457 Visas

There's a hotbed of political debate around 457 visas at the moment, frequently getting the blame for unemployment levels. But what actually is a 457 visa, and how much of a mark are they really making on the employment landscape?

457 visas are Temporary Skilled Migrant Visa.  In short they allow people come from other countries and work in Australia legally. The visas are usually issued in 2 year blocks, but they are almost always tied to a specific company, who sponsor the visa. So for example if McDonalds sponsor my visa, I can only work for McDonalds, and if I were to lose my job for whatever reason I would have to find another company to sponsor my visa or leave the country. 

Sponsorship is a hassle. There's a lot of paperwork McDonalds has to lodge to justify why McDonalds need to hire someone from overseas rather than a local. But it's not a ridiculous amount of hassle either.

And once McDonalds have my 457 in place, they can hire me. I'm still subject to local salary awards and I still pay tax.

Why then do companies sponsor people if they have to pay the local award?

Well let me give a real life example. One of my clients was recently looking for a SAP XI consultant. I won't bore you with the finer details, but SAP is a heavy duty piece of software many large companies use to help manage all facets of their business - finance, sales, manufacturing, warehousing, HR, distribution, forecasting, etc, etc. And SAP XI is kind of like the glue of SAP - it helps SAP talk to other pieces of software.

This isn't something a piece of software you just install as a free download, and have a play with, and soon you get the hang of it. It's incredibly complicated, and is a niche domain in the IT industry.

Now experienced SAP people are hard to find, and XI people even harder. And they are expensive - think $150000/year expensive.  Well that's what you play someone with lots of years SAP XI experience in the local IT industry. Way above any award. 

However if you hire someone from India (a global IT hub) you can get them significantly cheaper. Think $80000/annum or so. Hell of a saving. Well worth doing a bit of paperwork. That's still miles above the award, but massively cheaper than the local option.

Now before anyone says it, being from India doesn't mean they are second rate. Yes they might have an accent, but nonetheless many are excellent communicators. and many have awesome technical skills. And the size & depth of the IT market in India makes it comparatively easy to find even hard to find skills. Like SAP XI. And there's an appetite for Indians to move to Australia - better pay, better lifestyle.

And those who come to Australia on a 457 often transition across to a Permanent Residency Visa, which entitles people to stay out here for good. 

So there's a second wave effect of the 457s. People who have just gotten permanent residency can swap jobs and are looking to do better than the $80000 they are getting paid. So they are very open to roles paying $110000 or so. No paperwork hassles, and these guys now have some local experience and are acclimatised to the Australian workplace. Far easier to hire, and a more attractive prospect for Australian employers. and 12 months later they'll have even more local experience, and will probably move for $130K or so. Still cheaper than the locals.

But at what point to people become "locals"? Unless you're an aborginal or islander, your family arrived here at some point on a plane or a boat. Two years? Five years? It's all pretty arbitrary.

So that's 457s. Are they impacting the local job market? IMO yes, but it's the second and third wave effects that are having the major impacts. And it's really only impacting on jobs where salaries are massively out of step with awards.