Employers will win on 457 visas

When a review of the temporary skilled migrant program – better known as the 457 visa program – was announced recently, the union movement saw it as the first positive step to at least curtail an employer practice they believe is exploitative of guest workers and a threat to local workers’ wages and conditions.

Immigration and Citizenship Minister Chris Evans set up the working party of employers and unions under the leadership of industrial relations commissioner Barbara Deegan in April, and the report is expected in October.

During the Howard government years, as employers made increasing use of 457 visas – there are nearly 70,000 workers under this program in Australia – to meet what they said were genuine labour shortages, the unions waged a relentless campaign against them, trotting out example after example of exploited workers.

With Labor returning to the Treasury benches late last year, unions assumed that 457 visas would be seen in a far less favourable light in Canberra. Now, the review notwithstanding, unions are not so sure.

Although unions have stopped short of calling for an outright ban on 457 visas – largely, one suspects, because that demand would be dismissed out of hand by the Federal Government – they want a far more rigorous testing of 457 applications by employers.

In particular, they’re demanding:

• That every application be “market tested” to see whether it can be filled locally.
• Wages must reflect market rates, not minimum rates; in the metal trades industry, for example, unions say that would increase the wages of 457 holders by about 20%.
• Greater transparency.
• Tough regulations to stamp out any exploitation of guest workers.

The implicit message is obvious; having such conditions imposed on 457 visas, especially if every job had to be market tested – expect unions to fight tooth and nail to be involved in the process – would almost certainly stem the flow of applications. There would simply be too much red tape.

For employers in remote regions – the Pilbara in north-west Western Australia, in particular – it could prove to be a disaster. For many, 457 visas have been a last resort to fill jobs. At the same time, some workers have been exploited, and employers have done themselves no favours by ignoring – or even denying – that this happens.

Yet union claims that Australia has a skills shortage – not a labour shortage – often don’t accord with the reality. The labour market is tight, especially in the boom markets of WA and Queensland, and even if it was just a lack of skilled workers, that’s little consolation to a company wanting to fill a position today.

There is another factor involved in this issue that unions tend to ignore. Many guest workers hail from countries where the export of labour is a critical industry. In the Philippines, for example, more than 10% of the workforce is employed outside the country – a valuable source of foreign exchange earnings.

For these workers, the Australian minimum wage – Evans has just increased it by 3.8% – is nothing to be sneezed at, especially if it isn’t siphoned off by middle men or other “built-in costs”.

This pay rise is a likely harbinger of what the review will recommend; a tightening up of the system but no wholesale changes. Certainly unions are under no illusions that they face an uphill battle to secure their set of demands. As one cynic noted, Bill Kelty was the unofficial cabinet minister in the Hawke and Keating governments; in the Rudd Government that position is filled by Australian Industry Group CEO Heather Ridout.

Employers will be hoping the unions’ fears are well placed; to make sure they are, employers should move quickly and decisively to weed out those in their ranks that blatantly exploit the program. Solidarity, after all, is a union concept.

This first appeared in Business Spectator

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