How to understand 457 visa statistics: Don’t read the Australian

 

In August last year, I wrote about some poor reporting on 457 visa statistics. Natasha Bita in the Australian wrote:

RISING  unemployment has dampened demand for migrant workers, with 40 per cent fewer foreigners seeking visas to work here last financial year.”

This was nearly completely incorrect. The “demand” didn’t really do anything. Instead, a giant price increase on 1 July brought forward thousands of visa applications into June 2013:

This price increase did not create demand. Instead many visa holders already in Australia applied for a renewal a bit earlier than they would’ve otherwise and a number of businesses brought forward overseas hires. All of this masked what was a very standard year in 2013-14.

Ten months later. Same journalist, same paper… same mistakes:

Indian, British and Chinese workers are queuing for jobs in Australia, with applications for 457 work visas jumping by 15 per cent in a year.”

By definition, if you have artificially low numbers for 2013-14, you are going to see increases the following year even with the status quo. The same price hike on 1 July 2013 is “causing” the current rise in visa applications. This is because the 15 per cent “jump” is occurring in 2014-15, referenced against 2013-14, the year with artificially low numbers.

This isn’t rocket science. The current movements in visa application trends are probably about 10 per cent related to the labour market and 90 per cent related to the decision in the 2013-14 Budget to jack the fees of 457 visas by 200-800 per cent (depending on family size). This should wash out of the system over the next 6-12 months.

The public are told a nice narrative that correlates succinctly with the numbers. What a shame the narrative is completely unfounded.

There are many culprits here.

Let’s start with the Department of Immigration and Border Protection. They could have mentioned even a little bit of this background in their quarterly reports (March 2015). Instead, they are making the reports harder to understand by taking away some important contextual graphs on page 1. Of particular note was the graph that showed the actual number of 457 visa holders in the labour market, “Number of primary subclass 457 visa holders in Australia at the end of each month”:

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Looking at the graph, you see the number of 457 visa holders in the labour market moves slowly over time and never erratically (noting, of course, the dip in December as people holiday outside of Australia).

Unfortunately, you cannot see this graph in the latest report. For some reason, it has been removed. You instead need to dig into a pivot table that currently has a broken link. Yet even the text report says “The number of primary visa holders in Australia on 31 March 2015 was 106,750.” An extra couple of clicks and you can find out that the number at 30 June 2014 was 108,870. Doesn’t sound like a rollercoaster ride of 15 per cent increases and 40 per cent slumps to me.

I’d be very surprised if Natasha Bita read my previously blog post. Reading obscure migration blogs is not recommended for reporting in national newspapers. However I would’ve happily taken her phone call in my day job at the Migration Council Australia. I’ve spoken to numerous journalists – including three from the Australian – about migration trends and what my interpretation is of the latest statistics. I know a handful of other people who provide similar opinions. Instead, her article is a complete grab-bag of seemingly random statistics with a misleading central point (noting it is not deliberately misleading).

Lastly, I’ll take some of the blame. I got really hot under the collar when I read Ms. Bita’s article from last August. I made a commitment to myself that I would work harder to try and explain migration and the labour market – as I see it – to more people in the media, whether this be by random emails or actively following up what I regarded as mistakes. I started strong but a disappointing experience in March this year dissuaded me from keeping it up. My resolve has firmed once again.

There are really interesting, difficult policy questions regarding migration policy and the labour market in Australia. Yet the tosh that gets served up in the media makes it all but impossible for even interested readers to understand what is occurring. More damagingly, poor reporting prevents policy settings from being more closely examined. The hospitality industry continues to run rampant with the 457 visa program, with little regard for policy goals, the people they exploit or wages they seek to undercut.

This is horrible for policy outcomes and underpins ignorance in the community on how migration effects the labour market. The rising public debate about the migration provisions in the Chinese-Australia Free Trade Agreement will demonstrate how this ignorance can harm social cohesion and attitudes to migrants in the community.

Summary of 457 visa statistics – March 2014

The quarterly 457 visa statistics were published on Wednesday.

