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Snapshot

  • COVID-19 is having a serious impact on Australian immigration and visa processing.
  • The ability of business to sponsor overseas workers will be critical to Australia’s economic recovery.
  • Long-term changes to the ability of Australian employers to sponsor workers as a result of COVID-19 are unlikely.

Australia’s post-COVID fortunes hinge on rapid and sustained economic growth. That will simply not be possible without employers being able to sponsor foreign workers from overseas. But COVID-19 has shut our borders and created an army of unemployed Australians, making people movement much more difficult for employers and a political issue for government. So, what will COVID-19 mean for our immigration laws and policies, and the ability of employers to access the skilled people they will need?

Why employers sponsor overseas workers

In our experience, employers sponsor workers from overseas because they cannot find enough suitably qualified skilled Australians to fill the available roles, or because they need to transfer critical skills already within their business overseas.

The sponsorship process is not cheap. A four-year subclass 482 Temporary Skill Shortage visa (‘TSS’) could cost an employer around $10,000 before legal fees and impose legal obligations punishable with civil penalties of up to $63,000 per breach Migration Act 1958, s 140K). Nor is it a way to lower wage costs. Employers are obliged to pay sponsored workers no less favourably than an equivalent Australian (Migration Regulations 1994, r 2.72(5)(d)). Last year, the average remuneration for sponsored worker was $105,300. It is also to be used as a last resort. Sponsoring employers are, in most cases, required to demonstrate they have conducted extensive Labour Market Testing to find a suitable Australian before being approved to sponsor a foreign worker (Migration Act 1958, s 140GBA).

In 2018/19, employers sponsored 41,221 temporary workers for TSS visas according to Department of Home Affairs statistics. In the same year the workforce in Australia was some 12,890,000 strong according to the Australian Bureau of Statistics. The most commonly sponsored occupations were Software Engineers (5.4 per cent), Cooks and Chefs (5 per cent), ICT Business Analysts (4.5 per cent), Resident Medical Officers (3.9 per cent), Developer Programmers (3.3 per cent) and Management Consultants (3.1 per cent).

It is hard to see the needs of employers changing very much after COVID-19. There will not suddenly be more tech professionals, engineers, managers or chefs in Australia, although there will be some movement between employers. Those shortages are structural. Many are the result of global shifts to the new technologies Australia is now chasing. To win that work, overseas expertise will be critical and demand for overseas skills could in fact be higher.

Employer sponsored migration

Employer sponsored temporary visas (predominantly TSS visas) are demand driven and there are no caps on numbers. Although the total number of visas in the permanent migration program are planned each year, employers are allocated about 25 per cent of these visas to use to sponsor employees for permanent residence (predominantly subclass 186 Employer Nomination Scheme) and this can be increased if demand is higher.

Numbers of permanent employer sponsored visas (including family members) have been relatively steady over the past decade regardless of changes in government or government policy. Temporary visa numbers fluctuate more from year to year with changes in unemployment or government policy shifts, but these also even out over time.

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When unemployment is high, the availability of skilled workers improves in some sectors, but not in industries such as technology, infrastructure construction, sciences and luxury retail, which take years to produce talent locally. We will see whether it improves in fields where Australians have traditionally not wanted to work such as nursing, child care and hospitality or whether, as the economy improves, Australians will simply return to the roles they had before COVID. Any short-term impacts on unemployment and associated policy changes are unlikely to temper demand for overseas expertise and skill.

Impact of COVID-19

That is not to say that COVID-19 is not currently wreaking havoc on the Australian immigration system, or that it will not have longer-term impacts.

Some sponsored workers have left

Figures are not yet publicly available to tell us how many sponsored temporary visa holders have left Australia during COVID-19, but some will have departed. The decision not to extend JobKeeper to sponsored temporary visa holders left many in the position of having to return home or to stay and try to eke out a way of surviving. While the government has allowed sponsored workers to renew visas even where they have been temporarily stood down, it has not altered the visa conditions requiring them to work only for the sponsoring employer and only in the role they have been sponsored to do even if other work is available (Migration Regulations 1994, condition 8607, schedule 8). Others just needed to return to family.

New workers cannot enter

Australia’s international borders have been effectively closed to foreign workers since 20 March 2020. Only Australian citizens and permanent residents and their families and New Zealand citizens usually resident in Australia can enter Australia ‘freely’ – although all entrants are subject to a 14-day mandatory quarantine at a government mandated hotel. Border entries have fallen by 98 per cent since that time (Senate Select Committee on COVID-19, 5 May 2020).

