IMPLEMENTATION OF LABOUR MARKET TESTING IN THE STANDARD TEMPORARY WORK (SKILLED) (SUBCLASS 457) VISA PROGRAM. Response from AIIA

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1 IMPLEMENTATION OF LABOUR MARKET TESTING IN THE STANDARD TEMPORARY WORK (SKILLED) (SUBCLASS 457) VISA PROGRAM Response from AIIA AUGUST 2013

2 INTRODUCTION The Australian Information Industry Association (AIIA) is the peak national body representing multinational and domestic suppliers and providers of a wide range of information technology and communications (ICT) products and services. We represent over 400 member organisations nationally, including global brands such as Apple, EMC, Google, HP, IBM, Intel, Microsoft, Salesforce.com, and Oracle; international companies including Infosys, Telstra; national companies including Data#3, SMS Management and Technology, Technology One and Oakton Limited; and a large number of ICT SME s. All of our members, large and small are committed to developing Australia s digital capability and presence nationally and on the global stage. AIIA welcomes the opportunity to respond to the Discussion Paper Implementation of labour market testing in the standard temporary work (skilled) (subclass 457) visa program. AIIA members currently use the 457 Visa Program as a means to support continuity of business arrangements. OVERVIEW From the outset, AIIA would like to make it clear that it strongly supports the spirit and intent of 457 visa requirements. Currently, 457 visa arrangements are used legitimately by the ICT sector to meet a genuine gap that currently exists between the domestic supply and demand of ICT skills. Individuals who hold 457 visas not only fill real and immediate needs within ICT organisations, but also make a significant and positive contribution to the Australian economy generating more revenue than cost 1. 1 Access Economics, The Impact of Sponsored Temporary Business Residents of the Commonwealth Budget, May P a g e

3 By way of context, the Australian ICT services market is considered a mature and healthy market being the second largest in the Asia Pacific region. The most recent forecast for ICT services in Australia shows a 3% compound annual growth rate in US dollars between 2012 and 2016 with an estimated ICT spend of some 2.2% of GDP - some 42% of ICT services spending is in the form of outsourcing. 2 We operate in a business environment that is global and highly mobile more so than any other industry and our ICT market demands a highly skilled ICT workforce that is agile and innovative. Labour supply and demand is particularly dynamic in cutting-edge occupations that are of high priority to government projects and industry initiatives. The skills required in the ICT industry, for example, undergo rapid change at the same time that strong growth in demand is expected. This increases pressure to find suitably qualified staff in emerging ICT specializations that are critical to delivering major ICT initiatives such as the National Broadband Network. With this context in mind, we strongly emphasise that the skills shortage in the ICT sector is a real concern - both in the immediate and long-term. ICT job numbers are expected to double between 1999 and while ICT enrolments in training and education have fallen nationally by 55 per cent over the last decade visas are therefore critical to local companies being able to solve immediate skill shortage issues. While we believe this requires a longer term systemic solution, and are working with Government to achieve this, without easy access to 457 visas our members are at risk of losing contract opportunities and at the very least, being exposed to considerable delays in their ability to respond to market needs. 2 Gartner papers 3 Job numbers: ACS Statistical Compendium, ICT applications: DIISRTE Higher Education reports 4 Department of Business and Innovation, Victoria, ICT snapshot The State of ICT skills in Victoria, January, P a g e

