This debate around 457 visas boils down to a difference of opinion on how best to identify a domestic skill shortage for which a 457 visa can be used.

For Labor, the most desirable option for recognising skill shortages is employer-conducted labour market testing. Their Bill proposes that employers advertise for the occupation in which they seek to sponsor an overseas worker. Once an employer can prove that their recruitment efforts have been in vain because no suitable candidates have applied, the employer can make an application to sponsor a 457 visa worker to the department.

For the Liberals, the status quo suffices. They argue that the current 457 visa system is working well, with rorts occurring on a very limited basis and that there should be as little constraint as possible on an employer seeking to sponsor a 457 visa worker. The current mechanism for enabling employers to use the 457 visa scheme is the Consolidated Sponsored Occupations List (CSOL). So long as an occupation is on this list, then an employer can sponsor an overseas temporary migrant worker.

So where does the truth lie in the 457 visa debate? What is the best mechanism for identifying skill shortages?

We can start by unpacking the drawbacks of both Labor’s proposed reforms and the Liberal’s preference for the current system.

The issue with employer-conducted labour market testing is that this won’t stop the rorts of the 457 visa scheme. Good employers already recruit for local workers and when they can’t, they make an application to the department to use the 457 visa scheme. The vast majority of Australian employers are decent, law-abiding men and women who use the 457 visa scheme to fill genuine skill shortages. Nonetheless, bad employers exist.

Advertising in itself is not a litmus test because unscrupulous employers who want to rort the system can do so. They can fiddle with the job advertisement so that the pay is too low or the conditions are poor; they can turn back legitimate job seekers who respond to their advertisement; they can even stick the advertisement somewhere out there in cyberspace with no real intention of recruiting locally.

Put simply, a dodgy employer can do all manner of things to avoid Labor’s proposal of employer-conducted labour market testing and there is very little the Department of Immigration and Citizenship can do about it. The department does not have the manpower to really scrutinise whether an employer’s 457 visa application is legitimate.

The Liberals’ preference for the current system is even more problematic. Their denial of rorts reveals a Pollyanna view of employers. There is clear evidence to show that there are some employers are using the 457 visa scheme for ulterior purposes: to achieve a compliant staff too frightened to complain, to deunionise their existing workforce or to simply undercut Australian labour standards with workers who know that they only have 28 days before their visa expires if the employer lets them go.

The reason these rorts occur is that the current mechanism for identifying skill shortages is too crude. The CSOL has over 600 occupations on it. This is far too many. The vast majority of these occupations are simply not in demand. There are unemployed Australian workers who could do the jobs listed on the CSOL. In short, the problem with the current system is that it simply doesn’t work well enough.

So where does this leave us? A group of academics at the University of Adelaide Law School have been researching this area for some time now and we firmly believe that there is a genuine alternative that would enable the 457 visa system to work much better.

Our proposal is that labour market testing needs to be done independently of employers.

To achieve independent labour market testing the occupations listed on the aforementioned CSOL should be closely related to whether an occupation is in shortage. There should be labour market analysis conducted by the Australian Workforce Productivity Agency or some other body to ensure that the list only includes skilled occupations that are genuinely in shortage and the list should be updated over time to reflect changes in the economy. Only if an occupation is not on this list, should an employer have to make the case that a skill shortage exists and conduct their own labour market testing.

This is by far the most sensible option. Independent labour market testing limits the regulatory burden on genuine employers seeking to fill domestic shortages and eliminates the opportunities for those dodgy employers seeking to rort the system by circumventing the labour market testing requirement which occurred in the late 1990s.

This is also a fairly simple option. Currently the Australian Workforce Productivity Agency already does comprehensive labour market analysis for the permanent migration scheme. They compile and regularly update the Skilled Occupations List (SOL) which has 192 occupations on it. More resources could be given to AWPA to undergo further independent labour market testing for the 457 visa scheme.

Unfortunately the pre-election hysteria is skewing the debate on 457 visas with outlandish claims that Labor’s proposals are racist and unnecessary. Neither is true. The Liberal’s preference for the status quo is not in Australia’s best interests. While a step in the right direction, Labor’s proposal has some serious flaws that need to be properly worked through. The sad truth is neither party currently has a plan to properly fix the design flaws in Australia’s 457 visa scheme.

Joanna Howe – Lecturer in Law – University of Adelaide.- Extracted from ‘The Conversation’

Administrator’s note:

This is an excellent article and highlights some of the good and bad points of each model. What is doesn’t do is highlight the issue of monitoring and compliance – to date at least – because the main reason errant employers are able to get away with their objectionable practices  is due to the almost invisible degree of enforcement. Due to either other priorities or merely insufficient funding, the risk of being caught out was so low to be an almost acceptable  from a business point of view for some employers. Arguably no amount of strict market testing will control employers who intend to take advantage of a very good targetted program.

The powers always have been there to monitor and require compliance in terms of duties, salary and other sponsorship obligations.

Part of the proposed changes is the appointment of an additional 300  fair work inspectors to monitor and ensure comply which is a good step, but why the additional bureacracy? The other question is that this will only be effective and efficient if those charged with this monitoring and compliance function were to focus on immigration alone. However as Fair work inspectors they are charged with industry wide powers and it is unrealistic to suggest that they will ignore any other IR situations at targetted premises. One might have to ask, is this part of the proposed changes an attempt to increase the spread of Fair work powers as a compliance authority.

I agree that a system based upon an unresponsive list of occupations in shortage, with no limit on sponsoring numbers (removed by the current government) and without effective monitoring and compliance, expecting everybody to do the right thing will not provide the answers the economy needs.

For a certain percentage of employers, any form of reasonable regulation or regulatory framework will be superfluous and to be avoided. It is for this element that powers of monitoring and compliance must be increased – and should have been increased much earlier. It is unacceptable however to broad-brush the issue to require all employers regardless of their track record to meet the new (and as yet) unconfirmed changes. For example the suggested 6 month advertising period is clearly absurd for a system which came about because of  short term skills shortages.

Without more is is hard to avoid the conclusion that the government’s whole approach has been a charade to placate union demands in some way to repay recent political favours and also to prop up unions in the light of their falling rates of participation and relevance.