Brexit: An Australian Points Based System will Impose Significant Costs on UK Businesses

Boris Johnson and Michael Gove have announced today, 1st June 2016, that they plan to create “an Australian-style points based immigration system” by 2020 in the event of a Brexit. John Hayes of Constantine Law comments on the implications for businesses of this proposal.

1/ It will impose visa entry requirements on all economic migrants seeking work in the UK (as opposed to only non-EU workers, at present).

2/ As a result, it may be “fairer” because it will end the bias in favour of EU workers.

3/ But it will add significantly to business costs. It will impose, on all workers, something akin to the “resident labour market test” that we have present for “Tier 2” visa requirements – i.e. the worker needs to be: (a) skilled; and (b) the employer needs to prove the negative – that there is no comparable UK based worker who can do the job. This is a real cost (i.e. management time and recruitment fees and costs) to employers.

In so doing, it will drive up wages costs and inflation because it will improve the bargaining position of workers who are already working in the UK.

It is unclear how far the Leave proposals will differ from the existing “Tier 2” requirements for skilled workers (originally based on an Australian + Canadian models) and whether the Government would activate the Tier 3 system for unskilled workers (currently defunct).

The Government will have to employ 100's of additional desk-based immigration officers to manage the number of increased applications which will be involved if the “freedom of movement” of EU workers, ends.

This article originally appeared in Linkedin