Jacqui Taylor

The Government's trade deal with India will mean that it's cheaper to hire an Indian worker than a British one. And amazingly, they've just made it even worse. Most other countries are perfectly happy to strike trade deals without forcing us to undercut our own workforce. We should have expected India to do the same. Instead, under the terms of our Free Trade Agreement with India, Indian companies will be able to transfer their workers to this country more easily. Once they're here, those workers will be able to avoid National Insurance payments for up to five years. The same is true for employers. Previously, that exemption applied for three years - which was already bad enough. Instead, both employee and employer will pay into the Indian social security system instead. This National Insurance exemption will make it much cheaper to hire Indian workers, in fields like IT and engineering, than to hire domestic talent. Let's imagine a British IT firm, set to hire a computer programmer for £60,000 a year. To hire them, an employer needs to spend £60,000 a year on their salary, plus £8,250 on Employer National Insurance. That's a total of £68,250. An Indian competitor with an office in London, meanwhile, can save money by transferring Indian workers to the UK, even if they pay the same headline salary. They’d still spend £60,000 on the salary - but instead of paying National Insurance, they pay into the Indian Employee Provident Fund instead. Mandatory contributions to the fund are capped at 15,000 rupees a month, or about £120. That means that, across a year, an employer only pays £1,470 into the social security system - for a total of £61,470. So under this Government's deal, it would be at least 10 percent cheaper to hire an Indian worker over a British one for this job. This is absurd. Over five years, it would be nearly £34,000 cheaper for an Indian firm to bring over an Indian worker to London than to hire locally. The reason for this absurd arrangement is that the India deal includes a Double Contribution Convention. DCCs make it easier for international companies to transfer their workforce. They're designed to stop highly-skilled workers from paying into two different social security systems. We already have Double Contribution Conventions with other countries. However, these other countries tend to be either: (1) roughly as developed as the UK - in the case of countries like Canada or Japan, or (2) very small - in the case of countries like Jamaica. India is by far the poorest country on the list, and by far the largest. The net result of this deal will be more Indian workers in fields like IT and engineering, undercutting British workers. Given the relative markets in the UK and in India, we shouldn't expect this to automatically be a like-for-like swap in terms of talent. We've seen this happen in the US already, with Indian consultancies leasing their workers to American companies, who are then able to pay an Indian worker far less than they'd need to pay an American. The result has been a massive expansion in the number of lower-cost Indian workers, at the expense of American workers. We should not be allowing other countries to dictate the terms of our migration system, in exchange for some trade benefits at the margins. If India wants to trade, then we should trade. Migration shouldn't even come into the equation.