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457s and temporary migration: where the pressure points are

Australia’s temporary visa program is generally operating well, but new data shows where problems are emerging, writes immigration expert Henry Sherrell at Inside Story.

Last month the leader of the United Kingdom Independent Party, Nigel Farage, was criticised for hiring his German wife as his secretary. Farage, whose political stock-in-trade is anti-migrant rhetoric and Euroscepticism, frequently claims that foreign workers are taking British jobs.

Asked if this wasn’t also true of his wife, he replied: “No, because I don’t think anybody else would want to be in my house at midnight, going through emails, getting me briefed for the next day. Nobody else could do that job. I don’t know anybody who would work those kinds of hours.”

Farage’s office was quickly flooded with job applications from people willing to be paid to do just that.

Beyond the hypocrisy, this story encapsulates much of the contentious debate over migrant workers. Over the past two decades, the proportion of migrants working in Organisation for Economic Co-operation and Development countries has increased substantially, and they are now an integral part of the labour market.

In Australia, the 457 visa program has been the focus of debate. In many respects it is among the best-designed programs of its kind, but opportunities remain for exploitation and abuse.

At the end of 2013, about 100,000 holders of 457 visas were working in Australia, and between them they had around 70,000 dependants. More than 30,000 Australian businesses, universities, government agencies and not-for-profits employed 457 visa holders, and even the odd union has used the program in the past. They staff hospitals and clinics, work on mine sites, carry out research, administer offices and cook meals.

Since the 457 category was introduced in 1996, temporary migrant workers have become an integral part of the migration program and labour market. Yet public anxiety about the program remains high, encouraged both by political opportunism and by media coverage of abuses perpetrated by a small minority of employers who find ways to exploit the system.

Now, previously unreleased evidence from a comprehensive survey of 457 visa holders, together with information provided by the immigration department to Senate estimates, can help give us a better understanding of how the 457 visa program operates and where the true problems lie. The timing couldn’t be better: the Abbott government has commissioned another review of the integrity of the 457 program, which is due to report on June 30.

What this new information reveals about the 457 visa program is emblematic of Australian public policy in general. In large measure the program meets its objectives, but at the margins there are issues that need to be tackled.

In the survey of visa holders, carried out in 2012, 76% of respondents reported that they were satisfied with their current wages and 88% were satisfied with their employer. Only 5% of migrants thought their employer breached obligations under the program. These results counteract the impression that all temporary migrants are powerless and exploited in the workplace and support business claims that the vast majority of employers do the right thing.

But immigration programs should also be judged by what happens on the margins, to those who are vulnerable. And the best proxy for vulnerability is income. For some time the department has reported average salaries in a detailed statistical breakdown; the 2012 survey confirmed departmental statistics that show a median salary for 457 visa holders of between $75,000 and $80,000.

Unlike the departmental data, though, the new survey data allows for a more detailed income breakdown. It shows, for example, that 11% of 457 visa holders surveyed had a salary equal to or below $50,000. This is right on the edge of the “salary threshold” — the minimum salary payable under the scheme — at that time, which was $49,330. (The salary threshold exists because temporary migrants are denied most kinds of government support, including Medicare, and must be paid a sufficient sum to support themselves.) It’s true that the majority of employers paying migrants $50,000 or less are likely to be complying with program rules because migrants who arrived in periods when the income threshold was lower were included in the survey. But it seems almost certain that some workers within this cohort are being underpaid.

Perhaps more concerning is the fact that 21% of those surveyed did not receive any pay increase after working for longer than 12 months, and this is most evident at low-income levels. Of those surveyed who earned under $50,000, a full 55% had not received a pay increase despite being in Australia for more than a year …

Percentage of 457 visa holders without a pay increase, by months of employment

Holding pay steady erodes the purchasing power of migrant incomes. While the data in the chart above shows that the number of workers whose pay is stagnant falls over time, an identifiable minority had received no increase in income, regardless of how long they had been working.

The Rudd government introduced major reforms in 2009 designed to create pay parity between 457 visa holders and Australians performing the same job. This is know as providing a “market salary”. Formerly, employers could hire migrants at any salary above the threshold, which meant that migrant pay could be substantially out of step with what other workers were earning.

Although the market-salary requirement has helped increase migrant wages, it only applies at the time the visa is first issued. There is no requirement for wages to keep pace with prevailing market salaries, and so some workers find themselves slipping further and further behind. As this new survey data highlights, if all 457 visa holders are to be paid at the same rate as Australians, the scheme needs adjustment.

*Read the rest of this article at Inside Story

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    Jackon Taylor
    Posted Wednesday, 14 May 2014 at 10:36 am | Permalink

    Interesting contribution however I would argue that the final contention of Mr Sherrell’s (clipped) article is incorrect. The 457 visa programme requires that visa sponsors continue to ensure that the 457 visa holder is remunerated at market rates. In essence this obliges employers to continue to increase the salary in accordance with what they would pay an Australian in the same role. This is embedded in their obligations as a sponsor (reg 2.79 of the Migration Regulations) and failure to do so can lead to sanction. As shown by the graph in the article this does not always occur. Immigration needs greater financing for follow up compliance activities. This has been the case since the 2007 Immigration reforms which moved the 457 Programme to a ‘compliance driven’ model.

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