Australia’s ‘skills-based’ visa system is failing

For years we have been told that Australia’s visa system is world-leading because it provides the economy with vital skills and plugs so-called critical labour shortages.

This view is generally based on a superficial examination of Australia’s permanent migration program, whereby the ‘skilled’ stream accounts for around two-thirds of the intake:

The reality paints an entirely different picture.

First, around half of the ‘skilled’ stream actually comprises unskilled family members (spouses and children) of the primary skilled applicant. Accordingly, only around 30% of Australia’s total migration program is actually ‘skilled’, according to the Productivity Commission:

..within the skill stream, about half of the visas granted were for ‘secondary applicants’ — partners (who may or may not be skilled) and dependent children… Therefore, while the skill stream has increased relative to the family stream, family immigrants from the skill and family stream still make up about 70 per cent of the Migration Programme (figure 2.8)…

Primary applicants tend to have a better fiscal outcome than secondary applicants — the current system does not consider the age or skills of secondary applicants as part of the criteria for granting permanent skill visas…

Second, most ‘skilled’ migrants have gone into areas that are already oversupplied with workers, such as accounting, engineering or IT. Therefore, the visa system is failing to alleviate actual skill shortages (see here).

Third, the actual pay rates of ‘skilled’ migrants is less than the typical Australian worker, suggesting most are working in lower-skilled and lower-paid jobs.

Evidence for this claim is contained in the Department of Home Affairs’ Continuous Survey of Australia’s Migrants, which revealed that 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 particularly noteworthy given the population median income includes unskilled workers, which obviously pulls the population median figure down. In fact, if skilled visa holders were compared only against skilled Australians, then the pay gap would likely be very large.

Related to the above, the fourth and final problem is that many ‘skilled’ migrants cannot find work in their nominated field, leaving them either unemployed or underemployed. This has been evidenced by various academic studies, including here, here, and here.

The anecdotal evidence of ‘skilled’ migrants struggling to secure work is also piling up. Consider the below recent examples.

Example one:

Migrants who’ve settled in Australia in the last 10 years are more likely to rate career opportunities as a problem for them personally…

New migrants trying to negotiate Australia’s workforce face a litany of uphill battles: lack of skills recognition; uncertainty of work; a greater risk of vulnerability and exploitation…

Mohammad Al-Khafaji, the CEO of the Federation of Ethnic Communities Councils of Australia, says qualification recognition is just one reason migrants find it hard to gain relevant work…

“It’s making some of our doctors or engineers end up driving taxis or Ubers.”

Example two:

Vageesh Malhotra has been in Australia for six months after arriving from India on a skilled migrant visa, but he is yet to find a job matching his experience.

“I’m basically working in a restaurant and that’s what I’m doing right now,” he told SBS News.

Besides working in restaurants, the sales and business development professional has also been driving for Uber.

Example three:

Shady El-Agamy is a 28-year-old Egyptian migrant who was granted a 189 skilled migrant visa just nine months after applying from Cairo.

The professional skill for which Shady was selected is engineering… He believed demand for his skills must be high in Australia, but when he landed in Sydney in May of 2018, he discovered a different reality.

Not only was Shady unable to find a job in his field, but he says he never received replies from the dozens of employers and recruitment agencies he applied for work through…

Like many migrants, Shady realised his options were limited and looked for ‘temporary’ work to get by until he could land a job in his field. That job was shovelling manure at a horse stable, and a year later he’s still working the same job, barely making minimum wage. Shady is not an isolated case…

Example four:

Bhavesh Patel*, a mechanical engineer from Ahmedabad has applied for numerous jobs and appeared for three interviews since arriving in Melbourne a year ago.

He is yet to find a job in his field and is currently working at a 7-Eleven store to make ends meet.

Mr Patel is one of the many recently-arrived migrants who have not found a professional job in Australia…

Skilled Occupations Lists are in over supply and therefore most recently arrived skilled migrants to Australia have not found professional jobs.

The study states the Skilled Occupations List includes “numerous professions that the government’s own Department of Employment has judged to be oversupplied, including accounting and engineering.

“As a consequence, most recently arrived skilled migrants cannot find professional jobs.”

