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Erickson in the News: Protectionism and Global Immigration in 2018

October 18, 2018


By Salman Cheema, Business Immigration Attorney and Tarunpal Dhillon, Attorney, Erickson Immigration Group

For much of the last decade, waves of populist policy measures have dominated global headlines, much of it focused on the “Brexit” vote in the United Kingdom and the election of Donald Trump in the United States. The effect of populism has been a focus of intense journalistic and scholarly coverage in immigration. While most of the focus has centered on asylum, refugee, and family‐based immigration policy, the impact on business immigration has largely been ignored. In fact, while restrictions on humanitarian migrant flows have been dominating headlines, many countries have quietly placed protectionist measures on business immigration as well, dodging headlines and yet introducing policies that have greatly affected corporate global mobility. In this article, we highlight countries that have enacted such policies, and the effects they are having on enterprise‐level businesses.

UK‐ Brexit
As early as 2013, protectionist sentimentality, rooted partly from the controversial EU bailout of Cyprus, Greece, and Italy, led Prime Minister David Cameron to promise the UK public a simple “in/out” referendum choice on whether the UK would remain a member of the European Union. From 2013 to present, a complicated and multidimensional debate has assumed the UK population, asking the public to consider its ties to the European Union, but more importantly asking the public for its vision of the future. Is the public happy with the status quo, or is a vision of an independent UK, free from the regulatory imposition of the EU (the Council, European Parliament, and the European Commission) the better choice for the region?  Free from the ties to the EU, the UK would have absolute autonomy to regulate its social, economic, and public policy initiatives.  Immigration is a key factor in these discussions.

Prior to Brexit, the UK’s immigration policies were subject to the EU’s vision of an essentially borderless state. Under the Free Movement of Persons, as primarily outlined in Article 3(2) of the Treaty on European Union, individuals with citizenship of a member state can travel visa free and have the right to reside and work in any member state. As a result, the UK enjoyed the benefits of a multicultural population as well as the economic challenges of annual migration of large quantities of people.

On June 23, 2016, by a 52 percent vote, the UK public voted in favor of Great Britain’s exit out of the European Union or “Brexit.”  Prime Minister Theresa May and EU leaders have been in negotiations to determine a transition plan for Britain’s exit effective on March 29, 2019. Currently, the information gathered from these discussions favor the following understanding on the immigration status for non‐EU nationals.

Non‐EU Nationals

While the post‐Brexit immigration process is still under negotiation, we may see the continuation of a protectionist trend to further tighten immigration. Non‐EU nationals will continue to be required to apply for and maintain valid work and residence status in the UK and will be required to comply with the limitations surrounding their work permit status and apply for a renewal nearing the expiration of their current visa and Biometrics Residence Permit.

While the procedural requirements for non‐EU nationals will remain unchanged, there is a noticeable trend in the UK Government’s priorities with respect to Non‐EU nationals applying for work authorization under the Tier 2 General category, a highly sought‐after work permit in the UK with 20,700 open slots on an annual basis. For roughly 7 months (since December 2017), the quota for Tier 2 General permits has been oversubscribed, with the UK government approving sponsorship status almost exclusively for applicants expecting to earn an annual salary more than 50,000 GBP.  With no indication of an increased quota and the government’s approach with regards to sponsorship issuance, the message sent to non‐EU nationals and their employers is clear, the UK government’s goal is to preserve and strengthen the EU workforce, granting exceptions only to highly qualified, high‐earning foreign nationals. This message is further emphasized by the immigration skills charge that is imposed by the UK Government on UK employers that sponsor Tier 2 General or Tier 2 Intra‐company Transfer (ICT) visas for employment in the UK beyond 6 months (if applied within the UK, the charge will apply for visas valid for less than 6 months). Employers are required to pay 1000 GBP for each Tier 2 General/ICT sponsored foreign worker, with a reduced charge of 364 GBP for small and charitable sponsors. The skills charge serves as a penalty imposed on UK sponsors for hiring and cultivating foreign talent.

