Measuring success in skilled migration policy: the subclass 457 visa program

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Measuring success in skilled migration policy: the subclass 457 visa program

Posted 11/09/2013 by Gareth Larsen

With the unemployment rate edging higher over the past year, and against a backdrop of high OECD unemployment, jobs will continue to be a focus over the next term of Government.

A new report by Monash University’s Centre for Population and Urban Research reveals that recently arrived migrants are dominating the growth in the number of employed persons in Australia. It also points to local young workers being adversely affected by the competition for employment, with a global pool of ‘job hungry temporary migrants looking for the same work’. According to the OECD, the young and the low-skilled will continue to be hardest hit across OECD nations through 2014.

Whilst the Monash report makes a brief reference to the Temporary Work (Skilled) visa (subclass 457) program, it is important to acknowledge that this uncapped program has seen some major reforms over recent months to ensure it achieves what it sets out to achieve: a program that is highly responsive to the genuine needs of the labour market providing access to workers where a genuine skill shortage exists, or in effect, where a suitably skilled Australian worker is not available to be employed in the position.

Over the past few years, public scrutiny has focussed on the program’s ability to ensure Australians are first in the jobs queue. For example, recent figures from the Department of Immigration and Citizenship (DIAC) show that under the skilled worker scheme, areas with the biggest rates of growth were those with the lowest paid workers, and project that if such growth continues, there will be 350,000 temporary workers from overseas on subclass 457 visas in Australia in three years' time. 

Then there were the findings of a Migration Council Australia survey which identified that around 15 per cent of employers say that they have no difficulty finding suitable labour locally and yet they sponsor employees from overseas under the scheme.

The Migration Amendment (Temporary Sponsored Visas) Act 2013 which came into effect 1 July 2013, amends the Migration Act 1958, and prioritises the employment and training of local workers; legislates sponsor obligations; empowers Fair Work Australia to investigate breaches; and strengthens DIAC’s ability to prosecute against wrongdoing.

Former Minister for Immigration and Citizenship Brendan O'Connor said that this legislation ‘would protect local workers and ensure young people did not miss out on job opportunities’.

How will we know whether the program is achieving its stated goals with such a heady mix of variables and outcomes?

One method is to look at subclass 457 visa lodgements data and measure this alongside unemployment and job vacancy data.

The following graphs show the alignment between unemployment, job advertising and subclass 457 lodgements. Figure 1, published by DIAC, shows that when unemployment falls employers recruit more subclass 457 workers, and vice versa. The subclass 457 program is a way of meeting a specific shortfall in the market, and it can be seen from Figure 2 that subclass 457 lodgements from 2003 to 2011 have almost perfectly* responded in meeting skilled labour needs (grants data shows a very similar trend, but lodgements provide a more timely connection with job vacancy data).

Figure 1

Figure 1 - Unemployment Rate and Subclass 457 Primary Applications Lodged to 30 April 2011
 
Figure 2
Figure 2 - ANZ Job Advertisement Series and Subclass 457 Primary Applications Lodged to 30 April 2011
Source: graphs published by DIAC

* 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 where a surge of applications was reportedly recorded prior to the requirement's introduction and fewer applications followed. Despite this blip, business as usual established itself over the longer-term.

However, in 2011 a new trend emerged as shown in Figure 3, seeing subclass 457 lodgements rising despite higher unemployment and fewer job advertisements.

Figure 3
Figure 3 - ANZ Job Advertisement Series and Subclass 457 Primary Applications Lodged in the 5 Years to 31 May 2013
Parliamentary Library analysis using ABS Labour Force data, DIAC statistics and the ANZ job advertisement series

From the latest data available, it may be too early to determine the exact consequences of the recent legislative amendment, but seeing subclass 457 lodgements once again aligning with unemployment and job advertising may be one way to monitor the program’s progress in the longer run.

Comments

  • 21/01/2014 1:47 PM
    Gareth Larsen said:

    Hi Martin You raise an interesting point and there certainly was a jump in the number of persons applying for a subclass 457 visa between 2011-12 (10,567) and 2012-13 (18,050) where the last visa held was a student visa (See Student visa program quarterly report — page 69). As mentioned in the Flag Post, the Subclass 457 program is designed to meet demand from employers rather than supply of skilled migrants so your observation is perhaps part of the story of 457 trending out of alignment after 2011 and further illustrates the important link up between permanent and temporary programs. Kind regards Gareth

  • 21/01/2014 1:47 PM
    Gareth Larsen said:

    Hi Martin. Detailed information on occupations of 457 visa holders by state and territory available from DIAC at http://www.immi.gov.au/media/statistics/statistical-info/temp-entrants/subclass-457.htm The job ad data is not available by occupation or industry so we can’t do a direct comparison, however, we will be undertaking further analysis of 457 over the months ahead on a more geographic basis, so please do keep an eye on the Library’s website. Gareth

  • 21/01/2014 1:47 PM
    Martin Butterfield said:

    An interesting broad indicator is suggested, and it probably isn't possible to consider detail in a blog format. However the labour market requires consideration of occupations (especially skill requirements) and location. If the 457 applications are for mining technicians in the Pilbara and the unemployed are white collar folk in SE Australia the two series could move in the same direction. Is information available on the occupation(s) involved in the series? Martin

  • 21/01/2014 1:47 PM
    Martin Hildebrand said:

    Hi Gareth, I have practised as a migration agent for more than 10 years and from my experience there can be no doubt that the 457 visa program is overall a demand driven program. However, changes to the General Skilled Migration program in 2010/2011 which have precluded some overseas students to apply for permanent residence in their own right appear to have contributed to an increase of 457 visa applications in some sectors since 2011. I strongly believe that onshore overseas students are likely to be the real driver for an increase in “supply” driven 457 visa applications. Are you aware of any research data regarding this? Best regards Martin Hildebrand


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