There’s no demand for a genuine skilled visa program

Last year, the Morrison Government launched its Global Talent Independent (GTI) visa program, which promised that visas for 5,000 highly-skilled specialists working “at the top of their field” and earning in excess of $149,000 annually would be fast-tracked for permanent residency each year.

Early results are disappointing, however, with tech migrants shunning the program:

Documents obtained by iTnews under freedom of information laws reveal only 735 EOIs (expressions of interest) were lodged for the ‘Global Talent Independent’ program in the three months after it was launched last November.

But the actual number of visas submitted and granted following these EOIs is far lower…

Even if all 227 of the visa granted came through the GTI channel, it represents just a fraction of the 5000 people the government wants to attract between July 2019 and June 2020…

A key drawcard of the GTI program is the offer of a “fast-tracked process to permanent residency” taking weeks, not months, according to immigration and citizenship minister David Coleman.

While demand for these genuinely high-skilled tech visas is abysmal, Australia has experienced a boom in low-paid IT workers from India.

Recall the Australian Population Research Institute’s (APRI) 2016 report “Immigration overflow: why it matters”, which examined the widespread rorting of Australia’s skilled visa systems, especially involving Indian IT workers.

The APRI report noted how IT professionals, engineers and accountants (including auditors) were the key professions where foreign worker visas were being issued, despite these industries having significant surplus labour:

ScreenHunter_16433 Dec. 02 07.28

The 17,185 IT professionals visaed in 2015-16 (Table 1) indicate the scale of the problem. By contrast, just over 5,000 residents are currently completing undergraduate course in IT each year…

In particular, the IT sector has experienced the deepest rorting from Indians being paid well below market wages:

As Table 2 shows, some 76 per cent of the 7,542 457 visas issued in the three IT occupations listed were to Indian nationals. The great majority of these were sponsored by Indian IT service companies as intra-company transferees…

ScreenHunter_16434 Dec. 02 07.34

Once in Australia their staff are being paid at much lower rates than experienced resident IT professionals and in some cases even new local graduates.

Even more disturbing is the relatively high proportion of these Indian IT professionals (28 per cent) whose 457 visas were approved at the extremely low base salary of $53,900 or less. This is despite the fact that only eight per cent of the 457 visas granted to Indians in the two ICT occupations in 2014-15 were aged less than 25.

The median starting salary for local ICT graduates under the age of 25 is around $54,000. Coincidentally, the 457 minimum salary ‘floor’ is set at $53,900…

As the data in Appendix I show, between 2012-13 when Labor was in office and 2013-14 under the Coalition the proportion of Indian 457 IT professionals approved at the very low base salaries increased dramatically, from eight per cent to 27 per cent…

Clearly, the legislated requirement to pay the 457 market salary rate is not being implemented in the case of the Indian IT service companies (and perhaps other multinationals with Indian branches). The violation is obvious, given that more than one-quarter (28%) of Indian 457s in the two ICT occupations had their visas approved at no more than Australian IT graduate starting salaries…

ScreenHunter_16435 Dec. 02 07.39

Indeed, the Department of Home Affairs’ data on Indian migration showed they dominated IT professions in 2017-18:

This is more proof that the main 457/482 temporary “skilled visa” is actually a low-wage sham.

The key problem is that the Temporary Skilled Migration Income Threshold (TSMIT) has been set at an appallingly low $53,900 (non-indexed), which is $3,300 (6%) below the median income of all Australians ($57,200), which includes unskilled workers:

This $53,900 TSMIT has incentivised Australian employers to hire cheap migrants instead of local workers, as well as abrogated the need to provide training.

The first best solution is to raise the pay floor for all skilled migrants (both temporary and permanent) to at least the 75th percentile of weekly earnings (currently $85,852 p.a.). This would close off the cheap labour route and ensure that employers only hire migrant labour to fill genuinely skilled professions.

Unconventional Economist
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  1. “This $53,900 TSMIT has incentivised Australian employers to hire cheap migrants instead of local workers, as well as abrogated the need to provide training.”

    ….and the response of the ALP and ACTU? Cue the sound of crickets with laryngitis.

  2. adelaide_economistMEMBER

    Not very surprising. At least 50% of the company that provide contracted IT services to the agency I work for have obviously Indian names and while I’m sure they are very nice people, they struggle to solve very basic problems on my work computers that I could solve myself if they gave me administrative privileges and I spent 20 minutes on google. Like most things in this country these days, the modern way of doing things might generate $$$ for the ‘elite’ but adds near nothing in real terms.

    • I can understand the tolerance of dysfunction and poor work standards in many public departments because performance metrics are somewhat, er, different. But you would think that private companies, especially the smaller ones, would have worked out the false economy of employing cheaper, lower quality employees.

