It would be hard to have missed the commentary that has followed the minister’s recent announcement of an Enterprise Migration Agreement (EMA) for the Roy Hill Project in Western Australia. It is important to understand the facts of the EMA program and why it was introduced.
In a previous post, the rationale for EMAs was outlined in detail. A report from the National Resources Sector Employment Taskforce in July 2010 recommended their introduction. Additional evidence has also pointed to the need for a migration option which guarantees large mining projects have the workers to proceed—for example, the Skills Australia interim report of 2011 on resources sector skill needs indicated that by 2016, Australia will have a shortfall of 89 000 skilled workers in the resources sector.
Let’s address the most commonly raised concerns about EMAs.
‘EMAs and the negotiations around them are secretive’
An EMA is a contract between the Australian Government and the project owner. A contract like this cannot be fully disclosed because it contains commercially-sensitive information. The EMA guidelines require that extensive consultation must occur with all key stakeholders before an EMA can be agreed. The department will publish projects which have an active EMA.
‘EMAs will take away Australian jobs’
This is untrue. The government’s priority is to ensure suitably qualified Australian job seekers have every opportunity to find work in the resources sector. To assist, a Resources Sector Jobs Board was created to help Australians find employment opportunities offered by the mining boom.
However, there is a large body of evidence that points to significant skills shortages in the resources sector over the coming years. This shortfall suitably skilled workers is compounded by the unprecedented demand for Australian minerals and resources and the high levels of capital expenditure that are flowing into the country.
The EMA program aims to lock in these large mining projects to ensure their viability. This helps secure Australian jobs and supports future Australian workers entering into the sector through training and apprenticeships, which are an integral part of all EMAs.
‘EMAs will undermine Australian working conditions and wages’
This is untrue. The Worker Protection Act 2008, introduced in September 2009, requires overseas skilled workers be paid the market salary rate and provided with the same terms and conditions of employment as an Australian worker doing the same job at the same place. This ensures two things—that the employment conditions of Australian workers are maintained and not undercut; and that overseas workers are treated fairly in the workplace.
Sponsorship obligations also require employers to pay the travel costs to enable 457 workers to leave Australia. There is, therefore, no incentive for businesses to reduce costs by employing overseas workers through the skilled program—skilled migrants supplement the Australian labour force, not supplant it.
‘EMAs will result in overwhelming numbers of overseas workers’
This is untrue. Let’s put the numbers in perspective here—the minister has approved up to 1715 overseas workers for the Roy Hill Project. Comparatively, there were around 91 000 subclass 457 visa holders in Australia at 30 June 2012. Overseas workers under this EMA, therefore, represent less than 2 per cent of the overall 457 program.
Further information on EMAs can be found here.
The EMA submission guidelines are located here.
A medium-sized steel fabrication business in Broome, servicing the vast Pilbara and Kimberly regions in Western Australia, faced a challenge not unfamiliar to many regional employers around Australia—recruiting and retaining skilled workers to help the business grow and meet its customers’ needs.
In the shadow of the resources boom, the company also experienced competition for workers with nearby mining projects.
Alongside investing in training and development for local workers, including building opportunities for local Indigenous workers, the 457 program helped the company grow while building a culturally diverse and inclusive workforce.
Employer sponsored visa categories, including the 457 visa program, have the highest processing priority, which means skilled workers can be deployed more quickly into the Australian workforce where they are most needed. Access to skilled workers is critical for regional businesses to prosper, which in turn supports the local community and economy.
The 457 program enables Australian employers in both regional and metropolitan areas to sponsor overseas skilled workers for temporary residence in Australia for a period of up to four years, filling skilled vacancies in their business where the local labour market cannot meet demand.
Joselito* is a 34-year-old motor mechanic from the Philippines. He works for Car Tune car repair in Wagga Wagga. He has been working for his employer for the last two years as a subclass 457 visa holder. Car Tune’s manager has told Joselito the company would like to sponsor him for permanent residence.
Wagga Wagga is an eligible part of Australia for the Regional Sponsored Migration Scheme (RSMS).
Joselito can lodge his application before the reforms are introduced on 1 July and be considered against the current RSMS criteria. However, both the nomination and visa application would have to be lodged on or before 30 June.
A nomination lodged before 1 July can be linked to an application lodged after the reforms are introduced: however, the visa applicant will be considered against the new direct entry stream criteria for RSMS.