And last but not least, here’s Example five, which profiles a permanent ‘skilled’ migrant family from Bangladesh who was unable to gain work despite leaving their homeland to fill so-called ‘skills shortages’ in human resources. Hilariously, migrant groups then called for the state government to implement an internship program to help migrants find work (at the expense of locals):

Clearly, Australia’s ‘skilled’ migrant program is failing to deliver on its initial intent, and is instead creating oversupply across the labour market, lowering wages, and crush-loading Australia’s cities.

It needs a complete overhaul.

Unconventional Economist

Leith van Onselen is Chief Economist at the MB Fund and MB Super. Leith has previously worked at the Australian Treasury, Victorian Treasury and Goldman Sachs.

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Comments

  1. There wouldn’t be any problems if they made it so that these skilled migrants are only accepted once they have a local job offer.

    • that would be better for immigrants, for existing residents, and the country, but not for businesses who benefit from cheap qualified labour

      • Stewie GriffinMEMBER

        Personally I find our “Skilled Immigration” program to be incredibly racist, frankly it reeks terribly of Colonialism and the colonial mindset.

        In the Information age, Western nations such as Australia, are effectively strip mining developing nations of their best and brightest, stealing their social agents of change, in much the same way that 18th century and 19th Colonial powers and Robber Barons strip mined these same nations of their Diamonds, Gold and Oil.

        When these nations then fail to thrive, experience ongoing turmoil as their own investment in training and development of their human resources, is stolen by lazy Governments of the West, then they will inevitably blame the West – and do you know something? They would be absolutely 100% correct.

        Skills based immigration is a racist policy of colonialism and those who support it are using a contrived moral system, that justifies continued impoverishment of Third World nations, in order to be served by Doctors driving Ubers.

        • What it also does is to ensure that the English language is enshrined as the standard that and elite in non-English speaking countries need to attain in order to prosper. Hence, it filters and removes skills that can be fed back into an existing culture using the native tongue and appropriates them for Western discourse instead. e.g. the UK has taken armies of much needed doctors from India and turned them into English-speaking servants of the NHS. Similarly the USA keeps most of its PhD trained overseas students and this is what has driven their science economy. This point is explained by the insufferable Michio Kaku:

          https://www.youtube.com/watch?v=VXnAP6YUwZU

          Just what do people think happens in the nations where they come from? I note a comment here that suggests that this is a ‘tricky’ argument. That’s laughable! It is all on the record and in the academic literature for those who can be bothered to look.

          In the days of cotton, sugar, tea and coffee plantations it was the adult muscle power that the West sought that had been grown cheaply in the slave lands of Africa and could be maintained and transported for little cost in poor conditions. You got them when they had the muscle power to do work to generate profit. These days it is minds that have been trained in cultures that have used their own money to grow and educate to the point where they can be harvested by three main strategies:

          1. Money paid to tertiary institutions and rent seekers in a new economy that sells citizenship. This debt (student fees) has to be paid and has all the hallmarks of indentured servitude as does the backpacker scams to generate cheap labour for actual plantations;

          2. As a way to fuel the debt bubble through real estate investment that pulls foreign money to our shores and imposes full recourse loans that drive the creation of more debt;

          3. By driving wages down. Those who benefit from wage theft also do well from mass immigration that provides very many willing bodies for every single low paid job.

          True, the standards of care have improved – like they have in prisons in the West. Concrete dog boxes have replaced dank cellars and shacks. Tickets of leave are now called ‘visas’. The Rum Corp became ‘Boarderforce” and ‘DFAT”. The spokespeople for the plantation and slave owners to government are people like Innes Willox and Liz Allen who are bringing civilisation to the ‘white man’s burden’ via ‘diversity’. ‘Cause look at the much better life we have given these poor people by taking them away from their culture.

          The truly amazing aspect is how the Far Left and the ALP supports all this when it is a re-invented and nasty form of human exploitation that does indeed have many similarities with the colonial model of slavery, indentured servitude, resource theft, convict use and cultural erosion that the same ideologists say they are opposing.

          Let’s compare Liz Allen’s salary and that of Innes Willox with that of an Indian graduate taxi driver shall we? Let’s factor in the actual cost v benefit the degree scam for the individuals concerned and their society and see who comes out on top. Throw in the costs to locals and the balance sheet is interesting, for those in the black are the drivers of this scam.

          It is as you say, provably. But in an economy built from cognitive dissonance, wishful thinking and propaganda it is no surprise to see such observations met with cynicism.