There is no official date for when borders might open, but few commentators believe it will be this year. Until then, temporary visa holders are not permitted to enter Australia without the permission of the Commissioner of Australian Border Force (’ABF’). Sponsored employees seeking permission to enter must demonstrate they have critical skills (e.g. medical specialists, engineers, marine pilots and crews) or other compassionate or compelling reasons. The Commissioner’s decision-making process is not public and is highly discretionary. No reasons for decision are given and there is no legislative process for review, although there are no limits on the number of applications that can be made. Figures provided by the ABF Commissioner to the Australian Parliament’s Select Committee on COVID-19 show that numbers of exemptions for travel are low, although approval rates are very high.

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The impact of closed borders on the ability of employers to rebound will depend on how long borders remain closed and how often exemptions are granted.  

Critical to this will be, not only the health concerns, but the need to quarantine and who pays for it. It’s not a cheap exercise: each hotel where new arrivals are held for 14 days is ‘guarded’ 24/7 by police and security. In most cases government seeks an undertaking from employers to agree to cover the costs of quarantine but there is not specified amount and to date we are not aware of any employer being asked to pay.

Australian universities are already working with airlines and the government to create a safe and cost-effective way to bring in international students through a ‘secure corridor’ and ‘travel bubbles’ are being considered with New Zealand and then other ‘safe’ countries. It may not be long before employers will come up with similar proposals to government in order to secure entry of the people they need.

Overseas processing is frozen

The Department of Home Affairs has all but frozen processing of new visas from overseas. With their own resourcing issues and with borders closed, granting visas to people overseas is hardly a priority. Although few visas are being granted, many employers are still choosing to lodge applications in anticipation of long processing queues once travel can resume.

Applications are being more closely scrutinised

With no new talent coming in from overseas, employers must try to retain as many sponsored workers as they can despite the costs. This means renewing nominations or visas for workers even where the employee may be stood down or working reduced hours and where conducting Labour Market Testing may seem pointless. The government has made some concessions to allow applications to be made even where there is currently no full-time role (a basic criterion for a TSS visa pre-COVID), but there are no concessions on the application charges or training levies.

Case officers assessing applications for transfer or visa renewal are starting to question whether there is still a need for roles in businesses that are shut down or operating at less than full capacity and why Australians cannot be found to fill nominated roles. Such scrutiny is likely to increase while unemployment remains high and employers can expect to be put to task on these issues. Whether this has a real impact on visa numbers or the ability of employers to sponsor workers, will depend on their ability to show that skills shortages still exist. The most likely impact will be increased requests for information and delays, but ultimately, as history has shown, if the need is real, employers will continue to sponsor and the government will allow it.

Review of skilled migration lists delayed

Skilled occupation lists control much of Australia’s skilled migration program. They determine whether an occupation can be sponsored and whether or not the visa holder might have a pathway to permanent residence.

COVID-19 has delayed the eagerly anticipated changes to the skilled migration lists scheduled for March 2020, that would have meant some commonly needed skills such as ICT Project Managers and Sales & Marketing Managers would have been moved from the Short-term Skilled Occupation List to the Medium and Long-term Strategic Skills List, thereby permitting stays of four years instead of two and creating the all-important pathway to permanent residence that many employees seek.

The lists are reviewed regularly by the Department of Employment, Skills, Small and Family Business which provides its recommendations to the Department of Home Affairs on which occupations are in short supply in the Australian labour market. A core part of the research involves using job advertisements to gauge employer demand. Recent advertising for roles has been significantly impacted during the COVID downturn. The future of these lists and which occupations will be on them is of critical importance to employers as they effectively determine which roles they can sponsor and for how long. One consequence of COVID unemployment could be a radical overhaul of the lists with occupations being removed if there is evidence Australians should be available to do the work. If this happens, it would be one of the most important consequences of COVID.

The upshot

As the economy opens and treasury seeks growth, it is unlikely that we will see radical reform of Australia’s immigration laws or policies. Like much of the COVID response, Australia’s immigration system has been put into a form of temporary hibernation and the most likely response will be to revive it with as little change as possible. Unless there is real evidence of significant structural change to the job market for those critical occupations that employers typically sponsor, then once the borders open, immigration and visas are likely to return to business as usual.


Ron Kessels is a partner at Ajuria Lawyers.