Australia’s skilled visa system needs radical overhaul

For the past five years, MB has frequently derided Australia’s ‘skilled’ visa system, which we have demonstrated is poorly targeted, ineffective, and is failing in its stated purpose of alleviating chronic ‘skills shortages’ across the economy.

Our concerns have been centred around three main areas.

First, around half of all migrants granted visas under the skilled stream are family members of the primary skilled visa holder. Therefore, according to the Productivity Commission, “family immigrants from the skill and family stream still make up about 70 per cent of the Migration Programme“:

Second, the overwhelming majority of migrants that have arrived in Australia under the skilled stream have gone into professions that are already oversupplied (see here).

Federal and skilled occupation lists have no requirement that an occupation is actually experiencing skills shortages. Therefore, we have a bizarre situation whereby oversupplied areas like engineering, accounting, and IT (among many others) continue to import workers en masse. And the ‘skilled’ visa system is being used by employers to access foreign workers for ulterior motives, such as to undercut local workers and lower wage costs, rather than to overcome genuine skills shortages.

Third, there is massive unemployment and underemployment among ‘skilled’ visa holders, and the actual pay rates for ‘skilled’ workers is below the general population.

According to the Department of Home Affairs’ Continuous Survey of Australia’s Migrants, the median full-time salary 18 months after being granted a skilled visa was just $72,000 in 2016, below the population median of $72,900. This is shocking given the population median includes unskilled workers, which obviously drags the nation-wide median full-time salary down.

With this background in mind, academics have warned that most ‘skilled’ migrants that have entered South Australia have been unable to gain a job in their field, with many either unemployed or underemployed:

Our research suggests the skilled migration program is failing to achieve its full economic potential, dashing personal dreams in the process. Many skilled migrants are simply not finding the opportunities they anticipated.

Our survey of more than 1,700 skilled migrants living in South Australia found 53% felt they were not utilising their skills and abilities, with 44% working in a job different to what they nominated in their visa application.

About 15% reported being unemployed at the time of the survey or for most of their time in Australia – double the South Australian jobless rate. This was despite having skills deemed by government planners to be in short supply.

Our results indicate a big mismatch between the expectations of new migrants and the reality of the labour market – in the jobs available and in employer expectations. In short, the skilled migration program simply isn’t working the way it is supposed to…

The majority of Australia’s immigration intake is intended to benefit the economy… The majority – about 68,000 – were part of the General Skilled Migration (GSM) program, based on having skills deemed in short supply. The federal government’s “Skilled Occupation List” now covers more than 670 occupations…

These findings point to a clear problem with the General Skilled Migration Program.

Migrants are being drawn to Australia on the basis their skills are needed, but many are finding employers reluctant to hire them…

So what is the purpose of Australia’s skilled visa system? Is it to lengthen the queues of un/underemployed? Is it to lower wages? Is it to rob developing nations of their talent? Because these are the outcomes.

Dr Jane O’Sullivan from the University of Queensland summed-up the farce best in the comments section:

A timely study, as South Australia is most vociferous about increasing its “sponsorship” of “regional” migration. I’ve also met skilled migrants who feel defrauded by Australia’s claim that their skills will be in demand. The solution is not to help them into jobs (which means taking jobs from Australian applicants) but for them not to come. (I don’t mean abandoning the ones who are here – they should be helped, as for any Australian disadvantaged job seeker – but this is a mitigation, not a solution.)

The skilled migration program should ONLY accept employer-sponsored migrants (i.e. those with a job to go to), and even then it should be on temporary visas initially, until the demand for their employment is shown to be ongoing after three years. The current 35,000 in this category (which presumably includes their family members) would be consistent with an overall immigration program around 60-70,000 per year – a sustainable number.

Precicely. Australia’s skilled visa system needs a complete overhaul to ensure that it only brings in migrants to fill genuine skills shortages.

The easiest solution is to make all skilled migrants employer-sponsored and require them to be paid at the 80th percentile of earnings, or indexed to double the median wage. This would ensure that the skilled visa system is used sparingly to import only the ‘best of the best’, not as a general labour market scheme to undercut local workers.