Talking Talent

Boosting the skills in the ICT industry is a particular passion of mine.  One of my primary roles as CEO of the Australian Information Industry Association was to advocate policies and programs to alleviate Australia’s ICT skills squeeze.

I was talking about the impact of 457 visa restrictions in October 2007, and since then, nothing’s been done to change a disastrous situation.

12 months ago companies in the on-hire labour industry could bring independent contractors into Australia when their clients required it.  They’d been doing it for many years. Now they can’t - and it’s having a terrible impact on Australia’s ICT industry.

These legacy labour laws of the Howard Government are causing great difficulty for technology sector recruiters, who haven’t been able to bring foreign workers into the country on 457 visas since 1 October.

Just before the November 2007 election, then immigration minister Kevin Andrews toughened the training provisions in labour agreements for the 457 visa, but recruiters have been unable to meet the new requirements.

For example, the new laws require on-hire labour companies – most of them small businesses - to spend 2 per cent of their payroll on the training of contractors they do not manage.  Why is this unreasonable?  Because they do not manage their contractors!  They merely place them with their clients who, in turn, manage their day-to-day activities. Yet, without such a commitment in a labour agreement application, an on-hire company cannot bring 457 visa holders into the country for their clients.

As a result of these changes (that were pushed through with very little industry consultation, I might add) the Information Technology Contractors and Recruitment Association (ITCRA) claims more than 1,500 foreign workers have been prevented from entering the country.

And the Recruitment Contract and Services Association (RCSA) recently surveyed 150 companies, and estimated that more than 3,000 457 visa applications would be jeopardised over the next two years.

It’s interesting to note that, while the Australian on-hire industry is prevented from upskilling the national workforce, such discrimination does not exist in other countries.  Around the globe, the on-hire industry recruits and places Australian trained contractors with their clients.  The result is an ICT skills ‘brain drain’ which is affecting the Australian workforce – and our economy.

The Australian Government must remember this: IT work can easily be exported and development projects can be simply shifted to other countries.  As Australian companies find it increasingly difficult to find skilled ICT professionals for specialist roles, they’ll simply move those requirements offshore.  And that means goodbye Australian ICT industry.

Yesterday’s Federal Budget included a range of measures aimed at increasing productivity and workforce participation, including a $12 million package to encourage family-friendly work practices.

Minister for Employment and Workplace Relations, Julia Gillard, said the Australian Government would spend $12 million over three years to support small businesses as they introduce flexible working hours and other measures to improve retention and productivity.

Small businesses will have access to grants of up to $15,000 to help meet the set-up costs of family-friendly policies, such as rosters based on school terms, core working hours limited to 10am to 3pm, unpaid leave for carers or parents of children with special needs, workplace mentoring and family rooms at work.  The program is expected to be fully operational by 2010.

Of particular interest to the recruitment industry, the government will spend $19.6 million over four years (including $400,000 in capital funding in 2008-09) to “strengthen the integrity of temporary working visa arrangements, including the 457 visa program, by clarifying the obligations and rights of employers and workers”.

According to the Budget papers, funding will support a comprehensive information strategy and the introduction of legislation to better define employers’ obligations, increase the investigative powers of the Department of Immigration and Citizenship (DIAC), and develop “a more robust sanctions framework to protect workers’ rights”.

The temporary skilled migration program is expected to exceed 100,000 places in this and the next financial years.

While Australia’s business community continues to talk about Australia’s skills shortages, yesterday the Australian Government announced that it would leave the new regulations on 457 visas for on-hire employers in place for at least twelve months.

Sponsorship of skilled workers is an important source of workers for many skilled industries in Australia, including technology, construction and engineering. In the past, 457 visa migrants helped to bridge Australia’s skills gaps.

And yet, under regulations which took effect on 1 October, 2007, on-hire companies that seek to sponsor overseas skilled workers can only do so through labour agreements.  And these agreements require sponsors to employ 5 per cent graduates, 15 per cent apprentices, or spend 2 per cent of total payroll on training.

This means labour hire firms cannot sponsor 457 workers unless they meet their expenses, keep on their books a percentage of local workers who are receiving training, and invest at least two per cent of their gross wages bill on training.

The government’s decision has come despite  recommendations from the External Reference Group (ERG) review of the regulations (and report, containing 16 recommendations), which noted that many employers, particularly on-hire employers, had difficulty meeting the training criteria for 457 sponsor status, and recommended that the government “investigate processes to improve the flexibility of the temporary skilled migration program”, in relation to training.

Chief Executive of the Recruitment & Consulting Services Association, Julie Mills, said yesterday that the decision lacked any real justification, and would only serve to worsen the current skills shortage.

“By imposing a labour agreement with conditions that nine out of 10 [RCSA] members can’t meet, the regulations effectively prevent recruiters from sponsoring temporary skilled migrants in on-hired employment.”

Before you say “but 457 visa applicants are taking Australians’ jobs”, consider this: since the introduction of the new laws, other countries have continued to recruit Australian workers. In the seven weeks that followed the laws, there was an outflow of Australians, but no inflow of workers in Australia.

It’s time to turn the tide.