Furthermore, as of July 18, 2018, Tier 2 and Tier 5 UK sponsors are subject to additional criteria related to labor market testing: for positions that require a resident labor market test, sponsors are required to submit documentation for each candidate with UK settled status (UK citizens and legal permanent residents) that interviewed for the position and was either rejected for the position or decided not to take the position. Documentation can be in the form of interview notes and must clearly specify why the applicant was not selected for the position. By adding this additional step in the recruitment process, the UK government is sending a clear message to UK companies to strengthen and protect the domestic workforce.

Utilizing a restrictive quota, skills charge, and enhanced labor marketing testing procedures, the UK government has ensured protectionist policies will continue post‐Brexit.

Singapore

Long known for being a pro‐business hub in Asia, Singapore shocked many in the global mobility community in 2014 by introducing a minimum wage of 12,000 SGD per month for Employment Pass applications to be exempt from labor marketing testing.1 The move may have been the bellwether for ensuing global measures to protect local labor and has only been a continuing trend in Singapore.

Earlier this year, Singapore’s Ministry of Manpower (MOM) announced increased minimum salary requirements for Employment Pass (EP) applications to qualify for advertising exemption on the MOM Jobs Bank.  Effective July 1, 2018, EP applications supported by a fixed monthly salary of at least 15,000 SGD will enjoy exemption from labor market testing. EP applications filed with a fixed monthly salary of less than 15,000 SGD will require advertising for 14 calendar days on the MOM Jobs Bank before lodging an EP application to allow qualified Singaporean nationals to apply for the open position. Previously, the salary requirement for EP application to qualify for the advertisement exemption was 12,000 SGD, an increase of 25 percent.2

Job advertisement guidelines fall under the umbrella of the Fair Consideration Framework (FCF), supported by the Government as a means to strengthen and secure the Singaporean workforce. By increasing the minimum salary requirements for EP applications to qualify for the exemption, the Government is forcing companies to advertise a larger number of roles to the Singaporean population.

Australia

The election of Malcolm Turnbull and the rise of the Liberal Party of Australia in 2015 resulted in the expectation that there would be a conservative turn towards protecting Australia’s native workforce.  However, no one could have anticipated the almost complete overhaul of the country’s business immigration system. While the major storylines in Australian immigration centered on its newfound hardline approach to asylum seekers in 2016, the government was busy implementing changes to its skilled migration visas which went into effect in 2018. Key developments include:

  • Eligible Occupations:  Over 200 previously eligible occupations were removed, greatly narrowing the types of jobs that can be nominated.
  • Labor Market Testing:  Increased from the previous 21‐day advertising period to 28 days.
  • Skilling Australia Fund Levy: Each 482 and 186 visa position nomination will require a levy payment to be made to the Skilling Australia Fund.  For businesses with annual turnover above $10 Million AUD, the levy is $1800 AUD per year that an immigrant will be sponsored for. For example, a 2‐year 482‐sponsored employee will come with a $3600 AUD levy to be paid to the government fund.  The purpose of the fund is to skill up the local workforce.3

The reaction of businesses was immediate in the aftermath of the proposed changes, even before major components of the law went into effect in March of 2018.  Between July and December 2017, the number of skilled work visas granted dropped by a third compared to the same period in 2016.  The technology sector was particularly hit, with a 10 percent drop in approvals for software engineers, and a 50% drop for analyst programmers.4   The Australian government followed up these changes by maintaining a limit on overall immigration into Australia at 194,000, a number unchanged from prior years despite a falling birthrate among native‐born citizens.5

As in the U.S., enforcement activity is also being used as a tool to limit immigration. The Border Protection Service and Department of Immigration have been merged, resulting in an immigration department that can best be described as “an enforcement agency”.6

Whereas previously corporate immigration violations resulted in fines only, new rules in place require the government to publish the names of entities engaged in illegal hiring.7 Audits have been ramped up, and monetary and other punitive measures have been increased as well. Penalties can now range from banning companies from sponsoring employees, to harsh fines and even imprisonment for corporate officers.8 A recent well‐known case involving Hallmark Computers resulted in over AUD $600,000 in fines for failure to abide by immigration laws.9

In the most recently published statistics by the Australian Border Force on Sponsor Monitoring and Compliance, 2,000 sponsoring companies were audited between 2012 and 2015, 600 were determined to have breached obligations, and 400 were fined.10  The burden of responsibility to maintain a lawful immigration system has clearly shifted from the government to employers, it is now more important than ever for enterprise‐level businesses to be aware of compliance risks and undertake internal audits regularly.

