The Inquiry into Migration in Regional Australia has released its report which claims that Australia’s $53,900 Temporary Skilled Migration Income Threshold (TSMIT) is too high for regional employers:
2.16 The Temporary Skilled Migration Income Threshold (TSMIT) was another matter that was raised regularly during the course of this inquiry.
2.17 According the to Department of Home Affairs, the TSMIT is designed to ensure that overseas workers are paid no less than an Australian worker would if they did the same job in the same location. At present, the TSMIT is set at $53,900, and in order to qualify for a skilled visa, an employer must both demonstrate that an overseas worker will be paid a salary higher than the TSMIT, and in accordance with the annual market salary rate for that occupation. The Committee heard that this caused particular problems in some regional areas where some skilled jobs have salaries below $53,900.
2.18 The Government of South Australia summarised the view put by many submitters on the TSMIT:
“Where an employer can’t fill a vacancy locally, nationally set conditions like the TSMIT can make it unappealing to fill the vacancy with a migrant instead. In some industries, the TSMIT substantially exceeds the highest award wage, making it expensive and unlikely that the employer will use the migration system to address the workforce shortage. This only has a deleterious effect on regional productivity”.
2.19 The ACCI argued that the TSMIT should be adjusted to reflect market conditions in regional areas:
“To reflect differences in the market pay and the cost of living between cities and regional Australia and to assist in minimising the difference in the market rate of pay between an overseas worker and an Australian worker doing the same role, the TSMIT as an income floor should be 10 percent lower for regional areas (defined as work outside the capital city metropolitan areas of all states and territories)”.
The $53,900 TSMIT has been in place since 2013-14 and has fallen $3,300 (6%) below the median income of all Australians ($57,200), which includes unskilled workers:
It is also a whopping $22,400 (29%) below the $76,300 median full-time earnings of all Australians.
By being set so low, 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.
On this point, consider the testimony from Joanna Howe, Senior Lecturer in Law at University of Adelaide:
This [wage] crisis has been precipitated by the federal government’s decision to freeze the salary floor for temporary skilled migrant workers since 2013.
…the government has chosen to put downward pressure on real wages for temporary skilled migrants, thereby surreptitiously allowing the TSS [temporary skilled shortage] visa to be used in lower-paid jobs…
TSMIT is intended to act as a proxy for the skill level of a particular occupation… TSMIT’s protective ability is only as strong as the level at which it is set…
But since 1 July 2013, TSMIT has been frozen at a level of A$53 900… This means that the TSS visa can increasingly be used to employ temporary migrant workers in occupations that attract a far lower salary than that earned by the average Australian worker.
Clearly, lowering the TSMIT by another 10% for regional employers would de-skill Australia’s visa system even further, undercutting Australian workers and lowering wage growth.
Instead of further debasing the skilled migration program, the wage floor for all skilled migrants (both permanent and temporary) should be lifted to the 75th percentile of earnings (currently $85,852).
This would ensure that the skilled visa scheme is used sparingly by employers for only highly skilled migrants, not as a general labour market tool for undercutting local workers and eliminating the need for training.