The Hidden Side of Skilled Migration and the Student Visa Scam
By Carla O’Hara
Nationalist Alternative explores the link between Australia’s unemployment rate and the current skilled immigration intake, as the driving force for economic salvation and damnation, with no regard for the social impacts.
It is often represented to the public that Australia’s migration program stimulates the economy, and as such we are informed that Australia is in a “skills shortage” and that to overcome this workforce shortage, we must ensure a high rate of immigration. This article focuses on debunking the skilled component of the migration program.
Econtech, a subsidiary of global corporate KPMG, provides business and government advisory services based on economic modelling. They published a report in 2005 (on behalf of the Australian Federal Government), which claimed that the NSW Government would stand to benefit most from migration. The report claimed that the NSW economy would grow by $60 billion a year and each citizen, $703 a year better off by 2022, according to their economic model. The report states that NSW alone would gain an extra 744,000 people which would create 512,000 jobs. The report also suggested that migrants are on average younger than Australian residents and therefore have longer working lives, and would offset issues associated with Australia’s ageing population.
Another report published by Econtech in 2006, makes clear that the standard of living decreases with an increase in immigration, but claims that the standard of living improves after 12 years based on the concept of a share in the Gross Domestic Product or GDP. This implies that as the labour force in Australia increases, so does the GDP. While the Econtech report states that certain resources are in fixed supply such as water, and should be taken into consideration into the model, it is quite clear that the model fails to acknowledge non financial aspects to population growth.
“The main focus of research, are on the economic effects of migration, i.e., the effects on the supply of labour or human wealth.”Simply put, the report fails to take into account non economic social impacts of large scale migration such as social cohesion, increased traffic, urban congestion, pollution, the economic impact of water and other scarce environmental resources and a decrease in available recreational areas. Noting that the report makes clear it only uses fiscal variables in its migration model, it is even more damning that the first 12 years of high volume high skilled migration creates a decade long decrease in the average wealth of Australian citizens. It becomes clear that those benefiting from high levels of migration most are the Australian Government Taxation Department and Land Developers rather than the Australian public.
This makes Australians bear costs (additional financial and non financial) which are involved with bringing in overseas employment to employers. While certain industries may stand to financially benefit from such immigration, the cost is socialised and borne by unrelated parties. The economic and social impacts which are overlooked in this report result are the costly infrastructure upgrades, including construction of desalination plants and upgrades to major traffic thoroughfares. Despite these factors, voters have little recourse to change government policy significantly on such issues.
The report by Econtech suggests that the Government’s focus on skilled migration ahead of humanitarian and family migrants would also help raise the nation’s skill levels, and recommends increasing skilled migration by 50%.
“The average skill for migrants in total under the current migration intake is higher than the average skill level for existing residents. This means that by 2021-22 the migration intake will cause a steady rise in average skill level of the Australian workforce.”Yet, the evidence of skilled migration and increasing the skill level in Australia is quite the contrary.
There are two types of migrants capable of coming to Australia under the skilled migration program discussed in this article. The first is the 457 guest worker visa, while the second is the skilled migrant visa for the tertiary educated or trade certified, either sponsored or non sponsored.
The 457 subclass skilled migration VISA
Contrary to the belief that skilled migration increases the skill level of the workforce, the 457 guest worker scheme facilitates a lowering of the living standards and working conditions of Australian workers. Since the inception of temporary visas, cheap foreign workers have been preferentially employed as a type of slave labour.
In May 2009, Tieman industries in Reservoir, Victoria sacked long term employees in favour of 457 Visa holders. Australian Manufacturers Workers Union organiser Tony Mavromatis claimed;
“The company is pushing out people who gave up to 18 years of service in favour of guest workers who only started 18 months ago.”When asked why the company would prefer newly arrived foreign workers over locals, Mr Mavromatis stated;
“They shut up, do what they are told or they will be on the first plane out.”