Joselito and his employer will benefit from the 1 July permanent employer sponsored reforms because:
- some criteria satisfied at the standard business sponsorship stage won’t be reassessed (for example, that the business is actively and lawfully operating)
- the nomination won’t need to be ‘certified’ by a Regional Certifying Body (RCB) saving the employer time and paperwork, and
- Joselito will be considered to meet the skill requirement because he has already proven his skills.
After 1 July 2012—Temporary Residence Transition stream
Because Joselito has been working for his employer as a motor mechanic on a subclass 457 visa for the last two years, he is eligible to apply for permanent residence through the Temporary Residence Transition stream.
This provides a streamlined and simplified pathway to permanent residence for eligible subclass 457 visa holders. It is being introduced in recognition of the important economic and social contribution these skilled workers make to Australia.
The application process will continue to have two stages: the employer nomination and the visa application. However, the employer will no longer need to seek the certification of an RCB. This means the department will process these nominations much more quickly.
From 1 July, to nominate Joselito for permanent residence, Car Tune will have to meet the following criteria:
- The job or position being nominated for permanent residence is consistent with the position the person held while on their subclass 457 visa.
- The position will continue to be available to the prospective migrant for at least two years on a full-time ongoing basis.
- The terms and conditions of employment are the same as any that would apply to an Australian.
- The employer has met the subclass 457 visa training requirement
Joselito will need to meet key visa criteria, including:
- being less than 50 years of age
- having vocational English language proficiency
At 34-years-old he meets the first criterion. Joselito’s English ability would have been assessed previously for his subclass 457 visa to be granted. He would be able to reuse these results as long as they continue to be valid. From 1 July, IELTS tests results will be valid for three years, rather than the current two years.
Joselito’s skills would not need to be assessed, because he has been employed in the role for two years and Car Tune wish to continue sponsoring him.
*This case study is fictional, and is being used for illustrative purposes only.
We have developed a guide that provides an overview of the 457 program.
The 457 program allows employers to hire skilled overseas workers where experienced Australian workers are not available. It’s the simplest and fastest option that helps businesses deal with skill shortages.
If you are interested in learning more about the 457 program, including how to sponsor and nominate an overseas worker, take a look at our Guide to the 457 program.
We’re always trying new ways of communicating with the public about our migration programs. So this week our 457 policy team is opening up the migration blog to any questions you have about the 457 visa and temporary skilled migration to Australia.
While we can’t provide advice about individual cases, any other questions about the program no matter how specific or broad are welcome.
Here are some examples to stimulate ideas:
- Why do we have temporary migration to Australia?
- How do market rates work?
- What happens if I get fired while on a 457 visa?
- Why do I need to get health insurance while on a 457 visa?
We are looking forward to your questions.
The department recently terminated a labour agreement with a company that was found to be in breach of its obligations by employing workers on a casual basis, underpaying them and providing false and misleading information to the department. The breaches were uncovered during a monitoring exercise by the department. The termination means that the company can no longer employ overseas workers.
Labour agreements are formal arrangements that a number of Australian employers have with the Australian Government to bring skilled and highly specialised workers toAustraliato fill critical vacancies where suitably qualified Australian workers can’t be found to do the job. Overseas workers must be employed full time and on the same salary and conditions as Australians doing the same work at the same location, which protects overseas workers from exploitation and maintains wages and conditions for Australians.
One of the main types of labour agreement is the on-hire template agreement that allows recruitment companies to sponsor highly skilled overseas workers on 457 visas and then place them with other businesses. These workers are often critical in filling the skills shortages being driven by very strong employment growth in the resources sector.
Under the template on-hire labour agreement, the recruitment company must still meet their sponsorship obligations to their sponsored workers, even though they are on-hired to another company.
While the vast majority of sponsors do the right thing, the department will continue to follow any leads that suggest misuse of our visa programs or exploitation of overseas workers. In this case, visa holders affected by the termination have been given a reasonable amount of time to find alternative employment with other approved sponsors.
In November 2011, the government announced reforms to the Fringe Benefits Tax (FBT) treatment of Living Away From Home Allowance (LAFHA) benefits to commence on 1 July 2012.
LAFHA is commonly used by employers to compensate employees for additional costs incurred when they are required to live and work away from their usual place of residence. This can include accommodation and food costs.
Under the current tax system, the provision of LAFHA can increase the take-home pay of employees, including subclass 457 visa holders. The Australian Government has concerns that LAFHA concessions are being exploited by some employers.
