Smaller firms employing more overseas workers

Smaller firms in the resources sector in Western Australia are employing more overseas workers due to unrealistic pay expectations from locals, new research has found.

Companies say that they cannot afford to pay the inflated wages that Australians think they should get so to gain a competitive edge they are using 457 visas to find a workforce from abroad.

A new report from Edith Cowan University reveals that a ‘war for talent’ has inflated workers expectations such that employment in smaller firms is unattractive. Smaller firms are unable to find domestic workers and so turn to 457 visas to fill skill gaps.

The study, conducted by researchers from ECU’s Centre for Innovative Practice, interviewed 10 managers from smaller firms responsible for recruiting 457 visa workers, as well as 20 workers employed on these visas, to investigate how and why the visas were utilised in the sector.

The report found that while Australian workers still made up the majority of those employed in smaller firms in the resources sector, 457 visas were being used to access needed skills, despite the prohibitive cost.

The ability to employ skilled migrants means these smaller firms are able to compete for contracts they could not access previously. Smaller firms could stand to gain a competitive edge and grow their business by employing specialised workers, who might not be available locally.

The report’s lead author, Professor Rowena Barrett, said 457 visas had been caught up in the larger political debate around immigration. However the study showed no evidence of rorting, the practice where employers take unfair advantage of immigrant workers to pay them less.

‘The managers we interviewed connected their firm’s survival and growth to their ability to employ 457 visa workers, as they could reap a short-term competitive advantage for their firm,’ she said.

Barrett added that it is likely that the 457 visa system could be expanded under the new government. But ministers have not yet said what policy line they will take after the 457 visa system was made tougher a few months ago by the outgoing government.

‘The costs of living in WA is a major disincentive for workers so any expansion of the 457 visa system needs to be careful so that further costs are not imposed on firms and workers. Any expansion needs to ensure it benefits smaller firms,’ she concluded.

Several managers interviewed for the study expressed dismay at the demands of Australian workers returning to Perth after working in Western Australia’s North West region.

‘We get Australians coming back from up north demanding the same high wages they got up there. We find people have grown with the boom and they have all of a sudden become prima donnas and they only work for these high wages,’ said one manager from an engineering firm.

A common theme among the managers was inexperienced Australian workers demanding salaries more commensurate with a worker of 20 years’ experience. ‘You would have people who would do just, like, a two-day course and think that they could just jump into one of our roles and for $300,000,’ said a manager of a project management company.

The study found that the skills shortage was putting several participating firms at risk, however the use of 457 visas has allowed them to reverse that trend and in most cases grow their business.

‘We needed them because we had so much work on and we couldn’t find workers so we were turning jobs down because we didn’t have enough blokes to do them, we couldn’t service contracts. It has allowed us to expand and develop and increase our capital expenditure because we know we can move into different areas because we got the skills to do it now,’ said the manager of an engineering firm.

 Courtesy of  Australia Forum – Ray Clancy

 Administrators note:

An excellent article, telling it as it is and the unfortunate reality of the legacy of the mining boom. As usual it is the large employers who can afford to pay ridiculous salaries to secure professional staff, but the smaller SMEs struggle to compete. Hopefully the new government will free up the system, to reduce the cost burden on employers whilst at the same time tightening up compliance, to ensure the integrity of this excellent temporary work visa program.

Now with the election out of the way, the future is a little clearer and the prospect of a bright 2014 is on the horizon, business confidence has returned so that the Australian economy can rebound on the back of increased activity bolstered by skilled migration and the 457 visas program where local skills can’t be found.



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