In 2008, Construction, Forestry, Mining and Energy Union secretary John Sutton said there had been ”widespread exploitation” of 457 visa workers.
While, in 2007, an expert on 457 skilled migrant visas and former public servant, Bob Kinnaird, of R.T. Kinnaird and Associates, said the 457 guest worker scheme had set up a “race to the bottom in working conditions”,
“the dangerous aspect of the 457 visa is that people from low-wage countries, even if they are being underpaid by Australian standards, are still earning more than at home, so they will be tempted to put up with anything to stay here,” he said.
In 2006, the Australasian Meat Industry Employees Union South Australian secretary Graham Smith said;
“We told the Minister in very clear terms our concerns in relation to the 457 foreign worker visas. We explained that the visas were being taken advantage of by some unscrupulous employers to bring in cheap labour from overseas, denying careers to locals.”For perspective, the Immigration Department has only 65 case officers to police more than 100,000 visa holders living across Australia.
The Skilled 457 VISA minimum wage has been increased as is now set at $43,500 pa which is higher than minimum award wages. So, there are other factors which make visa holders more desirable in the workforce than simply economics. In particular 457 workers are preferred as a means of breaking a particular workplace culture, and using non-unionised labour.
International Student Permanent Residency
The 457 subclass Temporary Working Visa is only part of the problem with the skilled migration program. The jack-in-the-box is Australia’s third largest export; Higher Education, which is now estimated to be worth $15 billion annually. Many migrants come to Australia under the guise of obtaining a tertiary degree for the sole aim of securing Permanent Residency. To an international student in Australia, “PR” is a glittering prize of a new life in a new country.
Professor Paul Rodan, the Director from Melbourne-based Central Queensland University International Education Research Centre said that many overseas students came from such dire circumstances that the overwhelming motivation was to secure permanent residency.
“For some, it is vital to secure work and send money back home to their families. It’s no condemnation to observe that desperate people will often ‘do whatever it takes. Indeed, it may not be over-dramatic to describe a small element of the international numbers as de-facto economic refugees.”In 2007 there were 455 000 enrolments by international students at educational institutions across Australia, including 5000 funded under Australian Government scholarships. The Australian Bureau of Statistics does not include the number of International students who have gained PR; however, it was noted that in 2005–06, 77% of the 180,000 Permanent Residents entered through the migration program, presumably the other 23% are former overseas students. The foreign student PR figures are in addition to the Government’s annual migration intake figures.
The problem is compounded when some of the foreign graduates come from what industry observers describe as false flag “visa factories”.
A private college owner or a migration agent (either registered, suspended or unregistered) acting on behalf of a college owner takes money from a student for fake certificates showing the student attended classes and passed courses, when the student rarely if ever turned up. The migration agent will supply bogus work experience documents via suburban employers who also get a cut.
Since 2001 the number of private colleges has risen from 664 to 4892. Industry insiders suggest Australia is nothing but a Visa mill, as comparable countries don’t offer residency at the end of their tertiary qualifications.
While universities and TAFEs pay about 25 per cent commission on first semester fees, equivalent to about $1200-$1500 per student, private institutes will pay up to 30 per cent of the entire course fee, providing a clear financial incentive for immigration agents to channel students to private colleges, even into courses in which International students have no interest.
Karl Konrad, a former Victorian police officer, said a trade in fraudulent documents had evolved with employers and agents selling students verification they had completed their 900 hours. One university-educated overseas student spent $22,000 and two years doing a hairdressing course she will never use, just to secure her residency. She did her 900 hours work experience in a salon closely linked to the college, where students are required to pay a $1000 non-refundable bond to use the equipment.
Foreign students pay the owner for the paperwork, and because they want to stay here, they will do anything, including 900 hours free labour.