The Department of Immigration and Citizenship has received a number of enquiries about how these changes will impact subclass 457 visa holders.
From the department’s perspective, if an employer committed to pay a subclass 457 visa holder LAFHA, it is expected this payment will continue. The only difference will be how the Australian Taxation Office (ATO) views such payments.
For example, if a sponsor committed to pay a subclass 457 visa holder a base salary of $75 000 plus a $10 000 LAFHA, the department expects the employee will continue to be paid a total of $85 000.
If a sponsor is unable to pay the amount equivalent to the LAFHA they may be failing their sponsorship obligations.
A sponsor may decide to lodge a new nomination application to amend the salary offered to the 457 visa holder. However, the sponsor must demonstrate that the new salary continues to be the market salary rate.
Click here for further information on the Australian Tax Office’s LAFHA requirements.
This is a guest post written by Hayley, who works in the department’s 457 policy section.
Yesterday the Minister for Immigration and Citizenship, Chris Bowen MP, and the Minister for Tourism, Martin Ferguson AM MP launched a guide to using the 457 visa program for the hospitality and tourism industries.
The guide will assist employers to use the skilled visa program. You can access the guide below.
Information sessions will be coordinated to provide employers with information and answer questions about the guide. The first information session was in Perth and attracted around 20 employers from tourism and hospitality industries. The department received positive feedback and fielded some specific questions about using the 457 program in these industries. A further eight sessions will be held over the coming three weeks in capital cities and select regional locations. For further details about the department’s information sessions, please click here.
If you have any questions about the 457 program in these industries, please leave a comment below.
Edit: In case you are interested in further information, please see the attached 457 Tourism-Hospitality information session presentation that was delivered at the department’s information sessions.
This post was written by Laura, a graduate who recently completed a stint in the Temporary Skilled Migration Section in the Labour Market Branch.
At the Labour Market Branch, we closely monitor the trends that occur in the programs we deliver. The end of the program year is a good time to share our thoughts on the trends of 2010-11. Below, we review the year in the 457 program.
Overall, 2010-11 saw an increase in demand for the program – up from last year when the global financial crisis led to a softening in the demand in the labour market and a corresponding decline in 457 visa grants. The program is on track for an even larger increase in the coming year as the need for skilled labour in Australia increases in line with the growing economy and increased demand, particularly in the resource sector.
The 457 visa
The 457 visa was introduced in 1996. It allows skilled people to temporarily work in Australia if an approved employer sponsors them. They can work from one day to four years.
Since its beginnings, the program has undergone considerable change, yet it has continued to be responsive to the labour market, as seen in our previous post about how the 457 program creates employment in the Australian labour market. Through boom times, program usage has increased significantly, demonstrating the important role it has come to play in supporting the growing Australian economy.
Demand for the program declined in 2009-10, following the global economic downturn. This is not surprising, given that trends of the 457 program usually reflect other trends that happen in the Australian labour market.
If unemployment in Australia is high, employer demand for 457 visas declines. When there are more Australians available to fill skilled vacancies, it makes sense that employers don’t have as great a need for overseas workers. The decline demonstrates the way the program automatically responds to the trends in the labour market.
The 2010-2011 program year
We have seen a different trend in the last 457 program year. The recovering economy and resources boom are just some of the reasons why employers have relied more heavily on 457 workers in 2010-11.
In the past year, the number of people applying for a primary 457 visa rose 39.7 per cent and the number of primary visas granted increased 38.2 per cent. From a policy perspective, this shows the program has responded quickly to demand from employers.
Location and positions
The acute skills shortages in the mining sector have partly driven many of the trends for jobs and locations this year.
The majority of applications lodged were for jobs in New South Wales and Victoria, which has been the case for a number of years. However, there was a 64 per cent increase in the number of applications lodged for positions in Western Australia, where much of the work from the mining boom exists.
The expansion of mining projects also explains much of the the increase in demand for workers in trade and technician occupations, which rose 65.4 per cent in 2010-11. In particular, there was a 74.7 per cent increase in the number of visas granted for workers in the construction industry.
Individual occupation breakdowns tell a similar story. The number of electrical engineering technicians rose 248.9 per cent from the previous year and the number of drillers rose 152.0 per cent. The steep increase in 457 visas granted to skilled workers in mining occupations in the past year shows just how quickly the program can respond to the needs of industry.
