The 457 visa program – 2010/11 Year in Review

There were 48 075 primary subclass 457 visas granted in Australia in 2010-11

This post was written by Laura, a graduate who recently completed a stint in the Temporary Skilled Migration Section in the Labour Market Branch.

At the Labour Market Branch, we closely monitor the trends that occur in the programs we deliver. The end of the program year is a good time to share our thoughts on the trends of 2010-11. Below, we review the year in the 457 program.

Overall, 2010-11 saw an increase in demand for the program – up from last year when the global financial crisis led to a softening in the demand in the labour market and a corresponding decline in 457 visa grants. The program is on track for an even larger increase in the coming year as the need for skilled labour in Australia increases in line with the growing economy and increased demand, particularly in the resource sector.

The 457 visa

The 457 visa was introduced in 1996. It allows skilled people to temporarily work in Australia if an approved employer sponsors them. They can work from one day to four years.

Since its beginnings, the program has undergone considerable change, yet it has continued to be responsive to the labour market, as seen in our previous post about how the 457 program creates employment in the Australian labour market.  Through boom times, program usage has increased significantly, demonstrating the important role it has come to play in supporting the growing Australian economy. 

Demand for the program declined in 2009-10, following the global economic downturn. This is not surprising, given that trends of the 457 program usually reflect other trends that happen in the Australian labour market. 

If unemployment in Australia is high, employer demand for 457 visas declines. When there are more Australians available to fill skilled vacancies, it makes sense that employers don’t have as great a need for overseas workers. The decline demonstrates the way the program automatically responds to the trends in the labour market.

The 2010-2011 program year

We have seen a different trend in the last 457 program year. The recovering economy and resources boom are just some of the reasons why employers have relied more heavily on 457 workers in 2010-11.

In the past year, the number of people applying for a primary 457 visa rose 39.7 per cent and the number of primary visas granted increased 38.2 per cent. From a policy perspective, this shows the program has responded quickly to demand from employers.

Location and positions

The acute skills shortages in the mining sector have partly driven many of the trends for jobs and locations this year.

The majority of applications lodged were for jobs in New South Wales and Victoria, which has been the case for a number of years. However, there was a 64 per cent increase in the number of applications lodged for positions in Western Australia, where much of the work from the mining boom exists.

The expansion of mining projects also explains much of the the increase in demand for workers in trade and technician occupations, which rose 65.4 per cent in 2010-11. In particular, there was a 74.7 per cent increase in the number of visas granted for workers in the construction industry.

Individual occupation breakdowns tell a similar story. The number of electrical engineering technicians rose 248.9 per cent from the previous year and the number of drillers rose 152.0 per cent. The steep increase in 457 visas granted to skilled workers in mining occupations in the past year shows just how quickly the program can respond to the needs of industry.

As well as responding to temporary labour needs, each year the program responds to industries that have significant skills shortages. For example, the demand for 457 health professionals is always strong, and the highest number of 457 visas granted in the last year was for people working in health care and social assistance.

Salary

The average amount a 457 worker is paid often mirrors their skills and expertise and the demand for their occupation in Australia. It’s not surprising that skilled workers employed in mining had the highest salaries of any industry in 2010-11, given that they are often highly trained people and there is a shortage of the skills they have in Australia.

457 salaries increased again overall in 2010-11, continuing their steep upward trend from 2009 when program reforms changed the requirements for paying 457 workers. Rather than setting bottom limits on the salaries of 457 workers, the program has moved to a fairer system of market salary rates. This means that workers are given conditions “no less favourable” than Australian workers performing the same work. This prevents employers from using the program to undercut local wages.

The continued rise in average 457 worker salaries says to us that these reforms are working the way they should be.

Sponsors

There were 11 290 Australian and overseas employers who were approved to sponsor 457 workers in 2010-11. There were 18 530 active sponsors at 30 June 2011, with the vast majority of these identifying as small to medium businesses.

Countries

People from the United Kingdom were granted the highest number of 457 visas in the last year. Citizens from India came in second and the United States made up the third largest group. 2010-11 saw a significant increase in the number of Irish people applying for 457 visas, with a 60.9% rise from the previous year.

The top fifteen countries using the 457 program have been fairly consistent over the past two years and make up 84.4 per cent of 457 visas granted this year.

Processing

457 processing times were at historically low levels in the past year. The median processing time was 23 calendar days (30 per cent lower than 2006-07) which is well below our published service standards of between 2-3 months.

Even the 10 per cent of applications that took the longest to process came in at an average of 70 days. While this is still not ideal, it’s down from 83 days in the previous year.

Processing times are something we will continue to strive to improve in 2011-12.

The Year Ahead

Overall, the main trend for the 2010-11 year was growth. If current employment conditions continue and businesses struggle to find sufficient skilled Australian workers, the 457 program will bridge the gap and offer employers access to skilled workers in the coming year.

The current shape of the program makes it a quick and effective tool for businesses to access skilled workers, while at the same time ensuring that the training and employment of Australians is the first priority for business.

For more details on the 2010-11 program year, see this report containing State-based 457 data on the main DIAC website.