4 With regard to concerns regarding the overuse of 457 visas we would make the important point that the cost of recruiting a candidate from overseas is significant and a sufficient regulator of the labour market. In our experience, companies will generally only turn to overseas labour when it is genuinely needed and with cost in mind, will test the Australian market extensively before recruiting from overseas. Finally we make the point that the skilled migration program was overhauled in The aim of that process was to curtail independent migration and make the bulk of the skilled migration program employer-driven. These changes recognised that employers are well placed to respond dynamically to changes in the labour market and in the industry. We are very concerned therefore, about the imposition of an overly regulated 457 process and in particular, unnecessary labour market testing where a well-recognised labour shortage exists. COMMENTS The following comments relate to the specific areas of concern for AIIA members. Where appropriate, specific recommendations are made with regards to how this initiative should be taken forward. Recruitment Practices and Labour Market Testing (LMT) AIIA members currently use a variety of methods to recruit staff including online advertising, referrals from employees and Alumni members, recruitment fairs/events, networking events, graduate programs, and through mediums such as LinkedIn, company websites etc. It is important to note that these differ from business to business and some of these means, by their very nature, do not have a clearly defined evidence trail making it, at times, difficult to demonstrate the market has been tested. 4 P a g e

5 We are advised by our members that with skills relatively short in the ICT industry, their human resources and recruitment staff relies heavily on understanding internal business requirements and local knowledge of the market. This includes expert knowledge on: skills available locally; whether a vacant role needs specialised knowledge and expertise of the company s technology to perform the role; when local employees may be available to transfer from existing projects; and how quickly local staff can be found to fill vacant roles. In filling local vacant roles, recruitment professionals use their market knowledge to determine if the role is more suitable for an existing local employee, if they need to bring an employee from offshore or approach the local market to hire externally. In other words, there is not a 'standard procedure' for filling a vacant role that can be used as part of the information that could be sought for DIAC to examine whether market testing has taken place. Roles may also be simultaneously advertised on internal local and global corporate websites in parallel with approaching the market. In approaching the local market, the recruitment professional will again rely on their knowledge and experience to determine the best channel for approaching the market. Where roles are known to be harder to fill, recruiters may also use sites such as LinkedIn etc. to actively approach suitable candidates that already have positions in other organisations doing similar roles. Where skills are known to be hard to find both locally outside the company, businesses may engage a global recruiter to find a suitable candidate to hire from offshore. As noted above, our experience based on member practices is that recruitment processes rely heavily on local knowledge of the Australian market and the company s skills available both locally and globally, which will at times, make demonstration of market testing challenging. We are also concerned about the potential legal liabilities under the Privacy Act 1988 (Cth) and employment law that may arise from any requirement to provide DIAC with personal documents, details and/or information relating to Australian candidates or to retain these for future inspection. 5 P a g e

6 We would also point out the inappropriateness of a DIAC case officer second guessing the decisions of employers regarding their staffing needs. It is also inappropriate and inconceivable that DIAC has the capacity to determine whether a decision by a company to reject a candidate was justified. Placing case officers in the position of making recruitment decisions on behalf of a business will inevitably lead to the review of applications and further delays. A decision about whether a particular applicant has the skills required for the role is one that must remain wholly with employers. We would also advise that in terms of salary benchmarking many of our members use the AIIA/Aon Hewitt Salary Survey to benchmark specific ICT roles within their respective businesses. This ensures salary offers are appropriately competitive and align with the broader industry. This applies equally to recruitment through the 457 visa process. AIIA submits that any Labour Marketing Testing (LMT) requirements: Are flexible for employers to demonstrate LMT in ways that take into account particular industry and particular employer arrangements and that employers are not required to adopt a recruitment process they would not otherwise use; Do not risk the overarching privacy obligation of employers in respect of potential or existing employees; and Ensure decisions about whether a particular applicant has the skills required for a particular role is solely that of the employer (and not determined by a DIAC case worker) Labour Market Testing Skill-Based Exemptions Sections 140GBC(2) and (3) provide two skills-based exemptions to the LMT requirement. Sponsors are exempt from LMT requirements if the nominated position requires: a relevant bachelor degree or higher qualification, other than an engineering or nursing qualification; and/or 5 years or more of relevant experience, other than engineering or nursing experience. 6 P a g e

