Hiring overseas workers can help SMEs overcome skills shortages, but there are strict procedures to follow. By MIKE PRESTON.
By Mike Preston
Overseas recruitment has gone mainstream. Once viewed as the last resort of vaguely treacherous corporate wage cutters, hiring foreign workers is the newest trend for small and medium businesses struggling to deal with an unprecedented skills shortage.
But the popularity of overseas recruiting – and a few well publicised instances of abuse by rogue employers – has caught the Government’s attention. In April 2007 federal Immigration Minister Kevin Andrews declared his intention to “clean up the system” by introducing tighter policing and hefty new financial penalties for employers who breach migration laws.
All this means that overseas recruitment now presents greater risks and rewards for Australian businesses than ever before. For an increasing number of SME owners, coping with the skills shortage means this is a gamble they must take if they are to find the staff their businesses need to survive.
So much work, so few workers
Each month, economic data confirms what SMEs are experiencing on the ground: the skills shortage is getting worse. With unemployment already at a 32-year low of 4.4%, in May 2007 the number of new jobs ads surged 10.3% to 251,996, a massive 40.8% rise on a year earlier.
While shortages are being felt across the board, the cupboard is particularly bare for employers in the resources, information technology, professional services and hospitality sectors.
Andrew Stormon, the manager of Queensland SME Mt Isa Fleet Maintenance Services, tells a common story. “We advertised for 18 months trying to find people for mechanic positions; we just found we got very few responses, and those we did get didn’t have the right skills and weren’t suitable for the job.”
In a booming economy, not enough staff means lost work and lost profits. “We lost in the vicinity of $500,000 because we continually had to knock back work. We lost one of our clients worth $250,000 because we just didn’t have the people we needed to service their fleet for them,” Stormon says.
It is this combination of commercial opportunity and labour shortage that is driving business to recruit from overseas in increasing numbers. Immigration Department figures show 97,430 skilled migrants came to Australia in 2005-06, up from 77,880 in 2004-05. This number is set to increase to 102,500 in 2007-08.
By far the biggest increase in numbers has been in the s457 temporary skilled migration category, under which employers sponsor foreign workers with in-demand skills to work in Australia for between three months and four years. There are reported to be 105,000 foreign workers currently in Australia on s457 visas, a number that could increase significantly next year.
Navigate the migration minefield
Bringing a worker into Australia is not just a matter of filling out a few forms and sending a cheque for the processing fee. Although there is a lot of information available – the Federal Government and industry associations are good sources – the migration process is complex and requires knowledge of both Australian immigration rules and those of the country from which a worker is migrating.
Added to that is the difficulty of finding eligible candidates for the position in the country of origin, an especially difficult and time-consuming task in countries where English is not the first language.
Given the complications involved, it is no surprise recruitment and migration service providers have proliferated in recent years, encouraged by low barriers to entry and the big dollars desperate employers are prepared to pay for good staff.
It generally costs about $4000 to $6000 to have an agency find an employee and bring them into Australia, although prices vary depending on where an employee comes from and how they are employed in Australia.
Jo Burston, the managing director of migration services firm Job Capital, says the time-consuming nature of the process and the heavy penalties associated with breaches of migration legislation means agencies offer good value for money for many businesses.
“The Department of Immigration has very strict guidelines and the penalties can be substantial, so it’s a process that allows very little room for error. Since most SMEs don’t have specialised immigration staff, hiring an agency allows them to get on with their core business,” Burston says. “Most SMEs would hire an accountant to give them tax advice, they wouldn’t just have their admin person do it, and this is really no different.”
Even businesses that can afford to devote staff to recruitment tend hire professionals to help them navigate the process. Mike Smith, operations manager at IT services and integration firm Anatas, says he supplements his in-house resources by outsourcing difficult aspects of offshore recruiting process.
