As of 1 July 2023, Australian employers are expected to comply with the new Temporary Skilled Migration Income Threshold (TSMIT) of $70,000 for workers sponsored under the Subclass 482 or 494 schemes. This change marks a significant increase from the previous TSMIT of $53,900, which had remained stagnant since 2013. By adjusting the TSMIT upwards, the government aims to ensure that skilled migrant workers can support themselves, reduce vulnerability to exploitation, and maintain financial stability. In this blog post, we will explore the implications of this change and its potential benefits for both migrant workers and the Australian labour market.
Protecting Skilled Migrant Workers
The decision to increase the TSMIT to $70,000 aligns with the Australian government’s commitment to safeguarding the rights and well-being of skilled migrant workers. By setting a higher income threshold, workers are less likely to find themselves in difficult financial circumstances, ensuring their ability to support themselves and their families. Moreover, the government believes that this increase is a significant step towards mitigating the risk of financial exploitation that some migrant workers may face when their wages are disproportionately low.
Addressing Wage Disparity
One notable aspect of the TSMIT is that any non-monetary benefits included in the salary package, such as accommodation, clothing, meals, and travel, must be additional to the TSMIT. This provision is designed to address potential wage disparities that may arise when employers include non-monetary benefits as a substantial part of a worker’s compensation package. By explicitly stating that such benefits should be in addition to the TSMIT, the government intends that workers will receive a fair and competitive income, improving their overall financial stability.
Maintaining Access to Skilled Migration Programs
Contrary to many concerns that an increase in TSMIT may dampen employers’ demand for migrant workers, the Minister for Immigration, Minister Giles states that current labor market conditions in Australia suggest otherwise. With unemployment rates at 3.7 percent in April 2023 and high demand for skilled workers, he says the increase in TSMIT is not expected to hinder the availability or subsequent employment of skilled migrant workers. The government emphasises that raising the TSMIT to $70,000 strikes a balance between protecting migrant workers and continuing to provide access to these programs for a maximum number of skilled workers.
Issues for Employers
The increased Temporary Skilled Migration Income Threshold (TSMIT) to $70,000 may raise concerns for employers who typically employ workers with wages below this threshold, particularly in industries facing skills shortages in Australia. Sectors such as hospitality and aged care come to mind, where wages are often lower due to various factors. It is important to address these concerns and understand the potential impact of the new TSMIT on businesses.
One immediate consideration for employers is the potential effect on pricing and inflation within industries that heavily rely on migrant workers. With the new TSMIT, businesses may face increased labour costs, which could be passed on to consumers through higher prices for goods and services. This could lead to a broader negative impact on the economy and inflation.
However, it is crucial to note that the Australian government’s decision to raise the TSMIT is primarily driven by the aim to protect skilled migrant workers from exploitation and ensure their financial stability. While the increase in the TSMIT may pose challenges for employers, it is essential to balance the interests of both workers and businesses.
To address these concerns, employers in industries where wages typically fall below the new TSMIT can explore alternative strategies. One option is to consider labour agreements, which can provide salary concessions of up to 10 percent, allowing for a minimum salary of $63,000. These agreements enable employers to maintain access to skilled migration programs while accounting for the specific market conditions and wage structures within their industries.
Moreover, employers can also explore avenues for productivity improvement and operational efficiency to manage the impact of increased labor costs. Investing in training and upskilling programs for existing employees can help address skills shortages and reduce reliance on migrant workers in the long term. By building a skilled and diverse workforce, employers can enhance productivity and competitiveness while meeting the requirements of the new TSMIT.
It is also crucial for employers to maintain open lines of communication with relevant industry bodies, associations, and government agencies to stay informed about any changes, support programs, or initiatives that may mitigate the impact of the increased TSMIT. These organisations can provide valuable guidance and resources to assist employers in adapting to the new requirements and navigating any potential challenges that may arise.
While the increased TSMIT may present challenges for employers in industries with traditionally lower wages, it is important to recognise the government’s commitment to protecting skilled migrant workers and ensuring their financial well-being. Employers can address these concerns by exploring labour agreements, investing in training and upskilling, and seeking support from industry bodies and government agencies. By adapting to the new requirements and embracing strategies for productivity improvement, employers can navigate the impact of the increased TSMIT while maintaining a skilled and sustainable workforce. Ultimately, finding a balance between the interests of employers and the protection of skilled migrant workers is crucial for creating a fair and prosperous labor market in Australia.