Workers on 457 visas: evidence from the Western Australian resources sector.

• Author: Bahn, Susanne
• Position: Contributed Article - Report

Abstract

This article shows that in 2011-2012 the Australian resources sector was challenged by sharp demands for experienced skilled workers. These shortages rejected the limited pool of specialised Australian skilled labour willing to relocate to Western Australia, the falling numbers of workers taking up apprenticeships and traineeships, and the lack of experience of new graduates. Under these conditions, resources firms actively sourced overseas skilled labour on temporary 457 visas. In 2013, the landscape is changing in that some resource projects have tapered off, Australian workers have relocated to Western Australia in larger numbers, and access to skilled labour via the 457 visa has decreased. It appears that resource firms are using the 457 visa as a temporary response to deal with genuine skill shortages. However, the research here suggests that Australian workers may be subjected to coercive comparisons with overseas labour willing to work harder and longer in poorer conditions.

1. Introduction

   In 2011-2012 Australia experienced an unprecedented expansion of resources projects, predominantly in the resource-rich states of Western Australia and Queensland. These projects required large numbers of skilled workers and, at that time, Australia experienced a shortage, specifically of mining and construction workers in professional roles, for example engineers, project managers, and tradespeople (AWPA 2012). Some of the factors that created this shortage in Western Australia included a state unemployment level of 3.6 per cent (DEEWR 2012), minimal interstate net migration (Department of Immigration and Citizenship (DIAC) 2012; AWPA 2012), reluctance of resource firms to employ graduates without experience, and apprenticeship completions that had halved since 2009 (NCVER) 2012; Oliver 2012). Resource firms had two mechanisms to meet their immediate skills shortages: restrict firm growth and only take on work that their current staff could handle, or look overseas and source workers on temporary 457 visas. Many firms turned to the latter.

   The Temporary Business Long Stay Visa subclass 457 was introduced as Australian policy in 1996 (Oke 2010). DIAC (2012, p. x) advise that the subclass 457 visa is designed to support the growing Australia n economy by 'providing a mechanism to source temporary skilled labour as a top up for the domestic workforce'. The temporary 457 visa allows firms to employ skilled migrants with skills on the Consolidated Skills List from three months to four years, and it provides visa holders with the opportunity to apply for permanent residence after two years if they are sponsored by their employer.

   The employment of workers on temporary 457 visas is strongly debated in Australia. Supporters of skilled migration argue that in periods of rapid growth, the Australian economy lacks the capability to train sufficient domestic workers within the timeframe industry requires (OECD 2002; Roach Report 2005; Evans 2008). Supporters also argue that skills shortages increase the risk of extending the construction phase of projects, which results in cost blow-outs and the subsequent nervousness of overseas investors (BCA 2012). In response to pressure by Australia n business, the Federal Labor Government relaxed migration policy in 2009 to allow increased skilled migration numbers to create a 'big Australia' (Rudd 2009), and rezoned Western Australia to regional status to increase the numbers of skilled migrants applying for permanent residence (Bowen 2012).

   Opponents argue that such actions place Australian jobs at risk (Richards 2006) and reduce domestic skills training (Hugo 2006; Toner and Woolley 2008), and that workers on 457 visas are at risk of exploitation through reduced wages, conditions, and political and social rights (1) (Oke 2010; Jockel 2009; Deegan 2007; ILO 2003). In response to fears of domestic worker exploitation, coming predominantly from the union movement, the Federal Labor Government in March 2013 tightened the requirements for sourcing workers on temporary 457 visas. The Government pointed to examples of 'rorting' and of employers favouring overseas labour over domestic workers (Connor 2013). Firms promising wages for highly paid jobs, but instead placing workers on temporary 457 visas in lowly paid positions, and giving preference to overseas migrant labour in lieu of domestic workers were cited as examples (Connor 2013).There were numerous calls from business for the Immigration Minister and DIAC to provide specific examples. The Immigration Minister, Brendan O'Connor, when challenged to specify numbers of tort instances, stated in a media release in April 2013 'Insofar as numbers, I believe that the areas where there's been a n illegitimate use of 457s numbers [is] not negligible. I would say it would exceed over 10,000' (Hall 2013). However, DIAC found little evidence that employers discriminated in favour of overseas workers and the Minister has been accused of inflammatory rhetoric (DIAC 2013).

