Mark Wright, a partner and Asia Pacific immigration leader with Deloitte, is the latest to moan about the loss of ‘skilled’ 457 temporary work visas. From The Australian:
At what point did immigration become a dirty word? It is a debate with high stakes for the Australian business community which must attract and retain talent while grappling with the fast-changing nature of the workplace.
But, then, governments across the world have fallen out of love with immigration.
This month the Australian government abolished the temporary work (skilled) visa (subclass 457) and replaced it with the temporary skilled shortage visa.
The 457 visa was introduced in 1997 and in the intervening 20 years it has become one of the most successful corporate visa programs in the world, with elements of it widely replicated elsewhere…
[Australia requires] an immigration policy that fosters growth, provides our local workforce with opportunities and helps position Australia for our future place in the region.
Regrettably, with the influence of populism, immigration is often viewed negatively. And business will be an early casualty…
The new TSS visa will make life unnecessarily difficult for business. Mandatory processes around labour market testing — for example, how long an unfilled position has been advertised — and overly stringent English language requirements will slow down the deployment of much-needed talent to Australia.
Under the TSS visa system, occupations will be reviewed every six months to determine whether the nominated category qualifies for a two- or four-year visa, and whether the occupation has a pathway to permanent residence in Australia.
This is a problem for forward planning and for attracting and keeping talent — and we may lose that talent to other growth markets in our region…
In 20 years’ time, it will be interesting to see whether we look back as fondly on the TSS visa as we can over the past 20 years with the 457 visa.
Wright’s Panglossian view around 457 visas does not pass the sniff test.
457 visas were initially introduced so that companies that could not source “skilled” labour locally, due to shortages, could instead employ foreign workers on a “temporary” basis in order to fill specific roles. They were designed as a short-term stop-gap when certain labour was genuinely scarce.
However, since their initial introduction we witnessed the whole 457 visa system get perverted.
Exemptions from labour market testing grew from around 20% initially to the outrageous level of around 80%.
Exemptions were originally to be granted for clearly defined skills shortages as identified by the then DEEWR (now Department of Employment), such as for doctors in rural areas and for short term skill-specific undertakings (e.g: Asian chef’s for expo’s, etc). Instead we saw Australia’s pubs importing kitchen hands on 457’s in significant numbers with government approval. Most of these jobs could have been filled locally with a little bit of training.
457 visas holders residing in Australia also blew-out to around 200,000 (both primary and secondary), with many of these working in professions that are not consider to be particularly “skilled”, in short supply, or critical to the economy, such as cooks/chefs, cafe/restaurant staff, and customer service.
Not surprisingly then, the 457 visa system was found by a Senate Committee to be “not sufficiently responsive either to higher levels of unemployment, or to labour market changes in specific skilled occupations”.
Heck, government officials also conceded via an FOI request that they refused to cull the Skilled Occupation List (SOL) because they didn’t want Australians thinking that 457 visas were being used to manage any short-term shortage of workers, despite this being their initial purpose:
Briefing notes for Vocational Education and Skills Minister Scott Ryan, obtained under Freedom of Information laws, emphasise that since its establishment in 2010 “the list has remained relatively stable with only a few occupations being added or removed in any given year”.
“Major changes to the list from year to year would signal that it is being used to manage short-term labour market fluctuations,” the briefs state.
Joanna Howe, Senior Lecturer in Law at University of Adelaide, also frequently derided the merits of the 457 visa system, describing it as “shambolic”:
The mechanism for identifying who can apply for these [457] visas is the Consolidated Sponsored Occupations List. This is a list that has no requirement that the occupation be in demand in the Australian labour market. It includes more than 600 occupations, most of which are not in shortage. So long as an employer nominates an overseas worker to perform a job on this list, then the occupation is deemed to be in need.
Nursing, teaching, engineering and law are all on this list, and are also occupations where Australian graduates are struggling to enter the labour market.
This means the 457 visa can be used by employers who wish to access foreign labour for an ulterior motive.
Nor is the replacement for the 457 visa system – the Temporary Skill Shortage (TSS) visa – much better, and remains wide open to rorting.
