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Demise of the 457 visa in Australia

Demise of the 457 visa in Australia

By Dr Anand Kulkarni

The Australian Government has recently announced the removal of the employer-sponsored 457 visa and its replacement with new 2-year and 4-year visas.

With more stringent admission requirements based on previous work experience, English language proficiency and a much reduced ‘occupations in shortage’ list, putting Australian’s first has entered the political lexicon. Sounds vaguely similar to the protectionist undertones of a Trump administration?

Importing skills

Changes to the visa policy has affected Indians working in the IT sector. Indians have accounted for one-quarter of visa holders in this category, the largest by any country. There is concern and uncertainty amongst Indians regarding these changes, heightened by the fact that the pathway to permanent residency will be blocked for the new two-year visa.

The 457 visa, originally designed to address the skills shortage in the Australian economy, by temporarily employing foreign labour, has been contentious from the start. Controversies have ranged from it being a vehicle to undercut wages, implementing exploitative work practices, as well as not being rigorous in the application of labour market conditions. Despite all the hue and cry, the entrants coming in through this visa category have been relatively small, accounting for 0.7% of the workforce.

Compensate with training

However, it is true that the dominant fields of entry for the visa have been IT and professional services. These are service industries of the future relying on knowledge and technological sophistication. Which is why the Australian government has established a training fund, in lieu of the scrapping of the 457 visa, to train its local workforce.

Research suggests that employers utilising the 457 visas have been more likely to recruit overseas employees compared to training existing employees. On the other hand, firms whose competitive advantage is based on flexibility and speed to market for products and services, might be denied access to skilled labour when needed.

Student visas unchanged

While some have indicated that there could be a negative impact on Indian students looking to study in Australia, there is no change to the student visas themselves. In addition, there is no change to the 485 visa class which allows international graduates from Australian institutions to work in Australia on a temporary basis.

However, some concerns have been raised about the capacity to recruit and retain lecturers who have been put on the short term 2-year visa. With no pathway to permanent residency, work experience tests in the new visas could mitigate against foreign PhD holders with no work experience.

Australia has benefitted from the global flow of academics who bring ideas and expertise to global hubs of knowledge. It is noteworthy that the Australian Government has since flagged that it is prepared to be flexible around these situations of academic entry.


Dr Anand Kulkarni is a Consultant and Principal Advisor at Victoria University, Melbourne. He is also the Associate Editor for the Journal “International Review of Business and Economics” and a Fellow at the Centre For Policy Development in Australia. 

Featured Image Source: Reuters

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