UK employers pillaging Europe’s talent

The UK has one of the highest rates of overqualification in Europe. Research by the Institute of Public Policy Research two years ago placed Britain towards the upper end of the overqualification league table for those with both graduate and upper secondary level qualifications.

A report last year by the Chartered Institute of Personnel and Development, looking specifically at graduate overqualification, presented a similar picture.

A couple of weeks ago, reflecting on the number of foreign graduates I have come across in London doing clerical and administrative jobs, I wondered how much of this might be due to immigration. Recent OECD figures indicate that, since the recession, the UK has seen one of the biggest rises in the rate of over-qualification of foreign-born workers.

Data from the ONS, released earlier this month, supports my hypothesis. The ONS looked at the number of people with qualification levels above and below the mean for their jobs. It found that, until the middle of the last decade, both over qualification and under qualification had been falling.

The decline in under-education is, in part, due to a cohort effect. Younger workers with higher qualifications have raised the average level of education in a given occupation while those who came into that occupation when the qualification bar was much lower have been retiring.

But it is the rise of over-qualification that is the most interesting. It can’t be entirely attributed to the recession as it was rising before the downturn in 2007 and has continued to rise ever since. Something else happened in the middle of the last decade though; EU enlargement and a consequent rise in immigration. As this next chart shows, the over-qualification rate among eastern European (EU10) migrants is way higher than that of any other group.

Interesting also is the recent rise in overeducation among those from the old EU. This is consistent with the rise in migration from western European countries since 2012. My anecdotal data about London being full of Spanish and Italian graduates doing administrative jobs may not be far wide of the mark.

This chart also shows that the overeducation rate among the UK born has barely shifted since the early part of the last decade, which suggests that most of the rise has been due to immigration.

The age profile of the overeducated shows them to be concentrated in the 25 to 34 age group. According to the CIPD, more than half the eastern European migrants in the UK are in this age group.

 

Migrant workers from the EU don’t tend to come straight from college. Most come after they have some work experience. Degree-qualified employees already attuned to the world of work, willing to work for relatively low pay. From an employer’s perspective, what’s not to like?

At a Resolution Foundation event last year, Alison Wolf suggested that immigration might have had an impact on the amount of training investment by employers. There has certainly been a decline in training since around the same time that immigration and over-education levels began to increase. Having found a pool of cheap, well-educated and work-ready employees, have employers decided they no longer need to train people? Why build when you can buy for less?

Britain’s employers must be among the luckiest in Europe. Thanks to the dominance of English, education systems throughout the world teach young people our language. Freedom of movement and low regulation and low payroll taxes mean that it is easy to employ people from anywhere in the EU and the risks of doing so are minimal. There is an almost inexhaustible supply of high quality and inexpensive labour from which to recruit.

All of this raises another interesting question though. If Britain’s employers are happily pillaging Europe of its brightest and most talented people, how come the UK’s productivity is in the doldrums?