482/494/186: TSMIT to $91,000 after the Jobs and Skills Summit?

There has been a lot of speculation about the outcomes of the Jobs and Skills Summit that will be held later this week. The goal of the Treasury Department led pow-wow of unions, employers, civil society, and government is to brainstorm solutions to improve Australia’s workforce with mutual benefits for all stakeholders, and ultimately the Australian economy.

With unemployment at historic levels and inflation higher than ideal, there are immediate challengers that may cloud longer-term planning.

Only last week the top 10 occupations in demand were revealed based on job vacancies and projected industry growth in employment over the next five years.

While some of the most in-demand occupations such as construction managers, nurses, and IT positions are on the Medium and Long Term Strategic Skills List, two are nowhere to be found: aged and disability carers and child carers with the exception of group leaders available to be nominated for a subclass 494 – Skilled Employer Sponsored Regional (Provisional) visa. The summit will probably be wanting to address these critical shortages in workers in these occupations. This may involve adding them to the relevant occupation lists in addition to the already announced expansion of the Pacific Australia Labour Mobility Scheme to include care workers.

While immigration is one factor to be debated, it may provide short- and medium-term solutions to the demand for workers, that is, provided the Department of Home Affairs can process the applications quick enough.

A recent article suggests the number of permanent migration visas to be granted to increase from 160,000 to 200,000 a year is an almost certainty with a consensus between participants. This should see the skilled visa program increase dramatically in proportion to the family visa program.

Increasing permanent migration numbers, however, may have little immediate impact unless offshore applicants are targeted, and in industries and occupations the visa holder is likely to work in.

This is because a large proportion of permanent skilled visa applicants are already in Australia, likely holding a temporary visa with work rights and hopefully working in the occupation they have nominated (for independent skilled visas) or have been nominated in (for employer sponsored visas).

What is also proposed is an increase to the Temporary Skilled Migration Income Threshold (TSMIT). The TSMIT is an important salary floor that applies to all sponsored workers other than the independent contractor occupations, which are general manager and medical practitioners. The sponsored worker must have their guaranteed annual earnings, which excludes compulsory superannuation and unforeseen payments such as commissions, bonuses and overtime, to be at least the TSMIT.

The TSMIT applies to nominations for the:

• Subclass 482 – Temporary Skill Shortage visa,

• Subclass 494 – Skilled Employer Sponsored Regional (Provisional) visa,

• Subclass 186 – Employer Nomination Scheme visa, and

• Subclass 187 – Regional Sponsored Migration Scheme visa.

It is currently $53,900 and has not budged since 2013.

The article states that employer associations would be fine with the minimum being $60,000, a think tank suggests $70,000 and the Australian Council of Trade Unions suggesting a hike to $91,000 and pinned to Australian average earnings.

What many do not understand, including Australian senators is while the TSMIT is a floor, and an arbitrary one at that with no methodology in how it is calculated, it cannot be used to pin a migrant worker’s salary. This is because there is also the Annual Market Salary Rate (AMSR).

The AMSR is the requirement for all employer-sponsored visas mentioned above that a nominee’s earnings must be at least what the employer does or would pay, an equivalent Australian worker (Australian citizen or permanent resident) employee.

Where the equivalent Australian worker’s terms and conditions are determined by an industrial instrument (such as an award) or enterprise bargaining agreement, the award or agreement will, in effect, be the salary floor according to the instrument. Where there is no wage instrument applicable to the occupation and no equivalent worker, data such as job advertisements and remuneration surveys are used to benchmark a nominated salary.

Salary caveat aside, it is therefore unachievable to sponsor a CEO on a salary of $53,900 per annum as there would be no reputable data to justify this. The AMSR is occupation-specific and designed to prevent worker exploitation.

The big issue with increasing the TSMIT too much, however, is that the AMSR must also be above the TSMIT according to the regulations to approve the nomination applications.

In occupations heavily governed by awards, it may make it exceedingly difficult, if not impossible, to sponsor highly skilled workers. For instance, a senior occupational health clinic nurse’s minimum salary under the Nurses Award 2020 is $1328.50 per week, so is $69,082 per annum. Without guaranteed overtime, or with an equivalent worker on this salary, a TSMIT of $70,000 would mean this nomination would have to be refused.

If aged care workers or child care workers were to be added to the sponsorable occupation lists, it would be practically impossible to sponsor them without significant increases in wages for both the equivalent worker and sponsored worker. Where there is no equivalent Australian worker and there is no data to support such a wage, there is no possibility of being approved. Some trade occupations, such as cooks and motor mechanics would be unlikely to be able to be sponsored under any circumstance. And even if the AMSR was modified to allow overseas nationals to be paid at least the TSMIT while the AMSR was below the TSMIT, it may result in Australian workers resenting their higher paying colleagues.

An increase to the TSMIT to $91,000 therefore may be prohibitive to many occupations in demand.