As well as responding to temporary labour needs, each year the program responds to industries that have significant skills shortages. For example, the demand for 457 health professionals is always strong, and the highest number of 457 visas granted in the last year was for people working in health care and social assistance.
The average amount a 457 worker is paid often mirrors their skills and expertise and the demand for their occupation in Australia. It’s not surprising that skilled workers employed in mining had the highest salaries of any industry in 2010-11, given that they are often highly trained people and there is a shortage of the skills they have in Australia.
457 salaries increased again overall in 2010-11, continuing their steep upward trend from 2009 when program reforms changed the requirements for paying 457 workers. Rather than setting bottom limits on the salaries of 457 workers, the program has moved to a fairer system of market salary rates. This means that workers are given conditions “no less favourable” than Australian workers performing the same work. This prevents employers from using the program to undercut local wages.
The continued rise in average 457 worker salaries says to us that these reforms are working the way they should be.
There were 11 290 Australian and overseas employers who were approved to sponsor 457 workers in 2010-11. There were 18 530 active sponsors at 30 June 2011, with the vast majority of these identifying as small to medium businesses.
People from the United Kingdom were granted the highest number of 457 visas in the last year. Citizens from India came in second and the United States made up the third largest group. 2010-11 saw a significant increase in the number of Irish people applying for 457 visas, with a 60.9% rise from the previous year.
The top fifteen countries using the 457 program have been fairly consistent over the past two years and make up 84.4 per cent of 457 visas granted this year.
457 processing times were at historically low levels in the past year. The median processing time was 23 calendar days (30 per cent lower than 2006-07) which is well below our published service standards of between 2-3 months.
Even the 10 per cent of applications that took the longest to process came in at an average of 70 days. While this is still not ideal, it’s down from 83 days in the previous year.
Processing times are something we will continue to strive to improve in 2011-12.
The Year Ahead
Overall, the main trend for the 2010-11 year was growth. If current employment conditions continue and businesses struggle to find sufficient skilled Australian workers, the 457 program will bridge the gap and offer employers access to skilled workers in the coming year.
The current shape of the program makes it a quick and effective tool for businesses to access skilled workers, while at the same time ensuring that the training and employment of Australians is the first priority for business.
For more details on the 2010-11 program year, see this report containing State-based 457 data on the main DIAC website.
One concern that we hear from time to time is that the 457 program is being used to take jobs from Australians. We understand why people are concerned about this – of course Australian businesses should be hiring and training Australians first.
The 457 program is designed to ensure businesses hire locally first. Not only do we believe the program is meeting this goal, but in the process, overseas workers are stimulating growth in areas with labour shortages, leading to more employment opportunities elsewhere in the economy.
Below is a graph that shows the rate of lodgements for 457 visas compared with the ANZ job advertisement index.
The x-axis is a simple time line from January 2003 to the current period. The y-axis shows the change of both job advertisements and visa applications since January 2003. This index tells us that in January 2006, there were about double the amount of applicants and advertisements than in January 2003.
What are the important messages we can take from this? The data clearly shows that despite some small variations along the way, as job vacancies in Australia grow, and there are not enough skilled Australian workers to fill the positions, businesses will look to overseas workers to fill the vacancies. Importantly, the opposite is also demonstrated. As job growth slows, the use of overseas workers also slows.
An interesting sidenote is the ‘spike’ in visa applications which does not correlate to the job advertisements. This happened due to the introduction of an English language requirement for the 457 program. Despite this blip, business as usual established itself over the longer-term.
Another graph, showing the correlation between the unemployment rate and visa applications of 457 workers, also shows how the program acts to employ Australians before overseas workers.
This graph is a little bit more complicated but tells the same story. The x-axis is still showing the time period from January 2003 to the current period. However the y-axis now shows two indexes. The left side is again a base rate of visa applications but the right side shows an inversed unemployment rate.
When unemployment is low (and fewer Australians are available in the labour market) businesses start to look overseas to fill vacancies. That is, businesses employ overseas workers when they struggle to find Australians to perform the work.
So why do businesses employ Australians before overseas workers? Simple – cost. It is cheaper to employ local labour. There are no overseas recruitment costs, no immigration fees and no obligation to provide travel costs to overseas workers. Plus the additional time spent on HR matters can be significant.
The 457 program helps to address labour shortages, ensuring they do not constrain business activity and jeopardise Australian jobs. Rather than taking jobs from Australians, the program is an important cog in economic growth and the creation of jobs for Australians.