Immigration

How the 457 visa reforms overlooked the cheapest foreign workers

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The government will maintain the salary freeze for the lowest paid workers on 457 visas, but migration experts argue it undermines the 'skilled' component of the visa.

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.

A Department of Immigration and Border Protection spokesperson reaffirmed that the government decided to maintain the TSMIT, but declined to confirm how long it planned to freeze the TSMIT.

A government review into the TSMIT published in February recommended that the TSMIT be indexed from 1 July 2016.

457 visa changes

Wayne Parcell PSM, Global Immigration Leader at EY and former Department of Immigration official, said the hospitality sector is under pressure from a difficulty employing and keeping Australian workers, and the restrictions in the 457 program such as the TSMIT.

“You’ve got a lot of young people in roles, even Australians in those roles are not highly remunerated, because for many people these are entry level positions,” he said.

Australian workers in this area were not given the training and career development, let alone the remuneration - to commit to the industry in the long-term, he argued.

"This was the government’s concern as well - these are your entry level roles that should really be filled with young Australians," he said.

Last week Immigration Minister Peter Dutton told 2GB radio: “We don't want to see businesses close, we want to support businesses, help them grow, employ more young Australians, but there are some businesses you look at where you think, 'well I'm pretty sure that we could train up young Australians or help support Australians'.

“It is just a question of trying to get the balance right, but again we can have a look at individual cases and see what might suit them, but the default position should be to employ an Australian.”

Mr Parcell said the TSMIT worked in concert with the ‘market testing mechanism’, which requires employers to apply for a 457, and its replacement, the temporary skills shortage visa, at salary levels equivalent to other workers in their business or in other businesses.

"My view is that they are relying on the market rate mechanism to really ensure that we weren’t scratching around the bottom of the barrel for people on really low incomes,” he said, noting workers brought in on low pay could move employer.

He said while most businesses used the system legitimately and in good faith, "there are a few unscrupulous employers out there who will squeeze whatever they can out of the system and effectively exploit it”.