One has to wonder what benefits there are to the skilled migration program, when the skills attained by foreign students in skills shortage industries are manipulated purely for Australian residency. It is well known to Industry insiders that every time a new critical skills list comes out, education providers start introducing those courses. And despite the successful business model of high turnover rates of foreign fee paying students for the tertiary institutes, Central Queensland University, who heavily depended on the backdoor visa program, forecasts cash for general operations to be overdrawn by almost $5 million by the end of the 2011 financial year.
The decline after record growth in overseas student numbers in the 2007 and 2008 financial years, was a change in the Federal Government rules, where International students could get permanent residency more quickly and cheaply through vocational roles and private colleges, rather than public Tertiary Institutes, and high commission fees to immigration agents for private colleges.
Skilled migration and its effect on the job market
Australia’s reliance on skilled migration in any form, whether it be the 457 Visa, Permanent Residency via foreign students or the skilled migrant Visa, all facilitate a decrease in the average job competency level of the local Australian market, whilst putting unnecessary pressure on services and infrastructure.
Skilled guest workers are not necessarily competing with unskilled workers, but Australian workers who have invested in their education and skills in order to obtain a higher salary. Skilled positions requiring tertiary education have often attracted higher salaries, which not only made education worthwhile, but also provided an incentive for skilled citizens to remain in Australia. The erosion of these wages to below the national average is leading to many skilled and educated Australians, facing increasing housing and living costs, leaving for higher salaries abroad. This creates a ‘brain drain’ which ironically exacerbates any ’skills crisis’.
Skilled migration also creates an employer market where Australians without skills or in the midst of developing their skills, will be over looked by already skilled (degree or trade certification holding) migrants through the business sponsored skilled migration program. What this implies is that as the job market becomes tighter, employers will look for workers who have the skills they need, rather than paying for the time required to up-skill workers. Effectively, we will say goodbye to “on the job training” and white collar mentor programs. It also suggests that International students who gain Permanent Residency from third world conditions, will generate a race to the bottom in working conditions (as seen by the “slave trade” of International students needing their 900 hours for course completion).
Dr Bob Birrell from Monash University’s Centre for Population Research believes that there is too high a dependence on overseas skilled migration, for the reasons as outlined above.
“We’re not training enough of our own people, and given that there are about half of young people in Australia in their twenties don’t have any post-school education qualifications at all I think we’ve got a great deal to do amongst our own people. And this reliance on overseas skills is excessive.”A report published in 2008 by Dr Birrell and Lesleyanne Hawthorne titled “Immigrants and the Professionals” raised a number of questions about Australia’s current immigration policies. One issue of concern raised in the report was that Australia might “be scraping the bottom of the barrel” in regards to taking skilled migrants regardless if those skills are what are needed in Australia.
“Some 29,000 professionals, that’s equivalent to about two and a half per cent of the stock of employed professionals in Australia. That’s a very large increment in just one year. Of the order of a third of the growth in our skilled workforce is now coming from overseas sources each year.”
Currently, the skilled migration program is a points based system with a large list of so called ‘skilled shortage professions’ rather than a system designed to fill actual skills shortages in the workforce. For example, there are a lot of visa points attached to cookery, hairdressing or hospitality management, and there are also no requirements of skilled migrants once in Australia to be employed in the field in which they claimed to have studied. This has been empirically observed with the International Student phenomena. This ‘laissez-faire’ policy can cause a glut in white collar occupations for semi-qualified commercial roles, when skilled migrants abandon their skilled profession once in Australia, or post course completion.
The report by Dr Birrells and Lesleyanne Hawthorns states:
“This point can be illustrated through the fields of mechanical engineering and computing. Australia accepted an additional 3,719 mechanical engineers between 1986-1991, yet according to the respective Census counts in 1986 and 1991 there was a reduction in the number of all persons employed as professional mechanical engineers from 11,706 to 6,773. The inevitable consequence was acute unemployment amongst recent arrivals.”Even in 1991 it was clear from the statistics that skilled migration to a “critical skills shortage industry”, did not translate to higher employment in that field.
