26 Britain TheEconomistOctober9th 2021
nomic hit from the pandemic was at its
worst. This is compounded by a “composi
tional effect”: lowpaid workers were the
most likely to lose their jobs during the re
cession, meaning that average wages for
those still in work increased automatically,
even without anyone being paid more. Un
derlying growth, therefore, is surely weak
er than the headline measures. Data from
Indeed, an onlinerecruitment company,
show that wages on advertisements posted
on its website rose by an average of just
0.8% between February and July, not ac
counting for inflation.
In fact, the best period for real wages
may already be past. Inflation rose at an
annual rate of 3% in August, up from 2.1%
in July. Analysts now expect an annual
pace of over 4% by the end of autumn, dri
ven by surging energy prices and disrupted
supply chains. Higher prices will eat into
real wage growth. Meanwhile, underlying
wage growth may also be set to slow. The
government furlough scheme, which co
vered part or all of the wages of workers
temporarily sent home, closed last month.
More than a million people were still on
the scheme at the start of September, and
many will now be seeking work. Increased
slack in the jobs market should restrain
pay growth in the months ahead.
Despite rising energy bills, empty pet
rol stations and supermarket shortages,
the Conservatives have enjoyed an upbeat
party conference. They have sought to turn
a crisis into an opportunity by recasting a
shortage of drivers for heavygoods vehi
cles as an omen of good things to come for
all workers. For the moment, this seems to
be working, with the government main
taining a decent lead in the polls. But the
opposition Labour Party is beginning to
spy an opportunity. One shadow cabinet
member riffed off Mr Johnson’s former ca
reer as a journalist, dubbing his approach
as “government by newspaper column”.
The prime minister may have marshalled
the facts to present a plausiblestory. But as
households feel the squeeze, they may
start to doubt its conclusion.n
Big dipper
Britain, change in real household income
Percentage points
Sources: OBR; ONS; Bank of England; The Economist
6
4
2
0
-2
2523211917152013
OBR
projection
Adjusted
FORECAST
High-skilledvisas
Only the best
P
ulling the lever marked “uncon
trolled immigration”, said the prime
minister in an interview broadcast as the
Conservative Party’s annual conference
kicked off on October 3rd, was the wrong
way to solve labour shortages. Britain is ex
periencing many of these at the moment,
but employers should not expect to be able
to import their way out of them. Instead,
he said, haulage firms, poultry farms and
abattoirs that lack workers ought to entice
Britons into such jobs by training them up
and paying them more.
But when it comes to companies that
lack computer programmers, the govern
ment is far more sympathetic. That is less
inconsistent than it may seem. An hgv
driver takes between six and ten weeks to
train; a competent coder several years. And
demand for the latter has soared among
British startups. As a result, limited access
to foreign talent is a common gripe of tech
founders and venture capitalists.
For much of this year, the prospect of
looser immigration rules has been dangled
in front of them. The government’s budget
in March promised a new fasttrack visa
scheme for skilled migrants who have a job
offer from a highgrowth British firm.
“Highgrowth”, it later turned out, meant
firms that have increased their revenue or
staff numbers by 20% a year for three suc
cessive years, having started with at least
ten employees (so a firm that went from
ten to 18 employees in three years would
qualify). Such companies would no longer
have to sponsor visa applications, mean
ing they would be spared bureaucracy and
fees, and their recently arrived employees
would be able to switch jobs more easily.
This is not the only scheme intended to
attract talented foreigners to Britain. The
government’s innovation strategy, pub
lished in July, included plans to make all
graduates of top global universities eligi
ble for visas, whether or not they hold a job
offer. It also intends to make it easier for
entrepreneurs elsewhere to move to Brit
ain in order to found their businesses,
rather than doing so at home. Political and
industry insiders expect the full details of
the new schemes to be laid out in the next
budget, on October 27th, and for them to be
strikingly generous.
“Top global university” may end up
meaning any institution that appears in
the top 50, or even 100, of one of the main
rankings for the subject in question. Eligi
ble entrepreneurs are likely to include any
with backing from a reasonably credible
venturecapital fund. Such measures will,
at least initially, increase the competition
faced by welleducated Britons for the
most coveted jobs. In the longer term, the
government hopes that an influx of skilled
risktakers will fuel innovation, invest
ment and, ultimately, job creation.
All of this represents a significant liber
alisation, says John Kiely of Fragomen, a
law firm specialising in immigration. Al
though the existing Global Talent Visa al
lows companies to hire exceptional mi
grants without sponsoring their visa appli
cations, “it is a programme designed only
for the best—not for the good or the very
good”. Outside this programme, Fragomen
calculates that a single skilled worker en
tering Britain to work for a large company
for three years would incur a total visa cost
of £5,681 ($7,706). That compares poorly
with Britain’s neighbours: the equivalent
fees in France and Germany are €324 ($374)
and €175 respectively.
Entrepreneurs seeking to hire will still
have some reasons to grumble. The gov
ernment has remained tightlipped about
how much cheaper the new schemes will
be. For cashstrapped startups, that is a
substantial caveat. Moreover, many Euro
pean candidates are hesitant to move to a
country that, after Brexit, they perceive as a
hostile environment.
“When government ministers bash im
migrants in the papers to throw red meat to
their base, they should remember the peo
ple they’re trying to attract can read Eng
lish,” advises one industry insider. Such
rhetoric is also increasingly unnecessary.
Since the Brexit vote, immigration has be
come a lot less politically toxic. “Now
we’ve taken back control,”saysthe insider,
“we can let the coders in.”n
The government wants to boost British
startups through immigration