Skills, rorts and exploitation: The vexed issue of reforming the 457 visa scheme

Temporary labour migration in Australia is a highly vexed issue.

On the one hand those advocating a rethink of the 457 visa are accused of “turning away skilled, net-contributors to the Australian project”, while those opposed to re-regulating the 457 visa have been cast as failing to protect the jobs of Australian workers or being unconcerned about the exploitation of 457 visa holders.

The reality is somewhere in between.

Yesterday the government released the report of the 457 visa independent review panel, which is a constructive and evidence-based contribution to the ongoing debate over temporary skilled migration.

The 457 visa can benefit the Australian economy, creating local jobs and providing life opportunities for temporary migrant workers. Crucial to its success, however, is the design of the program to ensure 457 visa holders are only used in areas of genuine skill shortage, that they are protected from exploitation in the labour market and that we continue to invest in and train Australian workers, particularly the youth unemployed.

A number of positive reforms have been suggested in the report. Firstly, to improve the ability of the Immigration Department and Fair Work Ombudsman in monitoring compliance by employers with the rules of the 457 visa program.

Regulators cannot possibly monitor the workplace of every 457 visa holder – they are vastly outnumbered. However, the report recommends the Department and the FWO use a similar approach to the Australian Tax Office. Given not every tax claim can be scrutinised for fraud, a risk matrix is used, coupled with complex IT systems, to identify those most likely to be involved in tax evasion.

The report recommends a more coordinated approach between the Department and the ATO to ensure that the incomes of 457 visa holders are being accurately reported by employers and to identify visa holders who are most vulnerable to dodgy employer practices. Immigration Minister Scott Morrison has indicated he will act on this recommendation.

Another key recommendation of the report is the proposal for an annual training contribution payable by employers who rely upon 457 visa holders. This innovative idea is based upon the notion of a “social licence”, that is, the idea that, in return for being able to access temporary migrant labour, the sponsor should contribute to a national benefit.

Identifying skills shortages

A welcome development in the report is the proposal for independent labour market testing to replace employer-conducted labour market testing. This is a proposal that I made in my submission to the 457 visa independent review panel, but also articulated in my article for The Conversation last year.

It’s important there is a rigorous mechanism for determining whether an occupation is genuinely in skill shortage. If it is, then it is usually entirely appropriate that an employer rely upon a 457 visa holder to meet the skill shortage. This opens up employment opportunities for local workers because it means the employer’s business is not stymied by its inability to fill vacancies.

However, if a skill shortage is not genuine and an employer is using a 457 visa holder to achieve a compliant workforce, a de-unionised workforce or simply to rort the system by paying the worker less, then there is real cause for concern that local jobs are being replaced by temporary migrant workers. The government’s repeated attempts to whitewash claims of rorting within the 457 visa program obscure the truth: temporary migrant workers are a vulnerable group and cases continue to emerge of serious exploitation and abuse.

While employer-conducted labour market testing burdens good employers with extra red tape, it is relatively easy for unscrupulous employers to evade. In contrast, my article in the Federal Law Review last year shows that independent labour market testing can work.

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