Introduction to Microeconomics - Research Proposal Example

Introduction to Microeconomics INTRODUCTION United Kingdom formulated their major immigration laws in 2008 for non-European Union migrants desiring to come in the country for work or study. The new immigration system was built around a multi tier system to close some of the routes that existed earlier. Each tier specified different entry requirements for migrants to work in the UK. It will be worthwhile to see what this multi tier systems is before we embark upon to analyze its impact on the economy and general work conditions. Tier I: This is meant for investors, entrepreneurs, highly skilled migrants, and post graduate students. This replaces Highly Skilled Migrant Programme (HSMP) that was in force earlier. Tier II: Under this, skilled workers get entry in the UK, who have a ready job offer. This essentially replaces Work Permit rules granted to workers in UK. Tier III: This fulfills the need of lower skilled requirement of workers to meet temporary shortages in the labour market. This has now been tilted in favour of EU migrants only. Tier IV: This specifies the needs of students who want to study in UK and get enriched with skill and knowledge. Tier V: This is a general category as per the agreement with other countries to allow youth mobility and purely as a temporary work permit. Skilled migration has played a pivotal role to keep economy of UK buoyant and competitive. Doctors, engineers, scientists, MBAs, fall under the category of highly skilled individuals who were encouraged to immigrate and remain in UK since 2002. The problem arose because government imposed a cap which affects migration in this category. From April 2011, the Government has decided to impose a permanent restriction on skilled immigration replacing Tier 1 (General) category with a new exceptional talent visa. Currently the Government has stopped accepting new applications from the people outside of the UK. (Highly Skilled…) There have been serious concerns on levels of immigration after the worldwide economic downturn in 2008. The UK imposed no cap on immigration from the previous Eastern Bloc Countries that joined the EU in 2004. There has been a significant growth in Eastern European migration at the expense of non EU migration. Total immigration between the year 2004 and 2010 can be observed in below mentioned illustration. Surprisingly, it was highest in the year 2005. The year 2009 and 2010 do not show any drastic increase in immigration population so as to make any serious concern and any unemployment issue for locals cannot be seen having any linkages to any increase in immigrant population. Total long-term international migration estimates, UK, 2000–2010 Source: ONS, Long-Term International Migration Statistical Bulletin–Migration Statistics, Page 5 In fact, non EU migrants have got the biggest hit owing to Government efforts to quell public concerns over immigration. Because of the EU Law, government is not in a position to restrict immigration from EU Countries and what UK needs is the migration of highly skilled workers from non EU countries. The UK Government has declared a permanent ceiling of 21,700 on skilled immigration to be applicable in April 2011. Further, investors, entrepreneurs, and exceptionally talented individuals will get entry under Tier 1 and Tier 2 will be restricted to graduate level occupations. Entrepreneurs and investors will have no restriction whatsoever that can come to the UK with certain net worth. It will be pertinent to note that in 2009, UK issued 50,000 visas to non-EU citizens under Tier 1 category. Present cap of 21,700 visas in the highly skilled category is a substantial cut if seen from the perspective of visas issued in the year 2009. Shortage of Skilled Workers It will be interesting to see what business leaders say about the shortage of skilled workers. Ignacio Galan, the owner of Scottish Power Ltd has shown apprehension that UK’s plan to improve power-generation and to embark on renewable energy projects will be seriously hampered by the shortage of engineers. He further said that 80 percent of engineers are likely to retire in his company Scottish Power in next 15 years and virtually that is the story for most of the power industry in UK. (Bolger, Andrew) The headlines “Manufacturing grows in the UK, firms struggle to find skilled workers” tell us that things may take an ugly turn if the issue of immigration on skilled workers are not taken prudently. The companies like Elring Klinger, an engineering firm based at Kirkleatham, is struggling to find the skilled workers as reported by UK Immigration News Service in its issue dated 16 February 2011. (UK Immigration 2011) UK Business Secretary, Vince Cable, categorically accepted the fact at the Liberal Democrat Party Meeting in September last year that there are severe shortages of science graduates and skilled people. He opined that business growth will be hampered due to shortages of trained workers; schools churn out young people that are virtually unemployable. He categorically indicated that there is a chronic shortage of skilled engineers. (BBC News 2010) Can UK spearhead its economy in the changed circumstances of immigration caps imposed by the current regime? If UK has to maintain its position as one of the economically strong, vibrant, and thriving nation with the pursuit of liberalism then it has