7 Alternatively, occupations are exempt from labour market testing if the nominated occupation requires: a relevant associate degree, advanced diploma or diploma covered by the AQF, other than an engineering or nursing qualification; and/or 5 years or more of relevant experience, other than engineering or nursing experience. In order for the occupation to come within these skills-based exemptions to LMT, the occupation must also be gazetted by Ministerial instrument under section 140GBC(4). We note that at the briefing provided by the Department of Immigration and Citizenship in Canberra on 31 July 2013, attendees were advised that planned exemptions from LMT, whilst signalled in the legislation, will not be implemented with the new arrangements. AIIA is very concerned that this decision has been made, and made in the absence of any consultation with the industry participants affected. It effectively means that notwithstanding that the ICT sector has an identified and acknowledged skills shortage, for which we are legitimately and genuinely entitled to claim an exemption, ICT business will be required to establish processes, procedures and reporting structures in any case. This is time consuming and costly and imposes unnecessary additional red tape. AIIA s position is that exemptions should be in put place before LMT commences and applied broadly so that they cover most 457 nomination applications at the managerial, executive and specialist level as described in ANZSCO Major Groups 1 and 2 (which will align with the requirements of the Act). This will ensure businesses will not have to incur costs from creating unnecessary processes that will only be in place for a short period and avoid further disruption to recruitment activities. Having the exemptions in place will also enable DIAC to avoid unnecessary costs from processing 457 visa applications that are to be exempt. 7 P a g e

8 AIIA also seeks clarification of the requirement that engineers are not exempt from LMT. There are a number of IT occupations whose ANZSCO categorisation includes the word engineer. These include: Software Engineer Computer Network and Systems Engineer ICT Quality Assurance Engineer ICT Support Engineer ICT Systems Test Engineer ICT Support and Test Engineers The wording of section 140GBC is ambiguous as to whether IT engineers are caught by the compulsory LMT provisions. AIIA s view is these occupations should not be deemed as engineering roles. Despite the occupation names, these occupations do not require professional engineering qualifications. AIIA recommends that: Implementation of the new arrangements not proceed until exemption arrangements are clear and relevant industries have had the opportunity to apply for such exemptions. All occupations in ANZSCO Major Groups 1 & 2 should be gazetted. This would provide exemptions to LMT in executive, managerial and professional occupations, while requiring LMT in lower-skilled occupations that are of greater concern. DIAC policy should clarify that the mandated LMT in the case of occupations that require an engineering qualification, does not extend IT engineers. Disadvantaging Australian Businesses AIIA is also concerned that under proposed arrangements some Australian based businesses will be specifically disadvantaged as compared to their global competitors. For example while some non-australian businesses will be exempt from LMT requirements under intra-corporate transferees arrangements to Australia, this exemption does not apply to Australian-based 8 P a g e

9 businesses recruiting non-australian workers. This means in effect, that LMT would apply more rigidly to Australian businesses than to non-australian businesses. For this reason AIIA believes that an exemption of ANZSCO 1 and 2 occupations should apply in all cases. Exemptions for Accredited Sponsors Within the visa sponsorship program, reputable employers are able to apply for Accredited Sponsor status. Accredited Status is only available for sponsors that have a long history of good dealings/compliance with DIAC, including a high volume of good quality, decision-ready applications, and an excellent record of commitment to employing and training Australians. AIIA recommends that accredited business sponsors should be exempt from LMT because they have demonstrated a high level of compliance with the 457 Business Sponsor program and demonstrated their bona fides. Implementation Timeframe AIIA is also concerned that the implementation timeframe does not appear to allow for further industry consultation regarding proposed new arrangements prior to their implementation. While we acknowledge this important phase of consultation, the outcome of this process is that many divergent views will be brought together to inform the process to be implemented by the Department. This is in the absence of further industry review of proposed arrangements. We are concerned that this will result in overly bureaucratic processes that bear no resemblance to the reality of busy, operating businesses. AIIA strongly recommends that the proposed implementation date for new arrangements, i.e November 2013 be extended to ensure the Department has sufficient time to consult with industry on the proposed new operating arrangements. 9 P a g e