In response to the growth of the 457 visa program, the government has asserted that some employers are sourcing foreign labour without regard to the Australian domestic labour force. On 1 July, the government introduced contentious and sweeping reforms including the introduction of labour-market testing requirements for the program, which commence in November.
These reforms aim to ensure that the program is a supplement and not a substitute for the Australian labour market, and that it’s for skilled persons to fill genuine shortages while ensuring that 457 visa holders are not exploited. In response to a concern that sponsors are engaging 457 visa holders under arrangements that resemble independent contracting agreements instead of the required direct employee-employer relationship, the reforms prohibit on-hire arrangements that fall outside approved labour agreements.
There has also been a concern that sponsors are recovering certain costs from a primary or secondary sponsored person, which is inconsistent with their sponsorship obligations. The reforms require the sponsor to pay certain associated costs with becoming a sponsor and not to pass these costs on. It has also been felt that some primary visa applicants do not meet the English language requirement.
While the Department of Immigration and Citizenship has significant monitoring, enforcement and sanctions powers, the reforms now appoint 300 Fair Work inspectorsunder the migration legislation to ensure sponsored workers are employed in their nominated occupation and paid-market salary rates. The most contentious of the reforms is the introduction of labour-market testing. It is said that it will apply in the manner consistent with Australia’s international trade obligations, including those specified in the WTO GATS Uruguay obligations and the FTAs with Chile and Thailand (which will be exempted).
All occupations relating to technicians and trade workers will be subject to labour-market testing. Exemptions will apply in regard to occupations at Skilled Level 1 in ANZSCO, provided that the nominated occupation is specified by the minister in a legislative instrument. Similarly, occupations at Skill Level 2 in ANZSCO, which are specified by the minister in a legislative instrument, will be exempted in some cases.
Labour-market testing will require the sponsor to evidence attempts to recruit suitably qualified and experienced Australians to the position. It may also include information about the sponsor’s participation in relevant job and career expositions, details of fees and other expenses relating to recruitment attempts, details of the results of such recruitment attempts, details of any positions filled as a result, and other evidence as the minister may take into account.
Labour-market testing is a real concern
Many are alarmed that numerous mining and other projects that are in the pipeline – and with a value of $446.4 billion – could be jeopardised by labour shortages. With foreign workers on the visa only accounting for around one per cent of the workforce, and approximately two per cent of the skilled workforce, one questions the need for such heavy-handed and cost-intensive reforms.
These reforms are also contrary to the National Resources Sector Employment Taskforce, which has predicted a shortfall of around 36,000 skilled tradespeople in the resources sector by 2015. It was only in June that then-treasurer Wayne Swan said that in addition to Australia enjoying virtually full workforce participation, our economy has grown by 14 per cent since 2007; in the same period the British economy has contracted by four per cent.
He went on to say that Australia had the 12th-largest economy in the world. For a nation of 23 million people and a country only geographically slightly smaller than the US, one questions whether it is in Australia’s interests to micro-manage the labour market by re-introducing labour-market testing.
We agree that the 457 program is a supplement and not a substitute for the Australian labour market, that conditions and standards of employment must be safeguarded and that 457 visa holders are not to be exploited, but the pendulum has swung too far. Labour-market testing can only undermine economic growth at a time when it’s vital Australia continues to do well given the patchy world economy.