However, even with the obvious short comings in the skilled migration program, and the economic forecast models, the Federal Government in the 2008-2009 budget increased the number of skilled migrants by 31,000 entrants based on the advice of business lobby groups including Econtech. This figure is an increase in 30% of 2007 figures. The Family stream increased by 6500 places to 56,500.
The total migrant intake for the year was set to a total 190,000; composed of 133,500 skilled migrants, which did not include the International students who gained Permanent Residency, which in 2007 is estimated at 50,000.
Government budget cuts
In January 2009, Australia’s intake of skilled workers was cut by 18,500 in order to prevent what the Government described as “an oversupply of labour” and ease the jobless rate during the economic down turn. It was the first cut to the skilled migration program for more than ten years and reduced skilled migrant numbers from 133,500 to 115,000.
The cuts made to the skilled migration intake were sold to the Australian public as a means to increase job security; however, no cut was made to the skilled migration program in 2009 at all, rather, there was still an overall ‘net’ increase in skilled migration of 12,500, or a total migrant intake of 160,000.
To put these figures in context, the current jobless rate reported for June 2009 was 5.8 per cent, (its highest level since August 2003), which equates to over 20,000 people to have lost their jobs in the month of June alone.
ICAP senior economist Adam Carr said the unemployment rate is reflected by the number of people looking for work (the participation rate) and the number of job vacancies.
“The reality is that the unemployment rate is higher because the participation rate rose and that means there are more people looking for jobs and there are less jobs available.” said Mr Carr.What is also of great concern, is that during an economic downturn, younger migrants will be preferentially employed over older local experienced workers. According to the Bureau of Labor Statistics in the U.S, workers aged 45 and over form a disproportionate share of the long-term unemployed or out of work for six months or longer. On average, laid-off workers aged 45 and over were out of work 22.2 weeks in 2008, compared with 16.2 weeks for younger workers.
Tim Toohey, the chief economist at Goldman Sachs JBWere, said he expected unemployment to reach 7.5 per cent by December before peaking at 7.8 per cent in early 2010, while the Federal Government is warning of more job loses to come, with an estimated unemployment rate of 8.25 per cent by the middle of 2010.
“We are seeing the number of job seekers increase at a pretty rapid rate. That’s largely a function of the strength in the population growth rate which is being driven, in part, by migrants,” said Mr Toohey.The Econtech report clearly states that migrants are the cause of high participation rates.
“Extra skilled migration intake lifts participation rates and this is due to differences in the age-gender mixes of the migrants versus the existing population.”The skilled migration program does not benefit Australians during an economic downturn, nor does skilled migration increase the overall job skills of the local market, or improve the standard of living. The evidence points to the contrary, between the 457 cheap labour, International students working for nothing, the backdoor residency of International students blowing out skilled migration intake numbers by 30%, and the preferential employment of younger already skilled workers leaves the average local Australian high and dry.
Even the Econtech report which goes so far as to suggest a 50% increase in skilled migration, does not take into account non fiscal factors into its economic model, an economic model which also confirms that Australian’s would be financially worse off in the first 10 years of such high levels of immigration.
Monash University Demographer Dr Birrell, when asked about the Government’s $42 billion economic stimulus package said;
”If the migration program is not cut sharply, the growth in migrant job-seekers will exceed the number of jobs the plan proposes to protect.”
Dr Birrell is correct, Australia needs to completely rethink its skilled migration program, starting with significant cuts and true reporting of our annual migration intake.
References
http://www.theaustralian.news.com.au/story/0,25197,25784268-601,00.html
http://www.theaustralian.news.com.au/story/0,25197,25782678-12332,00.html
http://www.immi.gov.au/media/publications/pdf/Econtech_Comparison_Report.pdf
http://www.theage.com.au/national/foreign-students-slave-trade-20090714-dk6d.html
http://www.migrationnews.com/index.cfm/Australia/Home