There are two main streams available under this new TSS visa program, namely:
- Short-term stream – this is for employers to source genuine temporary overseas skilled workers in occupations included on the Short-term Skilled Occupation List (STSOL)1 for a maximum of two years (or up to four years if an international trade obligation applies)
- Medium-term stream – this is for employers to source highly skilled overseas workers to fill medium-term critical skills in occupations included on the Medium and Long-term Strategic Skills List (MLTSSL)1 for up to four years, with eligibility to apply for permanent residence after three years
There is also a Labour Agreement stream for exceptional cases where standard visa programs are not available and there is a demonstrated need that cannot be met in the Australian labour market.
There are two fundamental problems with the TSS visa program.
First, the pathetically low pay floor of $53,900 (non-indexed) has been left in place. SBS News last year did a great job exposing the ridiculousness of this low pay floor:
The government’s decision to ignore calls to increase the salary floor of 457 workers in its recent reforms threatens to undermine the ‘skilled’ component in the temporary skilled visa scheme, according to migration experts.
The salary floor for 457 visa holders, known as the Temporary Skilled Migration Income Threshold (TSMIT), has remained at $53,900 since 2013, despite a government review recommending it be increased.
In the nine months to March, almost 10,000 457 visas were granted to workers on salaries between $53,900 and $57,000 (an estimate of where the TSMIT would have risen to by now had it not been frozen), according to documents published under Senate Estimates.
This group represents around one-quarter of the entire 457 scheme, which will provide grants to approximately 45,000 foreign workers in 2016-17, according to latest Department of Immigration figures.
Dr Joanna Howe, Professor in Law at the University of Adelaide, said although it might not seem significant to not increase the TSMIT each year, if it is not indexed a key integrity measure of the 457 visa is undermined.
“The decision to freeze the TSMIT and to keep it frozen means that the 457 visa is shifting somewhat from being a skilled and highly-skilled work visa, to being a more general labor supply visa which can meet the alleged shortages in industries like accommodation and food,” she said.
Of the 9850 visas granted, with salaries between $53,900 and $57,000, in the past nine months, 3806 were in the accommodation and food sector – six times more than any other identified sector.
Alex Kaufman, migration manager and lawyer at FCB Group, argued the continued freeze on the TSMIT “runs counter” to measures introduced under the government’s recently announced reform package.
“Given the TSMIT has been used as a proxy indicator for ‘skills’, both in terms of signalling skills shortages, and the level of skill held by a 457 visa applicant, the decision to not increase the TSMIT for the time being is likely a political one, designed to placate sectors where the highly skilled still come at relatively low cost – notably, the hospitality sector,” he said.
The fact remains that the floor salary for ‘skilled’ temporary workers should be set around the average full-time salary of $84,682 (which includes unskilled workers), not 36% below it at $53,900.
By maintaining such a low pay floor for temporary ‘skilled’ foreign workers, the Coalition has ensured the system will continue to be overused and abused by employers, and will continue to undermine the pay and working conditions of local workers.
Second, as noted this month by the Australian Population Research Institute (APRI), most skilled migrants have gone into areas already in oversupply, with most also employed at levels well below their claimed skills set.
According to APRI, this mis-match will likely persist because the MLTSSL is not based on current needs or current ‘skills shortages’, but “makes selection conditional on whether an occupation might be needed in two to ten years’ time” and “includes numerous professions that the government’s own Department of Employment has judged to be oversupplied, including accounting and engineering”. Thus, “current migration policy is not about present skill needs, but hypothetically about those skills Australian employers might need in the medium to long-term” and the MLTSSL “takes no account of current skill needs”.
Moreover, “Australian employers still have access to the most generous temporary entry program in the developed world” provided they “pay a tiny training levy for the privilege” (i.e. “$1,800 a year for a large business”).
The likely end result is that Australia’s temporary skilled visa system will continue to be rorted. And this will be made worse with the permanent ‘skilled’ visa intake being maintained at an insane 130,000 a year – even higher than the during the mining boom – which acts as an enticing carrot for prospective migrants into Australia.
In short, Mark Wright doesn’t have a leg to stand on when bawling over the loss of 457 visas. In reality, further reforms are required to restore integrity to the temporary skilled visa system, including:
- Significantly raising the minimum pay floor; and
- Reducing the permanent skilled migrant intake.