      The point I’m trying to make is: the imports can’t be completely useless. SMEs cannot afford to carry dead wood

      • It’s all a function of the broader environment.

        If we had a tight labour market, and getting a good job were easy, then people like AE would get jacked with crappy imported IT support and leave the company to work at a different business – one with quality IT support.

        But we have a slack labour market, so AE just has to grin and bear it. Crappy IT support isn’t a reason to leave a job when getting a good job is so hard.

        Which is to say, in economic terms, that while labour is in a poor negotiating position, the “cost” of crappy IT support is externalised onto other staff, while the benefit is captured by the employer.

        It’s just one particular manifestation of the broader condition of a supernumerary labour force/population. The general term for this stuff is “race to the bottom”.

      • darklydrawlMEMBER

        No, not all of them are, but in my experience you will get a team of local folks who intimately know the systems, the users who operate those systems and the nuts / bolts / quirks (often as they built it) and who can respond quickly and efficiently to any issues who end up getting their entire department ‘offshored’ to SE Asia somewhere as the ‘cost’ is about 75% less than the local team (mainly due to cheaper wages).

        This looks great on the accounting dept KPI’s but in reality ends up costs about the same due to geographical, cultural, language and time differences causing multiple and ongoing issues.

        Seen it happen multiple times and the end result is always the same. The overall cost saving is generally either small (or non-existent) and service levels / end user satisfaction usually plummets. But boy it looks good on paper!

        • DD, I read a great piece on how the Boeing debacle unfolded – in essence, the company was taken over by a bean counter, who replaced someone whose expertise was building planes.

          Both compelling and chilling in equal measure and a lesson for all. I’ll paste in the link when I find it. you’ll appreciate it in light of your observations above.

        • Proof = situation where IT support is so woeful for the ‘workers’ that no-one bothers to use it…. but….wait for it… Exec Dirs have their own help line which is a priority specialty service so they don’t have to suffer what the rest of us do!
          So they know and are unwilling to put up with the crap, but don’t care about the quality for the rest of us and the lack of efficiency!

      • drsmithyMEMBER

        But you would think that private companies, especially the smaller ones, would have worked out the false economy of employing cheaper, lower quality employees.

        You would, but they keep doing it, over and over and over and over and over and over and over again. For decades.

        It’s almost like in theory, theory and practice are the same, but in practice, they aren’t.

        • Yes, perhaps these businesses are run by idiots and require the wisdom and guiding hand of a bureaucrat.

  3. The Indian IT “professionals” I’ve dealt with have been largely useless.

      • BabundaMEMBER

        That’s a good story. Also has parallels with Australia’s own HE system… “Quality was compromised in pursuit of quantity.”

      • My partner was a senior Uni bureaucrat back in the late 80s and early 90s. She had horrific stories of the quality of Indian and other overseas students even then…rampant cheating, hiring of doubles to sit exams etc. She was also involved in the earliest efforts at turning education into an export business that sold education as a “product” to overseas consumers. Even 30 years ago, knowing the cultures that were being targeted I knew it wouldn’t end well.

        There are mind boggling stories of Indian students rioting at their institution when the administration attemted to ban cheating. That’s right, cheating was an accepted part of academic life, and an official attempt to ban it resulted in riots.

        Importing massive numbers of people from such a culture into our country doesn’t make them instantly like Australians, it makes Australia gradually like where they came from, to the detriment of everybody and everything in this country.

      • I’m amazed, given the oversupply of coders, that salaries are below minimum wage by now. That’s what economy theory teaches 😉

  4. In news just to hand, an influx from India of highly skilled and highly paid servo attendants has narrowly averted a complete standstill on Australian roads.

  5. I’ve worked with many many “skilled” Indian IT developers over the years and there would be maybe 2 to 3 that I would tip my hat to. Most put up a facade of competency (dress immaculately, throw a lot of technical acronyms around) but are generally lazy and sloppy in their work and wouldn’t survive without Google.

  6. BabundaMEMBER

    Why would any genuine “tech migrant” want to come here? We’re a digital backwater

    • A-ha. I think what you meant to ask was: why would any ‘3rd rate’ tech migrant come here. Possibly because they already tried Europe and North America and failed? PR?

  7. Surprising that companies didn’t take opportunity for this new visa.

    What’s interesting is that the difference in overall quality of IT staff between New Zealand and Australia, and the relationship between the wage threshold.

    Generally in New Zealand, the IT candidate quality is better then Australia, and they are better trained as there are more corporate paid training programs used in the NZ IT industry.

    IT training vendors that focused on corporate clients all died out in Australia years ago.