Caren Pegg, chairman of the Chamber of Commerce’s Employment, Training and Skills Committee, has written this special report for Business News on the Chamber’s stance over the work permits issue.
Isle of Man Chamber of Commerce backs MHK Ralph Peake’s call for fundamental changes to the work permit system,
The Isle of Man’s need for economic growth should be apparent to all.
This is in light of a structural deficit (related to the public sector pensions liability) last reported at £80m, which is rapidly eating up government reserves; combined with what indicators and forward projections show is a steadily declining working population and increasing pensioner population.
Without economic growth and its attendant increase in tax revenues, government’s only effective option when reserves run out will be to cut front-line services, with its biggest areas of spend – health, infrastructure, education – inevitably being the hardest hit.
One of the main priorities of the Isle of Man Chamber of Commerce is a continued focus on breaking down and ideally removing barriers to business.
This is in response to the island’s challenges but also, perhaps more importantly, to the real opportunities for economic growth provided by the potential attractions of the island as a home for people and businesses who wish to be able to rely on certainty and long-term support from their government – certainty which is singularly lacking in the UK and US at present.
In connection with this desire to remove barriers to growth, the requirement for work permits and the rules surrounding them have recently been closely examined by the Chamber of Commerce.
The Chamber is pleased that this topic has also been brought to the fore so early in the cycle of the new Government’s administration by Douglas North MHK, Ralph Peake and would support his call for change.
Over the summer, all members of the Chamber of Commerce were invited to participate in a survey examining the work permit system in its current form and its effect on industry.
Chamber was overwhelmed with both the response level and the many detailed comments provided by way of feedback by Chamber members. The survey response has indicated the importance of the issue to the business community and Island in general.
There were 92 responses in total.
Businesses that participated ranged from small to large businesses.
Participating members included those operating within the financial sector, retail, manufacturing, hospitality, e-business and construction. Over 70 per cent of participating members had at least one employee engaged on a work permit and thus direct experience of the system.
The survey revealed that out of 92 members surveyed 61 members (equating to two thirds) believed that the current work permit system hinders the wider Isle of Man economy.
In addition, over two thirds of those surveyed were supportive of either; the entire system being suspended for a temporary amount of time to assess economic impact or alternatively; further sectors being made exempt from the requirement to obtain a work permit due to economic need.
In addition to these key statistics, various common trends were identified from the survey results in relation to the current work permit system.
Chamber is in the process of producing a detailed analysis of all the feedback received and its full report will be published shortly on the Chamber’s website.
Included in this report will be relevant examples and comments which highlight the difficulties that certain businesses and sectors have encountered with the current work permit system.
Over half of the members surveyed indicated that they believed that the current work permit system prevented their particular organisation from either effective recruitment or from flourishing to achieve its full potential.
Some of the key concerns voiced by members were as follows:
l 1.The current system is lengthy and inefficient.
One member stated that ‘candidates have withdrawn their application as a result of the timescale involved in the process’. Another commented: ‘The WP system is the single largest barrier to our growth as a company. The time lag that applies to those who need a WP discourages many off island individuals from considering a move to the island. In hospitality recruitment decisions are typically made quickly and there is a need to have the new recruit in place immediately’.
The need for the process to be digitalised so that it would become quicker and more efficient was also highlighted.
l 2.Encourages adequacy rather than excellence.
Many of the Chamber members felt that now is a crucial time for businesses to be able to have the freedom to flourish and the work permit system, in its current form, hampers the ability of businesses to do this: ‘We feel like we are constantly working to a process rather than trying to meet the needs of the business. We want to attract global talent to our business as we are a global company but the restrictions on us limit this.’
l 3.Does not encourage upskilling
A few members mentioned that the system does not encourage upskilling and bringing in outside expertise which can encourage growth locally, one commenting: ‘We miss potential opportunities to bring in expertise to the Island.’
l 4.Unmarried partners are excluded
Members rightly highlighted that it is not just the candidate or potential job holder that the system creates problems for but also potentially their families and spouses, which can result in people declining to move to the island: ‘a great many people who have come over with their partners (unmarried) and want to work and contribute but are handcuffed by the system.’
l 5.Lack of Flexibility
Members felt that the current system does not recognise that businesses, roles and individuals change and evolve; recruiting, promoting or transferring between organisations requires a new work permit each time.