   This article presents some of the findings of a study conducted in 2012 that investigated the costs and benefits of employing skilled labour on 457 visas. The study provides data from a specific period, 2011-2012, to show that resource firms that were attempting to grow and to respond to production demands were experiencing shortages of workers with specialised skills and actively sourced labour on temporary 457 visas. However, in 2013, the global economy has slowed, and the pressure for Australia to provide increased resources to growing non-developed countries is less. The slowdown has led to some resource projects failing to commence (ABARE 2011). There was also an increase in net interstate migration to Western Australia (DIAC 2012) and Australian skilled labour was more readily available. Towards the end of 2012, applications by firms to access workers on 457 visas in the resources sector began to slow (DIAC 2013), illustrating the cyclical nature of labour shortages. It appears that resource firms are using the 457 visa as a temporary response to deal with genuine skill shortages. However, the 2012 study also suggested that Australian workers may be subjected to coercive comparisons with non-Australian workers because of overseas labour being willing to work harder and longer in poorer conditions (Richards 2006).

   This article begins by illustrating some of the labour-shortage pressures which, as reported by the participants, Western Australian resource firms were experiencing in 2011-2012. We then present data about the employment of overseas labour and its impact on Australian employment conditions.

   Pressures to Increase the Number of Skilled Workers in Australia

   In the past two decades, the Australian economy has maintained an average growth rate of 3.3 per cent (ABS) 2012), and required significant additional and differently skilled employees, as it had structurally readjusted to an increasingly knowledge-based and service-oriented economy. The development of new mining projects and natural gas extraction and processing facilities in Western Australia a re examples of this rapid growth (Chevron Gorgon Gas Project: $43 billion; Roy Hill Mine: $10 billion; Solomon Mine: $5.4 billion; and the Sino Iron Project: $6.1 billion (ABARE 2010; 2011). These projects require large numbers of qualified people to carry out construction work and subsequent plant operations.

   Without access to sufficient skilled labour, firms are under threat of decline (Healy, Mavromaras and Sloane 2012). Deegan (2007) noted specific cases of specialised skill shortages--for example in engineering, where firms across Australia were either delayingor declining projects because of a lack of workers. Further, Bernard Salt (2012), a demographer, argued that 2011 began what he termed a 'tilt point', where baby boomers, becoming eligible for an age pension, exit the workforce at a faster rate than Generation Ys enter it (Jocke12009). Added to this, Australia has for several years been in the grip of an extreme shortage of trade skills (NCVER, 2008).The early trend estimates by NCVER of apprenticeship and traineeship commencements indicated that although trade commencements grew steadily from the June quarter 2009 to the September quarter 2010, since then there has been a steady decline (NCVER 2012). One reason for this decline was the level of employer investment in training, which began to slow in the 1990s. For example in 2001-2002 only 24 per cent of employers provided training that led to recognised qualifications, and only 13 per cent employed apprentices or trainees (Watson et al. 2003). In respect of training of specialised highly skilled professionals, engineering is a good example. Engineers Australia (2009) argue that the major causes of engineering skill shortages include: insufficient numbers of engineers trained domestically; the long lead time in training engineers (up to 5 years at university level); the ageing of the engineering workforce; the demand for engineering skills during high levels of activity in resources projects; and international competition for highly skilled labour (Cameron and Joyce 2010). Finally, accessing skilled workers within Australia requires high levels of interstate migration to the resource-rich states of Western Australia and Queensland. Until 2012, interstate migration levels to Western Australia remained low. In 2010-2011 only 6,163 people moved to Western Australia from interstate and this was a 10-year high; it was double the level of a decade earlier (DIAC 2012). In contrast, overseas migration to Western Australia has been consistent over decades, usually above the state birth rate, and currently bringing 15 to 24 thousand additional residents and workers to Western Australia (Sibma 2006).

   The findings of this study showed that the resources sector, from 2008 to 2012, was in the grip of a genuine shortage of workers with highly...