Australia’s ‘skills-based’ visa system is failing

For years we have been told that Australia’s visa system is world-leading because it provides the economy with vital skills and plugs so-called critical labour shortages.

This view is generally based on a superficial examination of Australia’s permanent migration program, whereby the ‘skilled’ stream accounts for around two-thirds of the intake:

The reality paints an entirely different picture.

First, around half of the ‘skilled’ stream actually comprises unskilled family members (spouses and children) of the primary skilled applicant. Accordingly, only around 30% of Australia’s total migration program is actually ‘skilled’, according to the Productivity Commission:

..within the skill stream, about half of the visas granted were for ‘secondary applicants’ — partners (who may or may not be skilled) and dependent children… Therefore, while the skill stream has increased relative to the family stream, family immigrants from the skill and family stream still make up about 70 per cent of the Migration Programme (figure 2.8)…

Primary applicants tend to have a better fiscal outcome than secondary applicants — the current system does not consider the age or skills of secondary applicants as part of the criteria for granting permanent skill visas…

Second, most ‘skilled’ migrants have gone into areas that are already oversupplied with workers, such as accounting, engineering or IT. Therefore, the visa system is failing to alleviate actual skill shortages (see here).

Third, the actual pay rates of ‘skilled’ migrants is less than the typical Australian worker, suggesting most are working in lower-skilled and lower-paid jobs.

Evidence for this claim is contained in the Department of Home Affairs’ Continuous Survey of Australia’s Migrants, which revealed that the median full-time salary 18 months after being granted a skilled visa was just $72,000 in 2016, below the population median of $72,900.

This is particularly noteworthy given the population median income includes unskilled workers, which obviously pulls the population median figure down. In fact, if skilled visa holders were compared only against skilled Australians, then the pay gap would likely be very large.

Related to the above, the fourth and final problem is that many ‘skilled’ migrants cannot find work in their nominated field, leaving them either unemployed or underemployed. This has been evidenced by various academic studies, including here, here, and here.

The anecdotal evidence of ‘skilled’ migrants struggling to secure work is also piling up. Consider the below recent examples.

Example one:

Migrants who’ve settled in Australia in the last 10 years are more likely to rate career opportunities as a problem for them personally…

New migrants trying to negotiate Australia’s workforce face a litany of uphill battles: lack of skills recognition; uncertainty of work; a greater risk of vulnerability and exploitation…

Mohammad Al-Khafaji, the CEO of the Federation of Ethnic Communities Councils of Australia, says qualification recognition is just one reason migrants find it hard to gain relevant work…

“It’s making some of our doctors or engineers end up driving taxis or Ubers.”

Example two:

Vageesh Malhotra has been in Australia for six months after arriving from India on a skilled migrant visa, but he is yet to find a job matching his experience.

“I’m basically working in a restaurant and that’s what I’m doing right now,” he told SBS News.

Besides working in restaurants, the sales and business development professional has also been driving for Uber.

Example three:

Shady El-Agamy is a 28-year-old Egyptian migrant who was granted a 189 skilled migrant visa just nine months after applying from Cairo.

The professional skill for which Shady was selected is engineering… He believed demand for his skills must be high in Australia, but when he landed in Sydney in May of 2018, he discovered a different reality.

Not only was Shady unable to find a job in his field, but he says he never received replies from the dozens of employers and recruitment agencies he applied for work through…

Like many migrants, Shady realised his options were limited and looked for ‘temporary’ work to get by until he could land a job in his field. That job was shovelling manure at a horse stable, and a year later he’s still working the same job, barely making minimum wage. Shady is not an isolated case…

Example four:

Bhavesh Patel*, a mechanical engineer from Ahmedabad has applied for numerous jobs and appeared for three interviews since arriving in Melbourne a year ago.

He is yet to find a job in his field and is currently working at a 7-Eleven store to make ends meet.

Mr Patel is one of the many recently-arrived migrants who have not found a professional job in Australia…

Skilled Occupations Lists are in over supply and therefore most recently arrived skilled migrants to Australia have not found professional jobs.

The study states the Skilled Occupations List includes “numerous professions that the government’s own Department of Employment has judged to be oversupplied, including accounting and engineering.

“As a consequence, most recently arrived skilled migrants cannot find professional jobs.”

And last but not least, here’s Example five, which profiles a permanent ‘skilled’ migrant family from Bangladesh who was unable to gain work despite leaving their homeland to fill so-called ‘skills shortages’ in human resources. Hilariously, migrant groups then called for the state government to implement an internship program to help migrants find work (at the expense of locals):

Clearly, Australia’s ‘skilled’ migrant program is failing to deliver on its initial intent, and is instead creating oversupply across the labour market, lowering wages, and crush-loading Australia’s cities.

It needs a complete overhaul.