Almost a quarter of top earners in the UK are migrants, research has found, with the government’s post-Brexit migration system unlikely to impact this, according to experts.
A study by academics at the University of Warwick's Centre for Competitive Advantage in the Global Economy (Cage), which analysed anonymised tax returns collected by HMRC, found that of the top 1 per cent of UK earners – or those earning more than £128,000 per year – 24 per cent had moved to the country as an adult. This was despite migrants making up just 15 per cent of the UK population.
Among low-income groups, only around one in six people were migrants.
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The paper, Importing inequality: Immigration and the top 1 percent, also found the number of high-paid migrants was increasing. There were 52 per cent more migrants in the top 1 per cent of earners in 2018 compared to 1997. Additionally, 85 per cent of the increase in the share of income held by the top 1 per cent over the last 20 years could be attributed to migration.
Rob McNeil, deputy director of the Migration Observatory at the University of Oxford, said it was “no surprise” that migrant workers in the UK were among the UK’s top earners, and that London in particular has “traditionally been a major draw for global talent”.
“Restrictions on lower-income labour migration from outside the EU for a decade has naturally skewed non-EU labour migration toward the middle and upper end of the UK wage distribution,” he said.
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McNeil added that the overall composition of the UK’s migrant population was complex and encompassed both some of the country's highest and lowest earners. “But to imagine that work migration to Britain is primarily a low-income phenomenon is to misunderstand the [migration] process,” he said.
Looking forward, the introduction of new restrictions on EU workers when the UK leaves the EU in January 2021 – including the new sponsorship system – would likely make hiring talent from abroad more costly for some employers, said Gerwyn Davies, senior labour market adviser at the CIPD. But the change could also bring benefits, he said.
The removal of migration caps and faster processing times promised by the new system meant “the new restrictions [would] probably have little bearing on employers’ recruitment strategies,” said Davies. “The premium they gain in terms of skill and experience will significantly outweigh the costs in the vast majority of cases.”
But, he added: “The situation is very different for low-wage employers who will need to change their recruitment strategy given the lack of route for recruiting low-skilled labour from outside the UK.”
In terms of sectors, the data showed that finance, medical, technology and professional sport had the highest proportion of migrant workers among their top 1 per cent of earners. Two-fifths (40 per cent) of the highest earning bankers were shown to be migrants, earning an average of £383,300, and 37 per cent of the highest-paid people working at UK hospitals were earning an average of £160,400.
In web portal work – for example website or software development – migrants made up over half (51 per cent) of top earners, taking home £259,700 on average. Meanwhile, in professional sport, 31 per cent of top-paid workers were from overseas.
Arun Advani, assistant professor in Warwick’s economics department, director of Cage and lead author of the paper, noted that the report’s findings showed concerns about migrants acting as a drain on the economy were misplaced.
Speaking to the Guardian, he said: “A lot of the worries about migrants is about the bottom end of the distribution, but actually migrants are hugely prevalent at the top of the income distribution – and therefore paying more tax.”
Advani added that the research could be important in the debate over who should pay for the government’s coronavirus support packages.
Labour party leader Sir Keir Starmer recently called for a “wealth tax”, through which the highest earners would shoulder a larger part of the financial burden of the coronavirus pandemic. However, Advani said that this could cause high-earning migrants to leave as they would have “less to tie them to the UK”.