Besides being English-speaking countries, what do Canada, Australia and New Zealand have in common? All three of them have a points-based immigration system. And the UK will soon join them.
However, a lot could change in the upcoming elections on 12th December. If the Conservative Party led by Boris Johnson wins, the UK will soon move to a points-based immigration system from the current unrestricted movement for EU workers.
In the points-based immigration system of Canada, Australia and New Zealand, eligible candidates are scored on various factors like age, education, work experience etc. The idea is to allow only those candidates to enter who match the requirements of the host country. The new points-based immigration system of the UK will also follow a similar path.
The new immigration system will not restrict immigration; rather, it will allow more immigrants to enter the country. For instance, Australia’s net migration is 8.6 people per 1,000 residents. It is the highest in the developed world and double the UK’s 4 immigrants per 1,000 residents. Canada’s net migration rate is 7.1 per 1,000 while New Zealand’s rate is the same as that of the UK.
How does immigration affect productivity? As per the OECD, Canada, Australia and New Zealand have done much better than the UK in terms of increasing output per worker.
The GDP per worker has increased to 110 in Australia, 107 in Canada and 103 in New Zealand. In comparison, the GDP per worker in the UK is just 102. The growth figures are also much more than the UK’s. In 2018, Australia’s growth increased by 2.2%, Canada with 1.8% and New Zealand by 2.5%. In contrast, UK’s growth increased only by 1.2%.
The current UK immigration system allows freedom of movement to EU citizens. As a result, a large number of unskilled workers move to the UK as the wages are higher there. For example, waiting tables or washing cars in the UK do not earn much, but it earns much more than what it would in Bulgaria. The national living wage in the UK is £8.21 while that in Bulgaria is £1.47.
The wage difference is not much in skilled jobs, however, the difference is significant in unskilled jobs. This encourages a lot of unskilled workers from the EU to move to the UK. Not surprisingly, a large number of small businesses have come up in the last decade due to the abundant supply of cheap labour. The UK has seen numerous coffee shops and car washes come up in the last decade along with a lot of other labour-intensive industries. But the problem is that generally such low-skilled workers usually have low productivity.
A point-based immigration system increases productivity. For example, in Australia, you need to have at least a degree, be fluent in English and have relevant work experience in order to migrate there. Such immigrants will definitely have higher productivity than the low-skilled ones in the UK.
With a new immigration system, smaller companies in the UK may not have access to cheap labour anymore. Even though there are chances that such companies may close down, the economy will not be affected much as such companies did not contribute much to the economy anyway.
Y-Axis offers a wide range of Visa and Immigration services as well as products to overseas immigrants including UK Tier 1 Entrepreneur Visa, Business Visa for the UK, Study Visa for the UK, Visit Visa for the UK, and Work Visa for the UK.
If you found this blog engaging, you may also like…