A labour market for the resources sector – what are Enterprise Migration Agreements?

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A labour market for the resources sector – what are Enterprise Migration Agreements?

Posted 4/06/2012 by Harriet Spinks

The use of temporary overseas workers to fill skills gaps in the Australian labour market has been commonplace over the last two decades. The subclass 457 visa was introduced by the Howard Government in 1996 specifically in order to meet the needs of employers looking for timely and flexible access to labour where it could not be found locally. There were 90 400 subclass 457 primary visa holders in Australia at 30 April 2012.

The Immigration Minister’s recent announcement that an Enterprise Migration Agreement (EMA), facilitating the recruitment of temporary overseas workers, had been granted to the Roy Hill project in the Pilbara appears to have taken many observers by surprise. It shouldn’t have.

Enterprise Migration Agreements were announced in May 2011, as one component of the Government’s response to the recommendations made by the National Resources Sector Employment Taskforce in its 2010 report on the employment needs of the resources sector. EMAs are designed to meet the needs of the resource sector in accessing temporary overseas workers to work on large-scale projects (with capital expenditure of more than $2 billion), where Australian labour cannot be found. The policy was developed in consultation with relevant stakeholders in the resource sector, including government agencies (federal and state), business peak bodies, unions and major employers.

EMAs only allow for the hiring of temporary overseas workers, on subclass 457 visas, not permanent overseas workers. Employers must meet all the sponsorship obligations associated with hiring 457 workers, including paying Australian market salary rates. Workers will be subject to the protections contained in the Migration Legislation Amendment (Worker Protection Act) 2008.

Projects also need to demonstrate ongoing local recruitment efforts before they will be granted an EMA, in order to ensure that overseas workers are being used only to supplement gaps in the local labour market, rather than as an alternative to Australian workers.

How do EMAs work?

EMAs essentially extend existing Labour Agreement arrangements to an entire project. A Labour Agreement is an agreement between the Commonwealth and a single employer allowing for the recruitment of an agreed number of overseas workers, either temporary or permanent, or both. EMAs allow for the owner of an eligible resource project to negotiate an agreement for the entire project, meaning that individual employers and sub-contractors working on the project do not need to negotiate individual agreements for that project.

The EMA sets out the terms of employment for workers on the project, including occupations, qualifications, English language skills, wages and conditions of the foreign workers. It also sets out the training commitments which must be met by the project. Sub-contractors then sign onto Labour Agreements under the terms agreed to in the EMA, ensuring that the company directly employing the overseas worker maintains the sponsorship obligations that go along with hiring foreign labour.

While the standard 457 visa program is available only to skilled workers in certain occupations, projects which are granted an EMA may also recruit semi-skilled workers. In order to do so however, they need to provide evidence showing that they are unable to find Australian workers to fill these jobs. The number of semi-skilled overseas workers that may be recruited for the project is subject to a cap, which is set during negotiation of the EMA. The recruitment of skilled overseas workers, who would otherwise be eligible for the standard 457 visa program, is not subject to a cap.

In order to be approved for an EMA the project must develop a training plan outlining how the project will develop skills amongst Australian workers in order to meet the future labour needs of the resource sector. Sub-contracting employers on the project will also need to meet one of the standard training benchmarks under the 457 visa program—either contributing two per cent of payroll to a relevant industry training fund or spending one per cent of payroll on training for their Australian employees.

Further information on EMAs can be found in this fact sheet produced by the Department of Immigration and Citizenship.

The Roy Hill Project

The $9.5 billion Roy Hill iron ore project in the Pilbara is the first project to be granted an EMA. The precise terms of the agreement have not been released, but the Immigration Minister has stated that it will allow up to 1715 overseas workers to be sponsored for work on the project over the course of the initial three year construction phase, in occupations including electricians, mechanical fitters, scaffolders, and boilermakers. This overseas work force will supplement an Australian work force expected to be in excess of 6700.

Under the agreement, Roy Hill will provide up to 2000 training places for Australians, including Indigenous Australians. The Government expects the project to invest more than $20 million in training Australian workers. The Minister has also stated that ‘the agreement has specific clauses that will require both Roy Hill and its contractors to continue to prioritise the recruitment of Australians throughout the life of the project.’ However, as the agreement has not been publicly released, very little detail is known about how Roy Hill intends to prioritise Australian workers, or how the Government will monitor this. The Government has also announced the creation of a Jobs Board to ensure local workers are hired first, but again, little detail is known about how this will operate.

The EMA with Roy Hill has been welcomed by business and industry groups, who believe that access to foreign workers is essential for ensuring the viability of large-scale resource projects. However the agreement has been criticised by unions, the Australian Greens, and even some members of the ALP, who are concerned that foreign workers will be used at the expense of Australian workers, and that the Government’s priority should be to protect local jobs. The Government is confident that the terms under which EMAs are negotiated do just that, and that sufficient safeguards are in place to ensure overseas workers will be used only where Australian workers cannot be found. The reality is that the use of temporary foreign labour to fill skills shortages has been a fact in Australia for many years, and with grants of 457 visas increasing and more EMAs in the pipeline it is likely to continue to be so for many years to come.

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