Needing a microscope to see the silver lining

Marguerite McKinnon & Josh Mehlman
4 July 2008
Page 1 of 2 : single page

Photo credit: Killanoodle

Even with unemployment set to rise, finding the right staff remains a pressing issue for many small businesses. Marguerite McKinnon and Josh Mehlman investigate if migrant workers are the answer and what the government is(n’t) doing to help.

You know the old saying; every cloud has a silver lining. However, these days it’s almost like you need the next-generation FEI Titan scanning transmission electron microscope to see one. When it’s released late in 2009, the Titan will be capable of viewing details down to half an Ångström. (That’s 0.05 of a nanometre, or a quarter the diameter of a carbon atom. Just to give you perspective, a typical human hair is about a million carbon atoms wide. Sorry if this is all sounding a little nerdy.) We have never been able to see things so small.

News of the Government’s plans to make Subclass 457 migrant visas more accessible for small businesses probably doesn’t have you jumping for joy, and you may not need to go down to the microscope lab to see the potential benefits.

The Temporary Business (Long Stay) – Standard Business Sponsorship (Subclass 457) visa, as the government likes to call it, enables businesses to sponsor staff from overseas to work temporarily in Australia from three months to four years. Overseas companies can also use the program to bring workers into Australia to set up a branch, joint venture, agency or subsidiary branch; or to fulfil obligations for a contract or other business activity in Australia.

Is it the answer to the skills crisis? Or more trouble than it’s worth for smaller businesses?

First, the bad news

Australia’s economy is still relatively healthy compared to other countries, but it’s shifting down a gear due to the string of interest rate rises. Higher repayments have squeezed home buyers, forced record repossessions and increased mortgage stress. Add to the mix rising petrol prices and a steady slide in new home building approvals since October 2007, and that lining is getting pretty small.

The second wave is the effect on small business. Australian Bureau of Statistics figures showed retail trade slowing down over the first quarter of 2008 and virtually at a standstill by May.

It’s like the economy has been watching episodes of the 1970s hit TV series The Six Million Dollar Man and is mimicking Steve Austin in speed mode, which we all know was really, really slow. But it sounded cool.

Jobs outlook patchy

News isn’t all that great on the job front either. Unemployment has been sitting around 4% and that means it’s often harder for employers to find qualified staff than for people to find jobs.

“Job ads have risen 20% in one year, which signals a growth in demand,” says Joe Powell, director of sales and services at job search website SEEK. “While there have been some increases in supply with more people, especially women, joining the workforce, it’s no match for demand. “WA is really feeling it. Job ads are up 36% in WA compared to about 20% in other states.”

Government privatisation policies have compounded the tight labour market, according to Tony Melville director of public affairs and Government Relations at the Australia Industry Group, which represents 10,000 employers across the country. “When governments ran businesses such as the railways, they used to include training (no pun intended),” he says. “Now it’s about the bottom dollar, a lot of the old training has stopped.”

Of course, the demand for jobs is uneven: some industries have too many potential workers; others can’t get enough.

Powell says smaller businesses are crying out for solicitors, real estate valuers and construction workers, especially in Western Australia and Queensland, as well as radiologists and sonographers in the medical fi eld.

However, Treasury forecasts in the 2008 Budget show unemployment is expected to rise to around 4.75% in the coming year. This is likely to impact less skilled jobs. According to SEEK, the jobs which have the largest volume of applicants are packers and fillers, kitchen hands and sandwich staff , banking and finance branch staff , call centre staff , and tourism jobs.

Sydney-based rainwater tank manufacturer Tankworks has experienced gaps for skilled and unskilled workers, according to chief financial offcer Adrian Tischler.

“My concern is that, in the quest for skills training, we are opening up a vacuum at the bottom end of unskilled labour,” he says. “I question this drive for skills when a lot of what’s needed out there doesn’t require a high level of training.” [See a complete interview with Tischler and three other experts in Think Tank on page 48.]

Is overseas the answer?

With the labour market tight, many employers are looking overseas for skilled staff . In the May 2008 budget, the Federal Minister for Immigration and Citizenship Senator Chris Evans announced the Government would expand the country’s intake of skilled migrants by 31,000. The skilled migrant intake for 2008-09 is expected to be 133,500, or 70% of Australia’s total permanent migrants.

The Minister also said the government expected more than 100,000 temporary skilled migrants under programs such as the 457 visa – the number of which is uncapped. But for some smaller businesses, the red tape and cost that come with the 457 visa can make it uneconomical and fraught with risk.

“To get a skilled worker it could cost small businesses up to $30,000 if you take into account the visa costs, approval costs, training them up, travelling over to the countries to source workers and sponsoring them,” says Melville.

“If you’re a small business starting out, it can be expensive. Remember you’re competing for talent in the same pool as big business where some companies spend around $250,000 on travelling over to the countries, recruiting and going through the approval process. The only way small businesses can gain access realistically is through the pre-approved systems. It really can be daunting for first-timers.”

Former restaurateur Mike Costin agrees the process appears complicated. He used the 457 visa system to hire a chef from Thailand to run a chain of restaurants.

“The Department of Immigration doesn’t make it look simple and that’s definitely a disincentive for small businesses,” he says.

But hiring an immigration agent made the process a lot simpler, if more expensive.

“There are plenty of agents out there who are happy to take your money and make the process easy,” he says. “For my business partner’s visa, the fees came to around $6000, but we didn’t have to provide much information to the agent to get things to work.”

Melville says the Federal Government urgently needs to make 457 simpler for small business.

“The Housing Industry Association is on the public record for wanting some type of centralised system for small business to access. It’s a good idea, but it’s complicated and a lot needs to be sorted with the detail for it to work.”