KEY POINTS …
–half of Australia’s skilled migrant intake is comprised of family members (spouses and children)
–only some 30% of Australia’s planned migrant intake is actually ‘skilled’
–by enticing foreign labour into areas that are already oversupplied with workers it undercuts local workers and supresses wage growth
–the wage floor for temporary and permanent skilled migrants should lifted to the 80th to 90th percentile of earnings, or indexed to double the median wage
–this would ensure that Australia’s visa system is used sparingly by employers to recruit only the highest skilled migrants
–and prevent employers from undercutting local workers and encourage them to provide training
Australia’s skilled visa hoax exposed again
October 21, 2019 | 25 comments
For years, MB has highlighted the deep flaws in Australia’s purported ‘skilled’ visa system, which accounts for around two-thirds of Australia’s planned migrant intake:
Our concerns has been based upon three main flaws, specifically:
- The overwhelming majority of migrants under the skilled stream are not actually skilled;
- Those that have arrived in Australia have overwhelmingly gone into areas that are not experiencing skills shortages; and
- The pay rates attached to skilled visas are appallingly low and undercut Australian workers.
Regarding the first flaw, the Productivity Commission’s 2016 Migrant Intake into Australia report revealed that around half of Australia’s skilled migrant intake is comprised of family members (spouses and children) of the primary skilled applicant, thus meaning that only around 30% of Australia’s planned migrant intake is actually ‘skilled’:
…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…
Regarding the second flaw, the Department of Jobs & Small Business produces an annual time-series database tracking skills shortages across occupations. This database shows that since the mining construction boom ended in 2012, skills shortages across managerial and professional occupations have run below the 32-year average:
*This is important because three-quarters of visas handed out under the skilled stream under both the permanent and temporary programs are for managerial and professional occupations, which are already well supplied with workers.
*The failure of Australia’s ‘skilled’ visa programs to alleviate genuine skills shortages arises because almost any occupation is eligible for visas, and skilled occupation lists have no requirement that the occupations are actually experiencing skills shortages.
*Accordingly, ‘skilled’ visas are being used by employers to access foreign workers for an ulterior motive, namely to undercut local workers and lower wage costs.
This incentive to employ cheap foreign labour has been exacerbated by the federal government’s appallingly low salary floor for temporary skills shortage (TSS) visas.
This salary floor has been set at just $53,900 since 2013-14, which is $19,000 below the median full-time Australian salary of $72,900 (comprising both skilled and unskilled workers).
Not surprisingly, then, the actual pay rates for ‘skilled’ workers is below the population as a whole, according to the Department of Home Affairs’ Continuous Survey of Australia’s Migrants. This survey 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 an appalling result given the population median includes unskilled workers, which drags the nation-wide median full-time salary down.
*With this unsavoury background in mind, SBS News published an interesting case study highlighting why Australia’s skilled visa system is a hoax.
The SBS article profiles a Pakistani family that migrated to South Australia on a permanent state-nominated ‘skills shortage’ visa, only for the primary visa holder to deliver food for six months before finally gaining work in the highly oversupplied mechanical engineering field:
When Pakistani migrant Ishtiaq Ahmed was considering a destination to call home for his young family in Australia, Adelaide was at the top of his list…
The 32-year-old moved to Adelaide in 2017 with his wife Zartaisha Kanwal and child and soon later found work in mechanical engineering on a subclass 190 Skilled Nomination Visa…
When Mr Ahmed first arrived in Adelaide he had to work odd jobs, including delivering food, for six months before he landed a job in his trained profession as a mechanical engineer.
This case study meets the first two flaws identified above.
First, the primary ‘skilled’ visa holder has brought over three unskilled dependents on a permanent basis – a wife and two children.
Second, the skilled visa holder has arrived in South Australia to work in an area – mechanical engineering – that is already way oversupplied with qualified workers.
Proof of this is documented clearly in the Department of Employment’s latest skills shortages report for South Australia. This report shows that there were 94 applicants per job vacancy in mechanical engineering in 2019, with 81 qualified applicants per vacancy:
• The average number of applicants increased significantly in 2019 (94.0), compared to 2018 (20.4).
• The average number of suitable applicants per vacancy was relatively unchanged in 2019 (1.2), from 2018 (1.1)…
• The average number of qualified applicants per vacancy increased in 2019 (81.4) compared to in 2018 (17.6).
• The reasons why applicants were considered unsuitable included:
○ Applicants lacked skills and experience in technical fields in specific industries
○ Applicants lacked basic soft skills including being able to work in a team and communication skills
○ Applicants were not considered an appropriate ‘fit’ for the organisation’s culture and values.
• Employers required applicants to have a tertiary qualification, a bachelor degree specialising in mechanical engineering field and most employers required a minimum of two to five years experience.
• Employers found it difficult to recruit experienced Mechanical Engineers in specialised fields that required five to ten years experience and met specific industry requirements.
Clearly, by enticing foreign labour into areas that are already oversupplied with workers, it undercuts local workers and supresses wage growth.
In order to stop the rorting, the wage floor for temporary and permanent skilled migrants should lifted to the 80th to 90th percentile of earnings, or indexed to double the median wage.
This would ensure that Australia’s visa system is used sparingly by employers to recruit only the highest skilled migrants. It would also prevent employers from undercutting local workers and encourage them to provide training.