IT workers could be big winners from a “reset” of Australia’s temporary skills migration program that the Grattan Institute has recommended to fix an unpopular program that it calls “the worst of both worlds”.

Australia’s current temporary skilled migration program “is unpopular with the public, squanders many of the potential benefits of temporary skilled migration, and enables unscrupulous employers to exploit workers,” the thinktank concluded in launching a report that made 11 recommendations for improving the sponsorship of foreign workers.

Recognising that the current Temporary Skill Shortage (TSS) visa program had seen employers sponsoring “a growing number of low-wage workers with few skills”, the report recommends that temporary sponsorship should be overhauled, with a new Temporary Skilled Worker (TSW) visa that could be used to sponsor workers in any occupation.

Freezes on the minimum salary threshold for TSS visas – stuck at $53,900 since mid 2013, although some labour agreements allow salaries as low as $48,510 – meant that “employers are sponsoring a growing number of low-wage workers with few skills” who are being paid less for ‘in shortage’ jobs than Australians would receive for comparable work, the institute warned.

“Exploitation of sponsored workers abounds, which further undermines public confidence in the program,” the report notes, adding that “it is practically impossible for the federal government to identify skills shortages in a timely way.”

Underpayment of foreign workers has been documented for years in government audits that have spawned data-sharing agreements and active compliance programs – yet over 50 per cent of sponsored workers now earn less than the typical full-time Australian worker, Grattan warned, up from 38 per cent in 2005.

“Australia has been left with the worst of both worlds,” the report’s authors conclude.

The new TSW visas would allow employers to sponsor foreign workers for any job paying more than $70,000 per year, and that the sponsored worker is paid at least as much as an Australian would be paid for the same job.

The changes would also see abolition of labour agreements permitting sponsorship for lower-wage jobs.

Based on these changes, Grattan Institute analysis suggests that the number of full-time jobs eligible for temporary sponsorship would increase from around 44 per cent today to as much as two-thirds of jobs.

Other recommendations include allowing workers with a TSW visa to switch jobs within Australia without losing their visas; allowing those who become unemployed to stay in the country for up to 90 days; and indexing wage thresholds to average weekly ordinary time earnings (AWOTE) – which increased by 2.1 per cent in the year to the latest reporting period.

Employers sponsoring high-wage workers would be offered accreditation, as well as five-day processing and fewer checks on intra-company transfers.

Benefits for the IT industry

The new TSW regime would particularly benefit the IT industry, where salaries tend well above the proposed $70,000 threshold.

Out of 73 technology-related roles where recruitment firm Hays tracks average salaries in Australia and New Zealand, just two of those roles – Level 1 and Level 2 end-user support – have average salaries below $70,000.

That would make the proposed TSW visa particularly beneficial for employers that are increasing their technology headcounts to support enervated digital-transformation agendas.

Some 39 per cent of technology companies reported staffing levels above those before the COVID-19 pandemic, according to the most recent Hays Salary Guide, which found that 72 per cent of technology companies are in a growth phase and 79 per cent expect a significant increase in their business activity.

Yet just 1 in 4 technology companies are confident they need to achieve their objectives this year, and 64 per cent believe skills shortages will impact the effective operation of their organisation this year.

Such deficiencies have increased the importance of policies to improve access to key talent – and 58 per cent of technology leaders said they would consider employing or sponsoring a qualified overseas candidate to fill the gap, the report found.

To improve access to qualified overseas candidates, Grattan also recommended the new visa regime eliminate the requirement for English language proficiency for workers earning more than $120,000 per year – and offer visa-holders who are earning more than $80,000 per year “a clear pathway to permanent residency”, a point the institute has previously advocated.

The new TSW visa would allow workers to stay and work in Australia for up to four years, Grattan recommended, with no restrictions on renewal.

Labor has been promising to close the pay gap for overseas skilled workers for years if it wins government, and Grattan Institute called for bipartisan support for the new visas during the upcoming federal election.

“A better-targeted, streamlined temporary skilled work visa would lift Australians’ living standards, attract global talent, boost the budget, and reduce exploitation of workers.”