Mining's new American hero?

The federal government recently announced that it would use the 457 visa skilled migration program to fast-track the number of skilled workers applying from the United States.
In defending this move, Federal Minister for Skills Chris Evans suggested that this was not a case of discriminating in favour of US workers, but rather cementing an important, existing relationship between the two countries.

He also argued the move could redress acute labour shortages in some parts of the Australia economy while also providing employment opportunities for the workers from the US, where unemployment is running at 8.2 per cent (considerably higher than Australia's rate of 5.2 per cent).

In particular, these employees would target the construction sector, where much of the current unmet demand for labour is in the development of large-scale mining projects.

Some benefits of this move appear obvious. In a recent article examining employer calls for an expansion of 457 visas in mining, I argued that workers from different cultural contexts, with non-English speaking backgrounds, might face greater challenges at the workplace and in remote mining communities. In particular, that article highlighted workplace health and safety concerns, and this concern was raised by the minister in explaining the move to expand the numbers of US migrant workers.

But there remains concern about the capacity of skilled migration to undermine employment opportunities for local workers, and a sense that government and employers should be seeking to maximise local employment opportunities. Given that employers have pushed hard for an expansion of the skilled migration scheme, it is critical to examine the motives of employers in pressing this case.

Operating as an employer-sponsored employment scheme, a key benefit to employers of 457 visas is their capacity to tie employees to a particular firm. That employers are able to restrict worker mobility is crucial to understanding how employers manage labour in contexts where they are dealing with skilled workers in tight labour markets.

In human resource management (HRM) literature there is a well known 'training paradox' that highlights the dilemma for employers in managing skilled workers in highly competitive markets.

The training dilemma occurs because acute labour shortages and high labour mobility act as impediments to the provision of training and development. Put simply, employers do not want to invest in workers who might leave, or be poached by other employers competing within the same labour pool.

On the other hand, not investing in employees also risks high levels of turnover as skilled workers expect development opportunities, and perceive these to be part of the implicit employment contract. Even prior to training, skilled workers incur substantial recruitment costs and so the investment does not pay off without a period of sustained employment.

So the attraction of an employer-sponsored scheme is then twofold. First, the skills required are already provided, lessening the need to incur substantial training costs. This is a known as a 'buy' rather than 'make' decision.

Second, job hopping (or employer poaching) is limited by the very nature of the scheme: that employment is dependent on the sponsorship of a particular employer. While employees could, of course, change sponsors, there is still a strong moral, if not formal, contract to stay with the original sponsor.

Since the 1990s Australia's employment relations system has been increasingly decentralised. We have moved away from standardisation of terms and conditions of employment across occupations and industries – which occurred under the previous industrial arbitration system – to enterprise and individual level bargaining.

Employers have welcomed this as a way of increasing workplace flexibility. The danger for employers however is that this decentralisation has exacerbated competition for workers, particularly in areas of skilled labour shortage, resulting in labour poaching, increased wages and the aforementioned HRM dilemmas.

In areas of skill shortages in particular, employers require measures to contain these competitive tendencies, and this would seem to highlight their desire for an expansion of the skilled migrant workers scheme.

Michael Barry is head of department at the Griffith Business School, Griffith University. This article first appeared on The Conversation. Republished with permission.