Chamber was particularly keen to know whether the current system has affected businesses to the extent that they have expanded elsewhere or, in the worst case scenario, relocated off-island.
The overwhelming response was that the current system had forced certain businesses to consider alternatives.
An alarmingly high number of members (over a quarter) indicated that the work permit system had forced their business to consider expansion or relocation off-island.
One member stated: ‘It’s just another reason not to locate here - on top of the logistics, higher living and utility costs.’
Others commented that the system has led to decision not to increase on-island headcount.
The most stark comment on this issue simply stated: ‘Expansion off- Island? I suspect leaving the island would be more of an option’.
The survey highlighted that certain sectors of the economy are adversely affected by the current work permit system.
Comments provided by members identified issues for businesses operating in several sectors including engineering, manufacturing, retail, construction and hospitality.
One member operating in the manufacturing sector commented: ‘Although manufacturing has no problem in getting work permits approved, they still present a barrier to recruitment if our job offer is competing against one from a company that operates in another jurisdiction. It is a question of job security.’
Chamber is mindful of DED Minister Laurence Skelly’s recent comments in Tynwald that to remove the system in its entirety would bring into play the issue of residency control, a topical subject given the immigration debate that is ongoing in the UK in light of Brexit.
It is accepted that any further changes will need to be carefully worked out and there are wider issues and implications for consideration. It is perhaps for this reason that 52 per cent of Chamber Members were supportive of a work permit system being retained in some form.
However, almost all of those members that wanted the work permit system to be retained were also very clear that further change and flexibility needed to be built into the system as a matter of priority to ensure that it is not a barrier to economic growth.
The evidence from industry via the survey results is that there are key sectors that are being detrimentally affected and stifled by severe skill shortages. Therefore, the additional hurdle of the work permit system as being another barrier to Island businesses simply has to be addressed.
Chamber notes Mr Skelly’s comments that the current system does provide flexibility to carve out further exemptions for particular sectors of the economy.
Chamber would strongly urge Government to consider suspension of the system (at the very least for certain affected sectors) so that economic impact can be assessed. This surely has to be in line with the Government’s stated guiding principle for the new administration of ‘Empowering enterprise for innovation and economic growth’.
In short there is no doubt that there is growing support among the business community for the work permit system to be suspended either in its entirety or for economic sectors that are struggling.
A fair proportion of Chamber members would like to see the work permit system discontinued in its entirety but this is balanced out by a large number of members that would rather change and improve the current system: retain but simplify - improve rather than remove.
The overall message is clear though, change is needed and fast.
Caren Pegg, chairman of the Employment, Training and Skills committee said that ‘if the work permit system is to remain in place in some form, Chamber feels that it is imperative that there is more active engagement with Chamber and industry (by sector where appropriate) to ensure that the work permit system is not prohibiting growth for business or the island.
‘There needs to be improved and more regular processes in place for Government to consider industry feedback and react quickly and accordingly to the needs of the island’s economy to ensure that any gaps in skills shortages can be addressed.
‘The system must be responsive to unemployment levels and industry feedback to ensure that the work permit system is not a barrier to business’.
Micky Swindale, president of the Chamber of Commerce asked that ‘serious consideration be given to suspension of the system, at the very least for certain key sectors (including sectors that commonly recruit unskilled workers), to allow active recruitment in areas where there are identifiable skill shortages.
‘In addition, action should be taken as soon as possible for the system to be moved to an online service in its entirety, and for further flexibility to be built into the system where necessary to allow applications to be processed quickly and more efficiently.
‘But I do believe that if we took the bold step - of complete suspension for a fixed period, with active monitoring of the economic impact on the island throughout it – the outcome would be positive in terms of business expansion, skills capacity, and local employment levels. If we don’t try, we’ll never know.’
Flexibility was one of the most commonly repeated words throughout the survey responses and the Chamber of Commerce believe that as an island we need to be open to anything as long as it creates ease and flexibility for businesses – freedom to flourish
Alongside a wholesale review of the work permit system,
Chamber feels it is very important that support is provided to allow local businesses resources and assistance to train local workers to ensure that there remains a focus on local skills development which will also, in the long-term, assist to address the skills needed for the future of the Isle of Man’s economy.