A couple of things I think are worth noting.

Salaries

While this has been a trend for some period, there is a significant gap in average renumeration between states and territories:

ACT $82,500
NSW $87,800
NT $105,600
QLD $95,200
SA $89,500
TAS $91,000
VIC $85,000
WA $111,500
TOTAL $92,500

While WA and NT should have higher averages, the size is quite substantial. Tasmania having a higher average than Victoria, NSW and SA is also slightly odd however it is off a very low relative number of visa holders. Perhaps this is the only salary data in the labour market where the ACT is the lowest in Australia. This is explained as 457 visa holders are ineligible to work in the public service.

Number of migrants

The number of migrants in Australia on 457 visas continued to rise, to a total of 111 780, the highest figure to date. This number reflects the outcome of program activity over the past four years, not just recent visa activity. Given visa grants rose throughout 2011-12 and 2012-13, we should expect this number to keep rising in the near future.

The share of cooks/chefs/managers via the Accommodation and Food Services industry

This is the most obvious issue the 457 visa program has at the moment. The growth – quadrupling over the past two years – in this specific industry relative to both the rest of the 457 visa program and the labour market as a whole is out of whack. I don’t know if this is a handful of major employers putting on massive amounts of 457 visa holders or if this is an industry push to expand, but it should be concerning to the department and the government. Hospitality is not an industry one immediately thinks of when discussing the 457 visa program and this could change the perception of the program in the community.

If anyone from the department is reading this, look into all the data you have on the hospitality industry because it isn’t going to be pretty when the media starts breaking major stories of exploitation and abuse.

The large increase in permanent visas from 457 visas

The growth of the 457 visa over the last two years has other interesting flow on effects. In 2012-13, about 50 per cent of all permanent visas were granted to people in Australia already. In the skilled stream, this number was about 65 per cent.

In 2013-14, these numbers are rising. 457 visa holders moving onto permanent residency visas is up nearly 40 per cent so far this year which is equivalent to about 10,000 additional visas to date. Nearly all of this increase is from the permanent employer sponsored visas with the rest coming from additional 457 visas holders gaining residency through the points-test, without an employer.

This continues the trend of ‘two-step’ migration where a period of temporary migration is followed by a permanent visa application. Statistics show about 70 per cent of those who stay longer than a year want to stay permanently. The only major concern is for people being stuck on temporary visas for long periods of time. This isn’t a major issue at the moment, but may increase into the future if temporary visas continue to grow while permanent placements stagnate.

A response to the CFMEU press release

The CFMEU released a press statement calling for rules “tightening to ensure that Australian workers and young people were given priority over temporary visa workers”. I would argue is it more difficult to hire a 457 visa holder than an Australian citizen, creating an implicit benefit to Australian workers. The “Australian’s first” argument is not pleasant as it feeds directly into fears in the community about incomes and jobs by conflating negative sentiment with migrants. Toning down this overt language would improve the policy debate.

However, the data outlined in the Accommodation and Food Services industry is concerning. I believe a higher nomination fee should be introduced, instead of tweaking existing regulation. Changing employer behaviour will be easier with price incentives as opposed to bureaucratic fixes.

Further, the CFMEU stated, “The good news is that 457 visa applications are coming down under the 457 reforms introduced by the previous government. But they are still far too high, given the thousands of Australians looking for jobs”. This is simply incorrect. Comparing applications of 2013-14 with those in the same period of 2012-13 is misleading as the large visa fee increase in June 2013 have skewed the visa statistics. In fact, if you look at trend visa application using a 12 month sample frame, visa applications have increased compared to the previous 12 month period. The reforms of the previous government did little to impact the rate of visa applications.

I have a lot of respect for the union movement. One of my earliest political memories is attending a massive waterfront dispute rally in 1997. I’ve been a member of the SDA, CPSU and ASU. But on migration, there are too many voices preaching overtly nationalistic jargon and failing to find a more pragmatic approach. The worst part about this is there are valid concerns to be made about the 457 visa program but jumping at shadows and inflammatory rhetoric doesn’t address them.