise the realities of the local employment situation. Despite a largenumberofunemployed in the Island thereremainedcertain employment sectors where few locally qualified residents wouldwork –

I f [ th e C o m  mittee] had applied the letter of the law in 1997 to 1998, basically we would have

closed every hotel and restaurant overnight, and of course we had to accept from a pragmatic point of view that couldn't happen.  You find very few local people, even with 400 unemployed, who want to be a kitchen porter.  They just don't do it.. You know, there are jobs.  If you walk down to the Job Centre, there are jobs on the wall for 30 chefs.  There are others in hospitality and catering and yet there is allegedly this 400 presently unemployed.  Why don't they go and get those jobs?  I don't know the answer to that.

Comment

The pressures on migration exist at the lower level of skills required in sectors such as hospitality as well as the higher levels required by the financial services industry.

5. P a n el's research into RUDL applications

W  h il st many witnesses have assured the Panel that the Economic Development Committee can and do

currently maintain strict control over employment numbers through the application of Regulation of Undertakings Licences, examination of current practice would suggest otherwise. Analysis of the cases which come to the Committee, being outside the delegated powers of the officer, often where an increase in the number of non-locally qualified (nlq) employees is requested, or where there is a variation of the local to non-local employees ratio which is the norm for the sector, reveals that on average 75% of the applications are accepted.

W  h il st it is true that these cases are only a small proportion of the total licences granted, they do show significant growth in non-locally qualified consents, and variations from the norm. Over the 5-year

period up to 2004, a total of 760 additional non-locally qualified employees were granted consents,

an average of 150 per year.

T h e r atios for each employment sector, which are presented in the regular 6-monthly reports to the States,

are as follows:

• H  al f of the total approved in Hotels/Guest Houses (50%)

• T w  o fifths of that in Restaurants/Catering (40%)

• O  n e in five in retail (20%)

• O  n e in six in Building/Construction (16.7%)

• O  n e in seven in Banking/Finance (14%)

• O  n e in eight in Marine (12.5%)

• O  n e in nine in Transport/Haulage (11%)

Ju s t t o illustrate how these ratios are treated, one has only to examine a selection of decisions taken by the

Committee to requests for additional nlq employees in the Finance sector:

One large Bank with 1,200 staff 217 nlq employees 18% Accounting company with120 staff 30 nlq employees 25% International Bank with 140 staff 40 nlq employees 28.5% Large Bank with 620 staff 186 nlq employees 30%

T h e evidence is that if businesses make the case for increased numbers of nlq employees and take it to

Committee, in most cases the numbers will be granted. Not only are numbers of employees increased, but the guideline proportions can be and are exceeded. The examples above cover a not insignificant 2,000 of the 11,000 jobs in the finance sector.

In t h e final case, the Bank had requested a further increase in the ratio from 30% to 35%, this was not

granted, but the response of EDC, in 2003 was as follows:

" S h o u ld th e company experience difficulties in finding local staff, it could approach the Committee at any time during the 3-year period in order to discuss staffing issues."

T h e P  anel is convinced that should the case for such an increase be made in the future, it will eventually

be granted.

M o s t worrying to the Panel is the fact that for much of this period economic activity rates were fairly static

or declining. If such growth in numbers has taken place with low economic growth the question of what will happen as we deliberately attempt to grow the economy by 6% or 7% must be asked.

S im  il ar cases are to be found in all sectors, for example in the hotel sector where a 50/50 split is said to be

the "norm", a 30/70 split is regularly employed.

In o n e case however, a hotel with 2 "(j)" category employees as manager and chef and 18 non-local staff

had  their  licence  revised  to  take  up  to  27  staff,  of  whom  20  could  be  non-locally  qualified.  The probability is that 100% of the non-management staff will not be local.

T h e o retical or Actual figures

T h e s e differing sector ratios are, in the opinion of the Panel, merely theoretical and used to disguise the

actual proportion of non-locally qualified employees involved in the individual businesses. The Panel found evidence that the Committee was aware of this fact, and has chosen to ignore it. On 13th June 2001, concern was expressed by officers that:

" fi r m s w e r e applying to increase their existing staffing establishment, despite carrying forward a number  of  vacancies,  in  order  to  increase  the  number  of  locally  qualified  staff  they  could employ".

