Visas Required

Simon Meyer, CEO and founder of FutureYou Executive Recruitment provides an updated view on the skills visa programme.

Visas Required

Australia & New Zealand

In April, the Turnbull government announced it was axing the 457 visa programme and replacing it with a new Temporary Skill Shortage (TSS) visa. Effective immediately and fully implemented by 2018. Since then, I have had very few conversations with employers or international candidates that haven’t involved a discussion around these reforms.

 

Although there is consensus that an overhaul of the broad 457 visa programme was long overdue, the nature and immediacy of the changes led the business community to question whether the government had fully considered the implications of such sweeping changes without consultation. Thankfully that consultation was eventually forthcoming and amendments were made.  

 

The government says the TSS will support businesses in addressing ‘genuine skill shortages in their workforce’ and ‘contain a number of safeguards which prioritise Australian workers’.

 

A snapshot: The TSS is split into two streams

  1. Short-Term Skilled Occupations List (STSOL) – a two-year visa with the option to re-apply for another two years, but with no pathway to Permanent Residence (PR). The coalition has designated this list as ‘dynamic’ – meaning it will be reviewed every six months.
  2. Medium-Term Skilled Occupations List (MLTSSL) – a four-year visa that can be renewed as long as the occupation is still on the list, and with a PR pathway after three years. This list will contain occupations that have been assessed as being ‘of high value’ to the Australian economy and aligned to the government’s longer term training and workforce strategies.

 

The initial list of eligible occupations

  • Initially this list was reduced by 216, including the downgrading of CEOs, MDs, corporate GMs, Academics and ICT professionals from the four year list onto the two year list, with no pathway to permanent residency. 
  • 268 were available for the two-year visa
  • 167 for the four-year visa
  • There were also new limitations and 26 caveats applied to many other visa occupations

 

The revised list, effective July 1, 2017

On Friday, June 30, after consultation with the business community, Minister for Immigration Peter Dutton released an updated occupations list for temporary and permanent skilled visas, stating:

 

"The occupation lists are designed to be dynamic. Revisions to the occupation lists are just one element of the government's reforms strengthening the integrity of Australia's employer sponsored skilled migration programs and raising the productivity of skilled migrants." 

 

  • Overall, 12 positions were reinstated or added to the MLTSLL, including the executive positions downgraded in the initial list (cited above) with many scientific and technical disciplines also reinstated. 
  • Eight occupations on the MLTSLL are now eligible for subclass 186 and 457 programs
  • 16 occupations previously unavailable are now on the STSOL
  • Two occupations went from the four year to the two year visa
  • 23 occupations went from the two year to the four year visa
  • Nine occupations in total have been completely removed from both lists. 

 

For a full summary of the July 1 changes, see here

For a full list of eligible occupations post July 1, see here 

 

Both visas initially required

  • At least two years' relevant work experience (something not required under the 457)
  • Higher standards of English proficiency
  • Character checks / Criminal record checks
  • Maximum age of 45 at the time of application

 

The July 1 revised conditions also addressed concerns expressed by Universities Australia, accepting that study toward a PhD would count as relevant work experience. 

Employers must also meet mandatory labour market testing

  • Non-discriminatory workforce test requirements;
  • Temporary Skilled Migration Income Threshold requirements;
  • Pay Australian market salary rate.

 

Industries affected 

 

With hundreds of job categories cut from the initial list of eligible occupations, most industries are affected by the changes to varying extents.

 

What the visa change inadvertently did was make the Australian business community acutely aware of the key talent gaps within each sector and identify where talent can be ‘home grown’ versus where we need to draw on a global talent pool.

 

The Australian recruitment industry has not been spared with many recruiters facing an uncertain future in Australia, particularly those missing the March 2018 PR cut off. Unsurprisingly the recruitment industry is working alongside various industries to draw attention to roles where there is a local skills shortage.

 

For example:

  • The retail sector will continue to highlight the critical role of web developers ahead of Amazon’s imminent arrival.
  • Universities sought and succeeded in removing the two-year work experience requirement for specialised researchers.
  • Hospitality will continue to seek recognition for work experience in place of degree qualifications.

 

 

Senior roles

 

Attracting the right global talent to CEO roles would have become much harder, and more expensive, without the July 1 repeal. At the same time, the 45-year age barrier remains an issue for executive recruitment given many global executives only consider moving later in their careers.

 

According to research undertaken by the Australian Financial Review, more than a third of chief executives of ASX100 companies are foreign-born, exposing how critical it is for the economy that the government continue to collaborate with business leaders in reshaping the country’s business skills profile.

 

 

The cost implications

 

Under the multipronged approach to tightening visa requirements, employers will be faced with additional costs to bring foreign workers into the country.

  • Visa application charges for the short-term (two-year) stream will increase from $1060 to $1150
  • Medium-term (four-year) applications will cost $2400 each

 

On top of this, from March 2018, companies will also be required to pay an annual foreign worker levy that will contribute to the government’s training and development fund designed to encourage more ‘home-grown’ talent.

The total amount payable will depend on the size of the company making the application.

  • For companies turning over less than $10 million per year, there will be a fixed fee of $1,200 (per visa, per year) for each employee on a TSS visa.
  • They must also make a one-off payment of $3,000 for each employee being sponsored.
  • For those with turnovers over $10 million, the fixed fee is $1,800 per visa per year
  • And a one-off payment of $5,000.

 

What we may see is the additional cost to employers passed directly on to the individual and included in an international candidate offer as a ‘standard’ ongoing annual fee for the privilege of working in Australia. When you are trying to attract talent to Australia, these kinds of levies are the sort of thing that can be a deal breaker.

 

There is only so far that Aussie blue sky and sunshine will go in terms of attracting the best talent when competing with global employment hubs such as Singapore, Toronto, New York, Kuala Lumpur and Bangkok to name a few.

 

 

How the changes impact recruitment

 

Will the TSS visa option be attractive to foreign talent? Will the changes be a deterrent to working in Australia? Circumstances will differ from one candidate to the next and be dependent on their age and stage of life.

 

The 95,000 primary 457 visa holders in Australia represents less than 1 per cent of the labour market. As such recruiters will have little problem finding the vast majority of the talent required to support the Australian business community. 

 

What experience tells me is that talent falls into one of two categories. Those wanting to come to Australia and contribute regardless whether they will be able to stay or not. The other is the more problematic category; those in senior roles with specialist skill sets that would only consider opportunities if there is clarity around pathways, particularly where families are involved. 

 

The government’s willingness to listen to the business community and conceded changes, on a six monthly basis, is a good sign

 

With the visa occupations list scheduled for review every six months, it will be critical for recruiters to keep across the changes. The best recruiters will also remain close to key recommendations being made by key sector and industry groups to the government; like the unchanged 45-year age cut off for senior executives and c-suite roles. Ideally this is something we can amend in the next round of changes early in 2018. 

 

 

Conclusion

 

The Australian talent market is extremely vibrant and diverse. It is one of the most challenging talent markets in the world geographically and in terms of the spread and diversity of talent. This unique combination makes creating one visa programme to address all the nuances of each industry and sector inordinately challenging.

 

It will be difficult for anyone to assess whether the new TSS better addresses the nation’s skills shortages until the 457 visa replacement programme has been in place for at least a year.

 



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