Eradicating the wolf amongst the sheep – will the proposed abolishment of Labour Market Testing for 457 visas make it more resistant to misuse by the less-than-honest few?

At the current time, the 457 is notorious for dividing opinions. One school of thought believes that the subclass 457 visa is the solution for Australia’s skill shortage. The other school of thought however, believes that the 457 visa is an avenue for exploitation for corporations in certain industries. Recently however, the Chamber of Commerce and Industry has written to the Productivity Commission pushing for the abolishment of the labour market testing (LMT) that is associated with the 457 visa. This is in addition to an independent review conducted a commissioned panel by the Federal Government in 2014.

Even without this seemingly controversial proposal, there is already a negative image that the 457 subclass is facing in general. Unflatteringly, this image revolves around the notion that this subclass is repeatedly misused by companies in certain industries to hire cheaper and cost-effective work force. Now with the upcoming push to eliminate the LMT component, one question that repeatedly arises is whether the 457 in general is an effective solution to address Australia’s skill shortage, given the amount of apparent abuse (in the eyes of a significant number of Australian public anyway).

To gain a little orientation in understanding this issue, we would have to first examine the reason why employers recruit 457 workers in the first place (as opposed to hiring local labour). The temporary skilled 457 visa (introduced in 1996 to address skills shortages) is supposed to allow Australian businesses to recruit workers with specialised qualifications, knowledge and experience. With the shortages of several industries in terms of workers reaching a significant point, the 457 visa offered serious solutions to the issue at the time. However, the reality of the administration of this programme has been rather mixed.

In certain areas and industries (e.g. rural areas, IT industry, etc.) there are genuine skills shortages and lack of local labour. For these conditions, the 457 visa does admirably well to help address these issues. Despite the numerous obligations, employers who are in the position of having no one to hire due to a shortage of skills are more than happy to sponsor an immigrant under this program. However, as with any systems, there are flaws to expose for exploitation. Interestingly, one of the major issues is the exploitation of the LMT component, which is originally introduced in 2001 to prevent employers choosing overseas workers over local labour. As the 457 visa is under the ‘umbrella’ of protecting local interests, it would seem ironic that the LMT component becomes the part of the 457 that is considered most open to exploitation.

Originally contained in the independent review of the 457 programme Robust New Foundations in 2014 (the proposal to abolish LMT) , this report sought to explore aspects of the 457 programme that were vulnerable and worthy of reproach. The Panel for the report had the goal of recommending a system that was sound and resistant to misuse (the integrity goal), while at the same time, was flexible and able to respond quickly to economic and business changes (the productivity goal). From the information that the Panel have collected for the report, they have found that business and sponsor representatives have overwhelmingly stated that the existing requirement for LMT is ineffective and imposes an unnecessary time, regulatory and cost burden. The Panel also found that stakeholders of the 457 programme are unclear how the actual requirement contributes to the integrity and compliance of the 457 programme. Of particular concern (according to the stakeholders) are not stringent enough to ensure that Australian workers have priority for employment in Australian jobs. From this information, it would seem that the general perception of the current LMT component is easily circumvented, high in cost and do not hold safeguards to prevent employers from unfairly choosing overseas workers in place of Australians.

Therefore, the issues that must be considered revolve around the balance that must be found between imposing an ineffective provision, cost issues, and the protection of Australian workers. At the current state, whilst the provisions are symbolic of what is trying to be achieved, in practice they do not assist in achieving the objective of providing evidence that suitable Australian workers are not available (to that employer). Unfortunately, the way that LMT is structured at the moment only adds unnecessary regulatory cost for little or no actual benefit. It is therefore the recommendation of the Panel that the LMT is not “fully reliable”, and in the Australian context has proven ineffective and recommends that the LMT be abolished.

In analysing this recommendation from the Panel, perhaps it would be prudent to take on board their recommendations and fully abolish the LMT. However, this does also create an opportunity to perhaps alter certain requirements or characteristics of the test. With the Federal Government noting the Panel’s recommendation, it would give the public some indication that they are listening to the current issues with LMT. However, given the available information (and the reality of LMT in practice), it would seem that a significant issue in abolishing the LMT component altogether lies in the fact that without the LMT, there is no substitute method of assessing/evaluating the fact that the Applicant’ s Sponsor has indeed taken steps to first finding workers from the local market. Should there be a solution to this issue, it would be a much easier prospect in eliminating the LMT component (than it would without a substitute procedure/component).

Given the ongoing debate, there has yet to be a decision on this issue. As 457 is a significant contributor to the Australian economy, so it will be very interesting to find out the conclusion to this development.
Should you have any issues on the matters discussed in this article, or any other issues relating to migration, please do not hesitate to contact our team at Valet Migration, where Australia is our passion. Do not hesitate to call us on (02) 9191 5580 or email us at and our experienced professional team member will be more than happy to discuss your issues.