Priti Patel’s immigration crackdown might not be enough

The argument for excluding the low-skilled from work visas under our new post-Brexit migration system is reasonable enough. As Home Secretary Priti Patel argued this morning, excluding low-skilled migrants should encourage businesses to invest in automation and in training higher-skilled staff who might be able to do the work of two of more unskilled staff.

The weak spot for the UK economy over the past decade has been productivity, which once again has flat-lined over the past year. According to ONS figures released yesterday output per hour increased by just 0.3 per cent over the past year. Output per worker was static. When you have a seemingly endless supply of cheap labour on tap, why bother to invest in labour-saving technology? And of course, without productivity growth, ultimately we cannot grow wealthier. While productivity rates occupy a pretty lowly place in public consciousness, they are at the root of how societies get richer.

But then is cheap labour really all that cheap any more? Making it harder to import low-skilled labour is only one route by which employers might be encouraged to invest in new technology. Another is to do as the government has been doing – to increase the minimum wage. From April, the minimum wage – or National Living Wage, as George Osborne rebranded it – will rise to £8.72 an hour. Someone working 40 hours a week will – assuming employers obey the law – be earning over £18,000 a year. Simultaneously, the government has reduced the minimum salary threshold for migrants from £30,000 to £25,600. For some industries with specific shortages such as nursing, civil engineering and ballet, the threshold will be even lower, at £20,480. There is, in other words, an increasingly small band of employment for which migrant workers will not be eligible under the salary rules.

It makes you wonder how much we really need a points-based migration system to discourage the import of low-skilled labour. If the government does succeed in encouraging business to invest in more automation and other labour-saving techniques it will more likely be the result of a sharply-rising minimum wage. That, of course, and stamping out sweatshops whose employers illegally pay beneath the minimum wage. That is at least as much part of the battle as is totting up points on the application forms of would-be migrants.