In my Inside Story piece published last week, I questioned the growth of employers using the 457 visa program in the hospitality industry.
Since then, two new pieces of information have been published that shed a bit more light.
The first is the availability of more detailed visa data from the Department of Immigration. From this data, we can better judge trends over time. The following graphs show an index of the number of migrants on 457 visas in Australia, from June 2006 to March 2014. Keep in mind the y-axis moves around and the black line represents the same number for all of the graphs.
The comparison of migrants who work as Chefs (blue line) and the 457 visa program as a whole (black line) shows strong parallels. Both show growth and fall, pre- and post-GFC and then a rising trend over the past two years. If all occupations under the program were used equally, this would be the dominant pattern. This doesn’t happen however as different parts of the labour market ebb and flow across different periods of time.
For Cooks (blue line), there is also some trend with the program as a whole, up until mid-2012. After this, the growth in the number of migrants as Cooks on 457 visas increases quickly relative to the number of migrants on 457 visas overall. This shows the number of Cooks in Australia on 457 visas increasing by about a factor of five from 2011 to 2014.
Lastly, we see the number of Cafe or Restaurant Managers compared to the program as a whole. The black line, because of the scale of the y-axis, doesn’t seem to move compared to the two graphs above (I assure you its the same line). Instead, what we see is a 13-fold increase in the number of Cafe or Restaurant Managers on 457 visas in Australia from mid-2006 to March 2014. This growth has mostly occurred in the last two years, after being pretty flat from 2009 to 2011.
In a vacuum, these numbers don’t really mean anything. The reason why Cafe or Restaurant Managers looks so different is that in 2006 there simply weren’t many migrants as Cafe or Restaurant Managers (276 to be precise), so the index comes off a low base. However, the large rise in the index begs the question, what happened in 2012, leading to strong growth for this specific occupation? Was there a sudden shortage of people willing to work as Cafe or Restaurant Managers (a supply shortage) or perhaps employers quickly needed many more people than previously (increasing labour demand)?
Unfortunately, I don’t think the explanation is that simple. Labour market data on vacancies in the hospitality industry does not point to strong labour demand. This submission from Restaurants and Catering Australia (.pdf, 0.8mb) into the 457 visa review helpfully provides some of this labour market data. Table 1 shows total employment in the Food and Beverage sector shrank by 1.1 per cent from November 2012 to November 2013, while rising by 2.2 per cent for all Tourism Related Industries. This would appear to show no strong labour demand from employers who suddenly require a shortage of Cafe or Restaurant Managers.
In terms of supply, the unemployment rate has slowly increased over the past 24 months. It may be the case that these people are ill-equipped to manager cafes or restaurants, however this would require a large leap of faith which I’m unwilling to take. So, to me, the labour supply argument seems inadequate to explain what has occurred.
Instead, the answer requires hypothecating as it won’t be found in empirical evidence. First, let me say I don’t believe the regulations of the 457 visa program are being circumvented by employers hiring these people. The law is being kept. Rather, it is the intention of the program which is likely being undermined.
If I was hired on a 457 visa as a Cook or a Chef, my duties are pretty standard. I have to cook and prepare food, amongst other things (here are the occupational definitions for Chefs and Cooks as per the ABS). However, if I was hired as a Cafe or Restaurant Manager, my duties are much broader and include things like planning functions, maintaing stock, complying with OH&S regulations (read: cleaning) and even “reservations, greet guests and assist in taking orders”. Basically if I was hired as a Cafe or Restaurant Manager, under the ABS definition, I could perform any task required in a cafe or restaurant, including that of a waiter or cleaner.
Employers – seeking more flexibility under the 457 visa program – worked this out sometime in 2011 and from 2012, the trend of hiring migrants under this occupation code started to grow substantially. I find it exceeding unlikely these people are actually managing cafes and restaurants as the standard definition of manager implies.
There are a range of positions one could take on this. This could be viewed as a clear breach of the program and should be stopped immediately. This argument would primarily rest on the premise these people are not skilled workers but entry level staff. Alternatively, we could understand this as employers creating flexibility in an otherwise strict system. One could argue there is no real issue here as migrants are filling roles other people do not wish to undertake.
My main issue with this increasing practice is that it is impossible to clearly understand what is going on. I favour more migration, including more low-skilled migration. However there is a strong argument if the 457 visa program is for skilled migrants, then this type of activity should at least be frowned upon. Migration advocates, like myself, are better served by arguing for an expansion of current low-skilled programs (such as the Seasonal Work Program) or new programs aimed at facilitating more migration.
This is why I believe employers and industry groups are only hurting themselves in the long-run by knowingly acting outside the intention of migration programs. Combined, these three occupations account for over 10 per cent of the population of migrants on 457 visas in Australia. If it is found that salaries are lower than what is required – because who would pay a waiter or cleaner $53,000 – or migrants are working 12 hours a day, 7 days a week, a skeptical public will have evidence to channel anti-migrant outcomes into the political process. This would be a disaster for Australia, as more of our immigration discourse would become laden with jingoistic rhetoric and nasty legislation.
In the submission I linked to above, the peak industry body Restaurant and Catering Australia advocates the salary threshold be abolished under the 457 visas program and an agreement to allow low-skilled occupations be expedited. I disagree this should occur under the 457 visa program. This is the easy option. But the case for expanding access for lower-skilled migrants has not been made forcefully to the public or political parties. This discourse is required, and required to be accepted at least by a plurality of the population, as the backlash can be harmful. You only need to follow the European parliamentary elections over the next fortnight to gain an insight into how this can manifest itself.
So instead of stealth, we should have this conversation about more migrants working in lower skilled occupations. The 457 visa program is excellent, necessary yet not sufficient. Changing it to suit specific interests is not the best way forward. This is a broader conversation that will take some time.