Australian Visa Law is going through some rough changes. These changes were announced in April, and their purpose is to replace the 457 visa program that was incredibly popular among both employers and foreign workforce. Until recently the 457 visa was the most common document for many skilled immigrants from all parts of the world. Before July, the holders of 457 visa had the right to live and work in Australia for four years. They could also bring their spouses, who also received the equal right to work or study in Australia. The employers sponsored the whole program. Startup businesses that worked in Australia for less than one year had the right to grant their employees a 457 visa for 18 months.
Since the startup culture in Australia has been booming in the last few years, the 457 visa program was an ideal opportunity for new companies to acquire educated, experienced and affordable workforce from overseas. Another 457 visa rule that was very popular among Australian entrepreneurs was that visa holders were only able to work for their sponsor and they couldn’t search for a job or even an internship or volunteering opportunity in other companies. This allowed Australian smaller entrepreneurs to build loyal and experienced teams of foreign nationals and use them to compete with the biggest corporate enterprises. In this article, we will discuss the introduction of Temporary Skill Shortage visas and the ways they will affect Australian startups.
New rules will change the game
On July 1st of this year, the 457 visa program was replaced with the Temporary Skill Shortage (TSS) one. One of the cornerstones of the new visa legislation is that employers will only be able to search for foreign employees if they are not able to find an Australian citizen who satisfies the job ad criteria. This way, the government will be able to control the labor market, while startups will need to offer competitive salaries to Australian citizens instead of hiring the affordable labor force from overseas.
Another very important change is that foreign nationals can now obtain two types of visas, the short one that lasts two years and the medium one that lasts four. Both types of visas are now much more expensive, and foreign nationals go through a stricter and longer screening process.
The main question is which occupations will find their place on the skill shortage list. As a part of the July changes, the government has added and removed several dozen occupations from the list. In addition to that, they now also require foreign nationals to have at least two years of experience in the field.
When it comes to employers, they will need to pass the non-discriminatory workforce test, pay the contribution to the Skilling Australians Fund and ensure that foreign workers have salaries that are in accordance with the Australian market standard. This way, the government is making sure that foreign workers don’t undercut Australians by agreeing to work for a smaller pay.
How will the new legislation affect startup businesses?
At the moment, Australia is facing a huge business growth. Many people have decided to quit their 9-to-5 corporate jobs and start an entrepreneurship career. While small-time entrepreneurs mainly do all the work themselves, or hire remote employees from overseas, business owners who are facing a fast company growth are forced to create an in-house expert team that will conduct all the work and solve day-to-day business problems.
Many small and medium-sized enterprises were relying on foreign workforce and fairly liberal 457 visa regulations. Now, when they first need to search for the Australian nationals with proper skills who are willing to work for small companies, their whole recruitment strategy will need to change. By offering higher salaries to Australian nationals, employers will have less money to reinvest in their business. Soon, their business growth will slow down, and they will be less capable of competing with the big corporate enterprises.
Although the new visa legislation seems very harsh, it definitely won’t put an end to the growing startup culture in Australia. People will continue to search for various business opportunities, instead of settling for corporate jobs. The salary gap between local and offshore workforce will continue to exist, and the entrepreneurs will rather employ remote workers. This type of working arrangement will be much more popular in the future since the increased connectivity will also support the remote work.
The only good thing about the new visa program is that the companies that have foreign workers with 457 visas will be able to prolong their stay for another two years. This will allow them to acquire additional skills that are listed on the Strategic Skill Lists issued by the government.
The world is becoming more connected each day, and increasing visa requirements won’t be able to stop the immigrant waves or solve the skills shortage problems. The new legislation also won’t be able to seriously affect the fast growth of the startup culture among Australian millennials. New generations are used to working and socializing with people from all around the world, and in the future, they will rely on remote working engagements and a freelance workforce.
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