T h is view was endorsed by one member of the Panel, who suggested that, in future, the Committee should

have regard to the actual percentage of non-locally qualified staff rather than the theoretical percentage. This view appears to be ignored by the Committee, who on 31st October of the same year, revised the licence of a finance-related company thus:

W  h il e the figure that will appear in any reports of overall ratios in this sector will be based on 29% the

reality is that the company were actually operating at 41% non-locally qualified staff. The percentage figure remains constant but hides an effective increase of 9 non-locals.

T h e Panel is interested to note that a decision on the application of 13th June was deferred "pending a

review of the benefits that would accrue to the Island if these requests were granted". The Panel has asked for the final decision but has been refused access to that information on the grounds of commercial confidentiality.

T im  e -limited consent

O n e way the Economic Development Committee attempts to control the steady and significant growth of

the numbers of non-locally qualified staff is to issue time limited consents. A view of their effectiveness can be gained from examination of one particular finance-related licence over a period.

T h e Panel notes that each and every target for reduction has failed to be met and the history is one of

significant growth in the number of non-locally qualified employees. Despite this, the Committee once again set a target for reduction to 10 non-locally qualified by February 2005.

T h i s is compounded in this case by the use of short-term contract employees, in this case, staff on

secondments of up to 2 years. Seconded staff do not appear on the establishment. In this case, the actual number of non-locally qualified employed by the company, and housed on the Island, is 19; 25% of the workforce when fully staffed, or 31% if the company fail to recruit further locally qualified staff. The figure that will appear in the published statistics is 16%

T h e w  orst examples of this approach are to be found in the restaurant/catering sector. For example, at the start of a restaurant undertaking in 2001, the original licence was for the engagement of 50 staff, initially

to be 30% locally qualified, increasing to 75% over 3 years. When the licence was reviewed at the end of the 3-year period in October 2004, the staffing establishment was found to be 34, only 4 of whom (12%)

were locally qualified. The company was given a period of time to meet the original 30% target.

E x a m ination of a further case in 2003, reveals that a manager with a company had been engaged on a

contract basis since February 1999 for a total of 4  years 8  months. Following his resignation, and despit the fact that no locally qualified person had been trained up as a replacement in all this time and the company had not undergone a recruitment exercise, a licence for a non-locally qualified person was granted "in the best interests of the Island.

T h e f ulfilment industry

T h e fulfilment industry was cited as the shining example of how to grow and diversify the economy

without increasing immigrant labour.  The  Chairman,  Migration  Policy Steering Group  stated in  his evidence said –

I c i te th e e x ample of the fulfilment industry.  They haven't got any non-qualified people on their

licences, and that is a good example of how the mechanism works and why, frankly, we need it, because, if we wouldn't have Regulation of Undertakings and Development, fulfilment would have probably sucked in huge amounts of immigrant labour.

O n cl oser examination, however, it was found that the fulfilment industry do employ non-locally qualified

labour. The Director of Regulatory Services confirmed that there are approximately 600 people engaged in this industry of which 94% are locally qualified. That is approximately 36 non-locally qualified workers in this sector. In September 2004, temporary non-locally qualified permits were also granted to one company for the period October to December to cope with the Christmas demand.

I n 2 003,  the  Economic  Development  Committee  granted  a  fulfilment  company  a  licence  for  the

employment of three full-time non-locally qualified members of the management staff and agreed to extend the capacity to take on non-locally qualified management staff to other fulfilment companies. The Minutes state –

T h e C o m  m i ttee granted delegated authority  to the Director to grant consent for  non-locally

qualified staff in future applications from fulfilment undertakings where the staff to be engaged were in management/technical positions, as opposed to pickers and packers. In addition, the Director was authorised to contact those fulfilment industries which had had refusals issued to them in order to advise them of the Committee's new policy.

T h e decisions itemised above are justified in terms of being in the best interests of the economy of the

Island' or because of the economic benefit derived from the company/industry'. The consents follow examination of the company's profits and hence the tax contribution to the Island.

Comments

The above examination leads the Panel to question whether strict control is exerted by the Committee over business applications for additional non-locally qualified staff.

• T h e averages are often breached in practice.

• T h e reported numbers on non-locally qualified are theoretical numbers because businesses run under their official quota for locally qualified staff.

• C o n d itions applied to time-limited consents often fail to be met.

• T h is  situation  exists  across all  sectors of employment, not  just the financial services industry.

• T h e r e is clear evidence that there is a great demand from business for non-locally qualified staff as the locally qualified population is unable or unwilling to fill the requirements.

• T h e  Economic  Development  Committees  appear  to  put  economic priorities above population concerns.