While penalty rates grab the headlines at the moment, another debate about 457 visas is coming. The Abbott Government has commissioned an independent inquiry into the visa program, due to report by mid-year.
What is it with hospitality? Like construction, it's one of the loudest industries on industrial relations. On Monday, the head of Restaurants and Catering Australia, John Hart, made the first calls for the elimination of the 457 visa salary threshold. He also wants the English language requirements watered down and the range of occupations allowed under the program expanded.
It's an opening gambit, but a hefty one, which if implemented would overturn some key tenants of the visa program. Don't underestimate the sway Hart may have either — he's also a member of Tony Abbott's Business Advisory Council.
The Temporary Skilled Migrant Income Threshold
Up until 2009, the 457 visa program worked on minimum salaries. You could pay migrant workers whatever you wanted, as long as it was legal and above a certain level. In 2009, this changed. Employers now have to pay migrant workers the same as Australians doing the same job.
Paying 457 visa holders market wages is the best reform in the history of the program. A salary threshold was introduced – now $53,900 – which must be met to hire a 457 visa holder. In the words of the Immigration Department, “The 457 program has a minimum salary threshold to ensure that visa holders have sufficient money to support themselves in Australia”. Hart argues this threshold should be abolished for 457 visa holders and award wages be paid to migrant workers, as this is what is paid to Australian workers.
The major drawback in the scheme is that Australians are entitled to social support (family tax payments, single parent allowances, low income offsets, tax rebates etc) while temporary residents are not. Combined with the requirement for 457 visa holders to hold private health cover — and in some states, pay school fees for children at public schools — this all adds up to a major difference in net income between Australians and migrants on award wages, threatening the ability for migrants to support themselves while in Australia.
On the one hand, there are tens of millions of migrants willing to work at Australian award wages, which could contribute to economic development in many developing countries. Awards are independently determined. Yet this confluence of policy outcomes — award wages and a lack of social support — was never intended for migrants. Further, one of the reasons the hospitality industry requires more migrants is, in some cases, the pay is not high enough to fill vacancies. If award wages do not clear the labour market, then by definition they are too low.
I see a firm case in maintaining the salary threshold unless some in-kind income support is provided to 457 visa holders. Australian immigration has historically been equitable and the removal of this threshold would introduce low-income, long-term temporary migrants.
English Language Requirements
Current policy on English language proficiency for 457 visa holders is each person must have "competent" English. This can be achieved by a score of 5.0 in each of the International English Language Testing System (IELTS) components of writing, reading, listening and talking and a score of B in the Occupational English Test.
“The reality is that most of the people coming into the business are cooks and chefs and many of the kitchens, especially in the ethnic cuisine, don’t use English at all … The language of the kitchen is the language of the cuisine. It is not appropriate to set the bar so high where there’s no requirement for English in the workplace, particularly with cooks and chefs."
This is perhaps true. However, there are important considerations about a person's ability to speak English outside the workplace. Most migrants require the ability to drive, rent a house, conduct basic business affairs, engage with governments and participate in society. While it is true one can get by without any English, it is not preferable.
There is a strong argument for reducing the level of English to an average of 5.0 and an average of B for the respective tests instead of a flat rate for each component. Again anecdotally, you hear stories of high scores on three components and a low writing score resulting in a failure to even apply for a visa.
There are also important long-term implications. Seventy per cent of 457 visa holders who have been in Australia for longer than 10 months want to become permanent residents. However, this pathway is difficult without a level of English language ability. An average score would inject some flexibility for industry while also ensuring 457 visa holders have a suitable level of English language proficiency.
Lower skilled occupations
While income and English proficiency are major considerations for the 457 visa program, the inclusion of low skilled hospitality occupations — such as waiters and bar staff — would be a radical change. Currently, there are only a handful of lower skilled occupations allowed for 457 visas through special agreements. Think meat workers in regional towns, ski instructors in alpine resorts and so on.
Waiters and bar staff in major metropolitan cities would be a substantial change to the 457 scheme compared to these occupations. They are occupations which do not require substantial training and offer employment options for lower skilled workers, first time job seekers and long-term unemployed.
The main consideration here is whether these occupations in the labour market should be extended in what has traditionally been a skilled migration program. The 457 visa program was created to combat skills shortages, areas of the labour market where it would take time to train Australians. Over time, the program has changed and is now used for most skilled occupations in Australia, not just those areas of a defined skill shortage. While temporary migrants on student and working holiday maker visas can work in low skilled occupations, there are strict limits on time and hours regarding employment.
The argument for including these occupations in the 457 visa program is weak. There are very real questions about youth unemployment in Australia, particularly in major metropolitan cities. Any low skilled occupations should sit outside the 457 visa program as they require additional regulation and oversight.
Further, Australia does have a low-skilled immigration program, the Seasonal Worker Program. This program will likely become a key cog in Australia’s aid and development framework, buttressing the flow of remittances from Australia to developing countries. In Western Australia and the Northern Territory, there are already opportunities to hire seasonal workers in the hospitality industry.
However, many employers dislike the scheme because of the red-tape, preferring the 457 visa program as this is a known quantity with fewer restrictions. While the Seasonal Worker Program is far from perfect, migrant exploitation and ensuring labour market opportunities for young unemployed are serious considerations.
Each of these three suggestions — abolishing the income threshold, removing English proficiency and low-skilled occupations — would not reflect community expectations on Australia’s immigration framework. If these reforms were to be implemented, it would be a short-term win for the hospitality industry. But a backlash would be inevitable from a future ALP government, as well as the heightened risk of employer exploitation leading to populist, restrictive reform.
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