to understand the implication of current laws of the immigration policy. Impact on Universities and Its Economy It will be worthwhile to see how new laws can restrict student immigration in UK. Immigration minister Damian Green was categorical in his statement that he intends to impose restriction on non-EU students coming to UK for study. How was that taken by educationists? Higher Education Policy Institute (HEPI) has estimated that if these immigration rules were implemented since 2005, students enrolling in UK universities would have been only 25 percent of the present strength. What would have been the likely economical impact to the universities then? As per James Dacey, it would have been astounding £12bn. In a way, this implies that UK universities are likely to get similar or even larger revenue loss in next 5 years, if these policy measures are implemented. HEPI director Bahram Bekhradnia states that new immigration laws restricting non EU students, if implemented, will have a major impact on the UK economy to the tune of thumping £5bn per year and will have a deleterious effect on universities particularly when they are facing serious economic pressures due to cut in public expenditures. (Dacey, James 2011) Institute of Public Policy Research says that education sector in UK contributes to the tune of £10bn in nation’s economy by way of fees and other spending that the international students bring in the country. In view of the shortages of students, many programmes and departments may not be viable and may be closed down. This will surely not augur well for the country. Impact on Scientific Researchers Under new immigration rules scientific researchers will get priority but still they will be affected as it is estimated that the new policy will bring down the counts of highly skilled workers from non EU territory by at least 6300 compared to the previous years. This reduction will surely have impact on intake of pure science researchers. If UK has to remain a leading nation in scientific and technological inventions any reduction in pure science researches will have a catastrophic impact in coming years. (Dacey, James 2011) There are many opinions against and in favour of immigration policy but there is hardly any evidence that suggests that recent immigrations has caused any serious issues within the country as a whole. Immigrants have brought a lot of economic value with them in view of their high skill and education. International study on "Impact of Migrants on Local Population" In the past, certain studies were done to look at the impacts of migrants on the employment and wages of the local population. In one of the survey, UCL prepared a report in the UK context covering the data of last three decades. It used the data from Labour Force Survey, the New Earnings Survey and Census data and employed econometric techniques to analyse the impact of immigrants on unemployment and wages in the UK labour market. Their basic finding states that immigrants do not exert any adverse impact on employment opportunities or wages of local population. (Haque, Russell 2002) Conclusion When migrants bring skills with them that substitutes local workforce, likely impact will be expansion of the sector and more efficient use of assets. The basic thinking that there are fixed number of jobs in an area or country is not true. Immigration has played a crucial role in nations economic and cultural enrichment for the reason that migrants from outside EU are talented, skilled and contribute enormously in building the nation and if they are restricted through a new policy measures and not allowed to participate in the nation’s growth its impact will be enormous to be felt in years to come, particularly when the world is transforming into a large global village across all cultures, creeds and faiths. Who had thought during World War II that Europe will become one common unit in next 5-6 decades? If that can happen for Europe, one cannot deny the same phenomena for rest of the world in next few decades when all humans move freely across the globe and work wherever they feel like. This is bound to follow as a natural corollary. References: 1. Highly Skilled Workers UK Border Agency [Online] Available at http://www.ukba.homeoffice.gov.uk/workingintheuk/tier1/general/ [Accessed 25 February 2011] 2. Office for National Statistics (2011) Migration Statistics [Graph] [Online] Available at http://www.statistics.gov.uk/pdfdir/mig0211.pdf [Accessed 25 February 2011] P.5 3. Bolger, Andrew (2011) Financial Times [Online] Available at http://www.ft.com/cms/s/0/31e4b954-37a4-11e0-b91a-00144feabdc0.html#axzz1EvczEoKi. [Accessed 25 February 2011] 4. UK Immigration [Online] Available at from http://www.ukimmigration.com/news/2011-02-16/uk/manufacturing-grows-in-uk-firms-struggle-to-find-skilled-workers.htm . [Accessed 25 February 2011] 5. BBC News (2010). Vince Cables speech to the Lib Dem conference. [Online] Available at http://www.bbc.co.uk/news/uk-politics-11390365 [Accessed 25 February 2011] 6. Dacey, James 2011 Researchers favoured in UK migration cap [Online] Available at from http://physicsworld.com/cws/article/news/45161 [Accessed 25 February 2011] 7. Haque, Russell 2002 Migrants in the UK: their characteristics and labour market outcomes and impacts [Online] Available at http://rds.homeoffice.gov.uk/rds/pdfs2/occ82migrantuk.pdf [Accessed 25 February 2011] Read More