On the same day President Donald Trump signed an executive order calling for changes to the H-1B visa program, Australian PM Malcolm Turnbulll announced his own "Australians first" labor strategy.
The government is abolishing its temporary work visa for skilled employees currently held by 95,000 people, or 1% of the workforce. The 457 visa, which like the American H-1B visa was sponsored by employers, will be replaced by the Temporary Skill Shortage (TSS) visa. This will have new requirements for employers, like adhering to a minimum market salary rate and mandatory labor market testing. Employers will also have to shell out more for foreign skilled labor, money which the government will use to train Australian citizens. Applicants will also have to meet stricter criteria and their occupation will have to be one of those the government has found aligns with a skill shortage. (See also: The H-1B Visa Issue Explained)
Is Tech Overreacting?
Since the government made the announcement about the visa policy change, there has been an outcry from the Australian tech industry that complains of a talent shortage. U.S.-listed Atlassian's (TEAM) co-founder Mike Cannon-Brookes publicly slammed the decision to curb the entry of foreign workers. Trent Innes, managing director of software company Xero, tweeted about it as well.
— Trent Innes (@trentinnes) April 19, 2017
Does this mean it's now impossible for foreign tech talent to work in Australia? Not really. Occupations eligible for 457 visas were reduced from 651 to 435. The 'removed' list doesn't include the tech occupations that are among the biggest users of 457 visas – software and applications programmers (9,111 since 2014), ICT business and systems analysts (3,941 since 2014), ICT support and test engineers (1,503 since 2014) and ICT managers (1,664 since 2014).
“ICT is Australia’s fastest growing sector – growing at a rate of 2 per cent compared to 1.4 per cent per annum growth for the workforce as a whole – yet we are still losing skilled workers to a globally competitive market," said The Australian Information Industry Association (AIIA) in a statement as a response to the recent change.
But ICT and other tech employees can still receive visas. The only caveat is that ICT project managers, software testers, ICT systems test engineers, and ICT support engineers need to have had at least two years experience in the occupation before they arrive to work in Australia. Most ordinary tech jobs also don't fall under the "Medium and Long-term Strategic Skills List," so applicants will only be able to receive visas with 2-year durations before having to reapply.
What employers, including American firms like IBM (IBM) which have Australian operations, are looking at is more rules, red tape and higher costs for foreign talent. It's inconvenient, but we wouldn't start ringing the sector's death knell just yet.
The Indian IT Factor
The Australian Population Research Institute found that 76 percent of 457 visas for IT occupations go to Indian nationals and a large majority of them are sponsored by Indian IT service companies, like Infosys (INFY) and Tata Consultancy Services, as intra-company transfers. Indians also account for the most visas overall at 25 percent, followed by the UK and China at 19.5 per cent and 5.8 per cent respectively, reported ABC.
This wouldn't be a problem except the report also found that Indian IT workers are paid much lower salaries than the average. "The result is that the Indian service companies have an enormous competitive advantage in tendering for IT consulting work. Their success here also means that they are in a good position to provide clients with the low cost option of moving the operations they have installed to their offshore offices," wrote the Australian Population Research Institute authors in a report titled "Immigration Overflow: Why It Matters."