Smaller Firms Depend on 457 Visas for Workers

October 29, 2013

Reeling under high-wage demand and lack of skilled Australian workers, resource firms in Western Australia rely on the 457 visa program to fill the skill gap. New research by the Edith Cowan University (ECU) finds that small firms in the region have a tough time competing against large businesses to attract and retain local workers. These findings come at a time when the Australian government is reviewing provisions of the 457 visa program to safeguard it against exploitation.

Research Findings

The findings of the study are based on intensive interviews carried out by researchers from ECU’s Centre for Innovative Practice. As part of the study, researchers interviewed 10 managers of small-sized resource firms and 20 workers employed under the 457 visa program. The objective of the study was to ascertain how and why the 457 visas were used by companies in the sector.

Researchers found that, although majority of the workers in small-sized firms were Australian citizens, managers were increasingly unable to meet the higher salary expectations of local employees. With growing demand for skilled workers in resource-based firms of Western Australia, managers of smaller companies also found it increasing difficult to retain experienced staff.

“That’s part of the problem in smaller firms - they don’t have the resources, they can’t compete in the same way,” says Rowena Barrett lead author of the report.

Despite advertising, firms struggle to find skilled staff

The study found that small businesses continually struggle to recruit skilled workers. Despite investing thousands of dollars on advertisements, business managers complain that they receive only few responses.

“What we found was that these firms couldn’t get Australians to do the jobs,” says Professor Barrett.

“So it’s not as though a migrant worker was displacing an Australian worker, they just weren’t available,” she points out.

Australian workers demand higher wages

Several managers told researchers that wage increase for workers in larger firms had a cascading effect, with higher wage demands being made by inexperienced and less-experienced workers.

Elaborating the crisis, the study quotes an engineering firm manager: “We find people have grown with the boom and they have all of a sudden become prima donnas and they only work for these high wages.”

Local workers are unreliable and tend to switch jobs

Smaller firms in Australia have often been criticised for preferring to recruit workers aboard, rather than employ local staff. Managers, however, told researchers that, local workers are unreliable and tend to switch jobs even for marginal hike in salaries.

Even Indian firms in Australia, particularly in the IT sector have been severely criticised for preferring to recruit Indian workers under the 457 visa program over local Australian workers.

As the Australian government reviews the 457 visa program, Professor Barrett feels modifications should not be such that it damages the prospects for smaller firms to attract workers at lower wages and compete against larger firms.



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