          Apparently, to some, such things could never happen in Australia. Problem is, they already have.

    • Correct. I’d go one further and make every grant a provisional grant that is conditional upon completion of at least 2 years of satisfactory work experience in their field, in Australia.

      By then the country will know that they can pull their weight in a high skilled job that probably also requires great English skills. Those who can’t, and can’t skill up fast enough to beat the clock, fail and their provisional visa doesn’t convert to permanent. Those who can, make it in.

      It seems pretty obvious that permanent migration of those in professions where qualifications differ substantially between countries, and those in professions which require high-functioning English in Australia, struggle if they have too high a re-qualification hill to climb, or are facing too great a language barrier.

  2. China PlateMEMBER

    From Example 3
    Shady El-Agamy from Egypt
    That can’t be real. Next you’ll tell me he was born under a Palm tree

  3. Mining BoganMEMBER

    To be fair, there always has been a skills shortage amongst the ranks of human resources, just not in the way it was sold in the interview.

    Oh, and that Shady chap. Surely that’s not his name. Betcha some scammer told him to slip the word shady into his resume to ensure a job offer but he’s put it in the wrong box.

    • The skilled migrant visa program works like this:
      – we give you a visa and you come over and give it a crack (we have no clue whether there’s actually a job here for you or not but you can rent a place from one of our many valued specufestors and spend some money in the economy).

      That’s it.

      • Lenny Hayes for PMMEMBER

        Facilitated by industry groups like Engineers Australia who charge candidates a bomb for assessing their skills.

        I can’t understand why Aussie professionals willingly pay money to these groups to be a member when they are effectively diluting their pay and industry skills.

        • These ‘associations’ are a total rort. The people who run them have just created a well-paid useless job for themselves.

          In many regards it’s quite clever.

  4. reusachtigeMEMBER

    As much as I support a boosted intake of skilled labour so that we don’t have local ice-heads getting jobs, I want an open allocation of guest workers so that we can compete with the great city states like Singapore, Dubai and Mecca. I would prefer that we pick the guest workers from countries that don’t need religious days off so preferably not from the Philippines as they’ll whine for Sundays off. I would love for more massage girls to be brought in from the Philippines though – some of them are smoke’n!

  5. It is also difficult for migrants who often take an enormous gamble on coming to Australia. I wonder if many would have come if they knew what was waiting.

    • I think many of the skilled migrants from certain types of countries would not come if they understood the truth of reality here. My last 5 years in China were spent training Chinese professionals in improving their professional English communication skills so I was able to gain their trust and talk to them about their hopes and dreams for the future. Many wanted to migrate for a better life for their children. These people had worked incredibly hard to not be in the really exploited classes and Many of them had very comfortable lives (some less comfortable depending on circumstances but they’d all experienced massive quality of life gains that we’d find incomprehensible). I was able to show some who were willing to listen to alternative narratives that they’d most likely loose a significant portion of their high level of comfort if they migrated and that their children would have no guarantee of a better life than theirs in Australia because their kid would be Aussie and the system was biased against existing Aussies in its current form. The people who understood my explanations of thecurrent situation in Australia said they’d go to North America instead. They we’re quite risk adverse in many respects. Interestingly in the last few year’s it wad easier to convince people of the harsher Aussie realities than earlier so I think some info had been filtering back that it wasn’t all sunshine and roses here

  6. Jumping jack flash

    “Clearly, Australia’s ‘skilled’ migrant program is failing to deliver on its initial intent, and is instead creating oversupply across the labour market, lowering wages, and crush-loading Australia’s cities.”

    Working perfectly, then?

    “It needs a complete overhaul.”

    Why?

    Everyone needs to wake up and realize that we’re still dancing to the same old tune that Howard started back when he was in power. The lie of “good economic managers” that everyone believes. “The adults” in charge. The surplus, the immigration, the failed workchoices, the need to contain inflation due to too much debt too quickly.

    These are solutions to a problem that ceased being a problem a decade ago, yet our politicians blindly follow the path of “political success” like insane people.

    There has been no effective policy since then from either party. Just more and more outsourcing of responsibility so our politicians are accountable for less and less. The RBA was put in charge of the economy with disastrous results.

    These guys in charge are far more stupid and dangerous than anyone can possibly imagine.