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Fixing and fiddling on 457s

The federal government’s reforms of the temporary visa scheme deal with longstanding problems, writes Peter Mares, but there’s more to be done:

THREE months after the prime minister, Julia Gillard, set off a new debate about the 457 visa, immigration minister Brendan O’Connor has introduced a bill that goes further than expected in tightening this temporary migrant labour scheme. With the federal election fewer than one hundred days away, it will no doubt be seen as a dying government’s desperate attempt to trawl for votes by courting xenophobic sentiment (and some of the government’s recent rhetoric lays it open to that charge). The government will also be accused of capitulating to union pressure and of being anti-business.

Some of the proposed measures bring much-needed and long-sought protection for migrant workers on temporary visas, and should improve the overall operation of the system without adding undue costs for government or employers. Other aspects of the package are designed to ensure that local workers get jobs ahead of temporary migrants. These may prove much more cumbersome and less effective in their operation. Further refinements to the 457 scheme are not on the minister’s agenda, but should be.

Most importantly, the bill gives workers on 457 visas ninety days to find a new employer if they quit a job. Previously they only had twenty-eight days to find alternative work or their 457 visa would expire. In practice, the immigration department often extended the grace period, but bureaucratic discretion is no replacement for a legislated right. If temporary migrant workers know they have much more time to find another job, then they can have more confidence in standing up to abusive bosses and resisting exploitative conditions, unsafe work practices and underpayment.

Industrial Relations Commissioner Barbara Deegan recommended extending the time limit to ninety days in her 2008 report into the integrity of the 457 visa system. As she noted then, unscrupulous employers could use the twenty-eight-day rule to intimidate temporary migrants and convince them that they would be kicked out of the country if they changed jobs. Over the subsequent five years, the government showed little inclination to act on Deegan’s recommendation, so its inclusion in the bill is a welcome surprise.

The government has promised to set up a telephone hotline to enable workers to report abusive or exploitative employers (anonymously if they choose). Union leaders recently told a Senate committee that a similar hotline set up by the ACTU two months ago has been getting about one call per day.

As previously announced, the government is extending the remit of the Fair Work Ombudsman so that its 300 inspectors can make sure employers are honouring their obligations to migrant workers. Employers found in breach of 457 rules may also be subject to “enforceable undertakings,” which include, according to the bill’s explanatory memorandum, such things as an agreement to repay missing wages. Such agreements could be enforced in court and the minister would have the power to make them public, effectively naming and shaming employers for not doing the right thing.

Taken together, these measures should help to further reduce instances of workplace abuse like those uncovered this week by investigative reporters at Fairfax Media. But the bill will still leave temporary migrant workers on an unequal footing with their Australian counterparts in respect to various entitlements. As revealed by the collapse of the cleaning company Swan Services, temporary migrant workers don’t qualify for payments under the federal government’s Fair Entitlements Guarantee because they are neither citizens nor permanent residents. This means that they are unlikely to recover missing wages, holiday pay or superannuation contributions. Similarly, while a temporary migrant who is injured at work is generally eligible for workers’ compensation under Commonwealth or state schemes, benefit payments cease if they leave the country. It is not hard to imagine cases of injured workers having to leave Australia because their visas have expired even though they are not yet fit to return to work.

The most contentious component of the minister’s package is the move to reintroduce labour-market testing. This would require most employers to provide evidence that they have made a serious effort to recruit local staff before they can nominate a position to be filled by a migrant worker on a 457 visa. The evidence might include details of advertising, participation in job and career expos, or fees paid to recruitment agencies. Labour-market testing was part of the 457 visa scheme when it was introduced in 1996, but proved cumbersome to implement and difficult to monitor. It was dropped as a requirement in 2001, when minimum salary levels were introduced – the argument being that a high-enough wage threshold for 457 visa holders, plus the costs of overseas recruitment, would be sufficient to ensure that employers made a serious attempt to find local workers before looking offshore. Minimum salary levels have since been replaced by a market-based salary requirement, which raises the bar even higher, since it aims to ensure that a 457 visa holder is paid at or above the rate that an Australian worker commands in the same location (such as a remote mining site for example).

Employers say formal labour-market testing is unnecessary. Since it is far easier and cheaper to recruit locally, businesses will hire Australians first whenever they can. They point out that 457 visas are already restricted to jobs on the Consolidated Sponsored Occupation List, which acts as a form of labour-market testing by including the range of skills in demand in the Australian economy. Employers are concerned that a return to formal labour-market testing will increase costs and delay the recruitment of much-needed staff. In some cases this could hinder local employment – if, for example, the delay in a key appointment restricts the ability of an enterprise to expand its operations and take on additional workers.

There are also questions about how well labour market testing works in practice. Past experience suggests that it can devolve into little more than a bureaucratic box-ticking exercise – “an artificial process,” as one migration lawyer described it in her evidence to a Senate inquiry.

The government, however, appears determined to be seen to be doing something: to paraphrase the prime minister, it wants to ensure that Australian workers are put at the front of the jobs queue. Minister O’Connor has noted big increases in use of the 457 scheme in Tasmania and South Australia, despite unemployment in those states being above the national average, and he has registered concern at the rapid growth in 457 visas for jobs, including cooks, in the hospitality industry. These statistics need to be treated with care, especially when the overall numbers in question are small. A handful of extra visas issued in Tasmania, for example, can translate into quite a big change in percentage terms. Nevertheless, as the minister has pointed out, the number of 457 workers resident in Australia grew by more than 20 per cent in the twelve months to 30 April, despite slow overall employment growth in many industries and regions. He has also referred repeatedly to a survey in which 15 per cent of companies currently using 457 visas reported that they had no difficulty finding local staff – citing this as evidence that some businesses are abusing the system.

THAT survey, incorporating responses from thousands of 457 workers and their employers, was commissioned by the immigration department but only saw the light of day thanks to a research report published by the recently formed Migration Council Australia. The report contains many more useful insights into the 457 program that the minister has been less quick to point out – notably, that more than three-quarters of 457 workers report that they help to train or develop other workers in the course of their job and that more than two-thirds of employers say they use 457 visa holders to train Australian staff. Only 4 per cent of 457 visa holders reported that they were dissatisfied with their relationship with their employers, while 11 per cent were dissatisfied with their earnings and about 5 per cent felt that employers were not meeting their obligations.

One of the most interesting aspects of the report – and the one that received the least attention – related to the situation of the spouses of 457 visa holders. There are more than 80,000 “secondary” 457 visa holders in Australia. Some of them are children, but most are the partners of the primary visa holder and most are women. While they also have the right to work, they do not receive any settlement support and can struggle to find a job and adapt to life in Australia, particularly if they come from a non-English-speaking country and particularly if their husband is working long hours, as is often the case. Given that many of these women will end up staying in Australia – about 40 per cent of 457 visa holders eventually become permanent residents – it would make sense to provide them with English language tuition and other settlement services from day one. Even if they did not become permanent residents, support could help them to participate more fully in the labour market and engage more fully with Australian society.

The Migration Council report recommended lifting the fees that businesses pay to nominate a 457 visa holder. Not only would this increase the incentive to employ local workers first, but the increased revenue could be used to fund support and language training for secondary visa holders. It is a suggestion that seems well worth considering.

Peter Mares is an adjunct fellow at the Swinburne Institute for Social Research.


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