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

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.


Flagpost is a blog on current issues of interest to members of the Australian Parliament

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