Denmark

New rules were implemented in late 2017 regarding eligibility criteria and salary thresholds that had the effect of limiting non‐EEA nationals from obtaining permanent residence. The new policy requires eight years of physical presence in‐country, up from the previous six‐year requirement unless an applicant possesses a high salary, advanced Danish language proficiency, a passing score on a Danish history and civics examination, and a record of regular employment.11 Applicants must also have not received any form of public assistance in the four years prior to applying. 12

Another policy eliminated the use of allowances for transportation, medical insurance, and per diems in the calculation of salary for purposes of minimum wage laws.  To reach the DKK 408,800 minimum salary employers can no longer rely on benefits programs that offered high-value benefits at often lower cost to the company given their ability to leverage scale. 13

Conclusion and Strategies
It is evident that the regulatory and policy environment around the world is becoming increasingly restrictive towards global mobility. Enterprise businesses have long felt immune from the anti‐immigrant rhetoric that has surfaced from time to time.  After all, business migrants are invited by established firms, have high salaries, and bring with them the potential to grow a country’s economy.

As this article has highlighted, however, the rhetoric has seeped into business immigration. We must now deal with an environment of increased enforcement and increasing protectionism that is designed to limit the flow of talent. Companies should now be prepared to implement the following measures in response:

  • Budget for higher base salaries ‐ Firms should not be surprised to see increasing prevailing wages globally. Most countries do not factor bonuses or commissions when evaluating the wage offered.
  • Use benefits packages ‐ In many countries relocation assistance, housing allowances, and per diems can be used to augment a wage figure.
  • Recruiter training ‐ Recruiters that work in tandem with immigration counsel can be better prepared to spot and avoid potential red flags that could result in a negative immigration outcome down the line.
  • Evaluate jurisdictions ‐  Smart firms pivoted from the UK to Ireland when expanding EMEA offices. As an EU member state and English‐speaking country in the same time zone, Ireland has predictably become a haven for companies seeking to avoid potential immigration issues with Brexit in the UK. Corporations will need to note immigration policies globally when evaluating global expansion.

 

1 https://www.sirva.com/en‐us/blog/detail/sirva‐asias‐blog/2014/07/17/new‐minimum‐salary‐requirement‐by‐singapore’s‐ ministry‐of‐manpower
2 http://www.mom.gov.sg/newsroom/announcements/2010/new‐15000‐minimum‐for‐foreign‐worker‐medical‐ insurance3 https://www.homeaffairs.gov.au/trav/work/newsletters/february‐2018
4 https://www.smartcompany.com.au/startupsmart/news‐analysis/job‐search‐activity‐shows‐aussie‐startups‐were‐ hit‐hard‐by‐457‐visa‐changes/
5 https://www.sbs.com.au/yourlanguage/hindi/en/article/2018/05/09/immigration‐no‐cut‐australias‐migrant‐ intake‐2018‐19. http://www.abs.gov.au/ausstats/abs@.nsf/mf/3301.0
6 https://www.anao.gov.au/work/performance‐audit/integration‐department‐immigration‐and‐border‐protection‐ and‐australian‐customs‐and‐border
7 https://www.homeaffairs.gov.au/trav/visa/migration‐fraud‐and‐scams
8 https://giltonvaleo.com/immigration‐risk/
9 Id.
10 http://lawcouncil.asn.au/FEDLIT/images/Employment_Visas_Session_‐_Marisa_Dominello_‐ _Compliance_and_enforecement_framework_under_the_Australian_Border_Force.pdf
11 https://newlandchase.com/immigration‐insights/latest‐news/denmark‐stricter‐permanent‐residence‐ requirements‐and‐new‐salary‐rules‐for‐pay‐limit‐scheme/
12 Id.
13 Id.