This is the first report in the Tech Nation Talent series, exploring the state of tech talent in the UK.
There is a shortage of reliable data on the share of non-UK workers in the digital tech industries. As we go forward and people want to know whether Brexit is changing the talent pool, it becomes even more important to have a reliable source of data and a solid benchmark on which to measure change, should it occur. This report, using data from 2011 to 2015 explores the mix of nationalities in the UK’s digital tech industries.
We know that tech businesses are at the heart of the UK economy and are playing an important role in driving growth. Crucially, this growth requires tech talent.
It is essential for the UK to…
Ideally, detailed migration information would be available to contribute to our discussions on skills and talent, however as this is not readily available, an alternative is to study the nationality of workers in digital tech industries. This report therefore analyses the nationality of workers in the digital tech industries, their qualifications, and distribution across the country to help inform these important debates.
There has been limited research on the impact of migration policy aimed at non-UK workers in the digital tech industries 1. Quantitative research has tended to focus on non-EU migrants because of data availability 2 and the fact that EU migrants are not currently subject to any restrictions under the UK’s migration policy 3.
One of the reasons visa routes have been tightened in recent years is arguably that non-EEA (European Economic Area) migration rules are the only policy lever the government has in a system where the UK is bound to accept EU migrants 4. This context in which this policy is enacted is rapidly changing – to ensure that the UK maintains its strong performance and global competitiveness into the future, employers will need to continue to be able to recruit talent from across the world. The shortage of sector specific data on both EU and non-EU workers in the UK makes this research important when trying to understand the breakdown of the digital tech workforce 5.
To build on the limited published information on levels of non-UK nationals in the UK digital tech workforce 1 we use data from the Office for National Statistics’ (ONS) Annual Population Survey (APS). The APS is the basis for the UK government’s official statistics on the labour force 2.
It can tell us about the composition of the digital tech industries workforce, including the proportion of workers in digital tech industries that are UK nationals, EU nationals and non-EU nationals. Using the APS, we will also be able to show evidence on how migration has affected the nationality of the digital tech industry across its sub-sectors.
For the analysis we adopt a definition of digital-tech industries used by Tech City UK in their 2016 Tech Nation report and developed by Nesta in its 2015 Dynamic mapping of the information economy report 3. Below is a list of industries that fall within it. In addition to the APS, we also draw on some sector specific surveys and sources, including the 2017 Tech City UK survey, research by DueDil research and LinkedIn. They are broadly consistent with the findings from the APS and illustrate the recruitment challenges currently faced by tech companies.
Definition of digital tech industries 4
We define digital tech industries using the set of Standard Industrial Classification (SIC) codes outlined in Tech Nation 2016, which classifies digital tech industries as:
26.20 Manufacture of computers and peripheral equipment
58.21 Publishing of computer games
58.29 Other software publishing
61.10 Wired telecommunications activities
61.20 Wireless telecommunications activities
61.30 Satellite telecommunications activities
61.90 Other telecommunications activities
62.01 Computer programming activities
62.02 Computer consultancy activities
62.03 Computer facilities management activities
62.09 Other IT & computer service activities
63.11 Data processing, hosting & related activities
63.12 Web portals
95.11 Repair of computers & peripheral equipment
There are two main sources of alternative data with information on levels of non-UK nationals working across UK industry sectors.
This is data collected through employer surveys to understand skills supply, demand and gaps/shortages.
There are two main types of employer survey:
This is available on request for non-EEA workers who are subject to the UK’s migration policy system. The points-based immigration system is the means of regulating immigration to the United Kingdom from outside the European Economic Area where applicants are awarded points for attributes and skills that count towards their application.
A summary of the different Tiers of the points based system is set out below. Data available includes Tier 1 (High value), Tier 2 (Skilled work), Tier 4 (Study), and Tier 5 (Youth mobility and temporary work).
However, this covers only part of the picture when addressing non-UK workers, as EU migrants are not subject to the points based migration system, and currently have freedom of movement across EU member states. The volume and type of data available varies across tiers, for instance, for Tier 5 Youth mobility and temporary work, significantly less information (in terms of both volume and granularity) on workers is available compared with Tier 2.
The data available, and analysed in this report is, by necessity, highly aggregated – owing to the costs of data collection, privacy issues and limitations inherent in measuring dynamic sectors like the tech sector with annual surveys.
The UK should therefore look to using new data sources, such as web-based data from job advertisements 1 to improve understanding of the skills needs of the economy to inform its future migration policy.
The Points Based System (PBS) for migrants to the UK from outside the European Economic Area (EEA) was introduced in 2008 and currently consists of five tiers. (Scroll through for more information.)
|TIER 1||High Value||Tier 1 covers entrepreneurs, investors and individuals that are deemed to have exceptional talent under the scheme. For these routes sponsorship from a UK-based employer is not required. Graduate Entrepreneurs are also included in Tier 1, for this route sponsorship is needed from a UK-based educational institution.|
|TIER 2||Skilled Workers||Tier 2 covers skills workers with a job offer from a Tier 2 licensed, UK-based employer. This employer is known as the sponsor.|
|TIER 3||Low Skilled (closed)||Tier 3 is designated for low-skilled migrants to fill specific, temporary skills gaps. Although legislation for this route exists, it has never been opened by the government.|
|TIER 4||Study||All students visas fall under Tier 4. To qualify, applicants must have been offered a plan at an educational institution which is licensed to sponsor migrants.|
|TIER 5||Youth Mobility and Temporary Work||Tier 5 is for migrants who have a job offer for temporary or short-term work from a UK-based company and young people (18-30) who want to live and work in the UK for up to 2 years.|
Thanks to the Nesta research team and report authors; George Windsor, John Davies and Hasan Bakhshi.
Thanks to Atomico for their research via www.atomico.com/InventedHere; Dan Hynes, Tom Wehmeier and Elena Mustatea for their support.
Thanks to Index Ventures: Dominic Jacquesson for his invaluable input and on going support.