“We would just burn weeks and weeks of staff time doing it all ourselves. Even with staff working on the process it can be time-consuming just providing the information and vetting candidates. There is no way to short-cut the process, you just end up causing problems for yourself if you do,” Smith says.
Traps for young players and what to do about them
Contrary to popular belief, the vast majority of businesses who hire foreign workers are not motivated by the prospect of lower wages. Imported workers cannot be employed to perform cheap unskilled labour and must be paid above a legislated minimum standard annual salary of $41,850 ($57,300 for IT staff).
These rules are not flexible. The desire to avoid any further horror stories of foreign workers being paid a pittance or charged outrageous migration fees has caused the Government to allocate more than $80 million in this year’s budget to increasing the monitoring and investigation capacity of the Department of Immigration and Citizenship and to increase penalties for breaching migration laws. From August 17, employers can be personally fined up $13,200 or, in extreme cases, jailed for up to two years for employing a worker without the appropriate visa or referring a worker without an appropriate visa to another employer; while businesses can be fined up to $66,000 for each offending worker they employee. More severe penalties are applicable if workers are being exploited through slavery, forced labour or sexual servitude.
The complexity and bureaucracy that governs the skilled migration process means planning ahead is also important. Finding an employee and bringing them to Australia generally takes three to six months, migration service providers say, with even longer lead times workers with very specialised skills are sought.
A more obvious problem employers of foreign staff have to deal with is culture shock. Even for people who come with all the good will in the world, the shock of finding yourself in unfamiliar territory far away from family and friends can be too much to handle.
Australian Recruiting director David Young, who recruits Asian and UK workers for Australia’s mining and healthcare industries, says it is rare for foreign workers to cut short their time in Australia because of culture shock, but it does happen from time to time.
“It can be for all kinds of reasons: sometimes it’s the climate, the food, often people who come here don’t realise quite how big Australia is and get a bit of a shock if they find themselves in a remote location. On the other hand, I was talking to a company the other day who brought in workers from Sweden: they were very skilled but it didn’t work out because there was a big difference between the sense of humour of Swedes and Australians,” Young says.
Small things like meeting new arrivals at the airport, help with accommodation and transport, opening a bank account and taking out medical insurance can help minimise homesickness. “We brought someone in the other day who was a great musician and we connected him up with a local band; things like that can make a huge difference,” Young says.
Once these hurdles are overcome, it seems there can be real upside to taking staff from other countries into your workforce. Mt Isa Fleet Maintenance manager Andrew Stormon says after dealing with some “out-of-date” attitudes on the workshop floor towards the four skilled tradesmen he brought in from the Philippines, the new arrivals have now become an important part of the business.
“These blokes have turned up and keen as hell, punctual, their English is excellent and they really get in and work. And their skills are fantastic: I haven’t come across tradesmen as good as some of these blokes for many years,” Stormon says.
Another advantage of bringing in workers from overseas can be loyalty. Anatas’s Mike Smith says in sectors such as IT, where highly skilled employees tend to be highly mobile, this is be a big plus.
“We have found workers we bring tend to stick with us. Often they will be looking to become permanent residents in a couple of year or perhaps it’s just because we have developed with them, but we’ve found they stick with us for a bit longer than Australian staff,” Smith says.
As long as Australia continues to enjoy the fruits of the China-led resources boom, economic necessity will continue to drive Australian businesses to hire skilled staff from overseas.
The key to making overseas recruitment a good experience is to take advantage of the information available and obtain professional advice and assistance where necessary. By going into the process with eyes open, a business of any size can successfully navigate the migration minefield.
You can help us (and help yourself)
Small and medium businesses and startups have never needed credible, independent journalism and information more than now.
That’s our job at SmartCompany: to keep you informed with the news, interviews and analysis you need to manage your way through this unprecedented crisis.
Now, there’s a way you can help us keep doing this: by becoming a SmartCompany supporter.
Even a small contribution will help us to keep doing the journalism that keeps Australia’s entrepreneurs informed.