EVALUATION OF THE GENERAL SKILLED MIGRATION CATEGORIES

Transcription

1 EVALUATION OF THE GENERAL SKILLED MIGRATION CATEGORIES Bob Birrell, Monash University Lesleyanne Hawthorne, University of Melbourne Sue Richardson, Flinders University March 2006

2 Commonwealth of Australia 2006 This work is copyright. Apart from any use as permitted under the Copyright Act 1968, no part may be reproduced by any process without prior written permission from the Commonwealth available from the Department of Communications, Information Technology and the Arts. Requests and inquiries concerning reproduction and rights should be addressed to the Manager, Copyright Services, Info Access, GPO Box 2154, Canberra ACT 2601 or by to ISBN X Overseas contributors: Daniel Hiebert, University of British Colombia, Canada Richard Bedford, University of Waikato, NZ John Salt, University College of London, UK Particular thanks are due to Virginia Rapson, Monash University, and Laurence Lester and Diana Illsley, Flinders University. for their contribution to the preparation of this report.

3 TABLE OF CONTENTS Terms of Reference... 1 Introduction Description and Analysis of GSM Visas General Skilled Migration Program description The points criteria and points assigned as of 1 July Description and outcomes for components of the program Labour Market Outcomes of Points Tested Migrants Measuring Success The Data The Overall Picture Differences by Visa Category How Much Does English Matter? Analysis By Detailed Visa Category Conclusion Operational Issues in Skilled Migration Skilled Migration Policy and Operational Procedures The Calibre of Onshore Training and Work Experience English Language Ability Assessment of Offshore Training and Work Experience Select Issues Related to Occupational Field (Including Shortages) Conclusion International Approaches to Skilled Migration National Goals for Skill Migration Current Skill Migration Programs Compared Points Testing: Areas of Difference Assessing Skill Migration Policy Outcomes Conclusion Options and Recommendations Principles guiding recommendations Policy implications Recommended review of SOL and MODL occupations Recommended changes to thresholds and points Australian qualifications New pathways to permanent residence for onshore overseas students State-specific and regional-sponsored visas under the GSM umbrella

4 A1 Skilled Immigration in Canada: Context, Patterns, and Outcomes A2 A1.1 Introduction and context A1.2 Canadian immigration policy A1.3 Contemporary immigration patterns A1.4 The economic fortunes of immigrants in Canada A1.5 New data resources: towards a more nuanced perspective on immigrant fortunes A1.6 Immigrant economic integration In 2001: A cross-sectional perspective A1.7 Conclusion Skilled Migration in and out of New Zealand: Immigrants, Workers, Students and Emigrants A2.1 The brief for this paper A2.2 A point of departure A2.3 The approach A2.4 The national context A2.5 Developments in immigration policy, A2.6 Contemporary skilled migration policy A2.7 Assessing the economic, social and demographic benefits of international migration A2.8 Skilled migration policy in Australia and New Zealand: similarities and contrasts A2.9 A concluding observation A3 Skilled Migration: The UK and Australia A3.1 Introduction A3.2 The policy background in the UK A3.3 The economic effects of migration in the UK A3.4 The UK and freedom of movement within the EEA A3.5 The work permit system A3.6 Proposed new five tier system A3.7 The Australian system for skilled immigration and comparisons with the UK References Chapter 3 Operational Issues in Skilled Migration Chapter 4 International Approaches to Skilled Migration A1 Skilled Immigration in Canada: Context, Patterns, and Outcomes A2 Skilled Migration in and out of New Zealand: Immigrants, Workers, Students and Emigrants A3 Skilled Migration: The UK and Australia

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6 Terms of Reference BACKGROUND The General Skilled Migration (GSM) Categories Australia s general skilled migration categories include the points tested Skilled Independent, Skilled Independent Regional and Skilled-Australian Sponsored (for those sponsored by a relative who is an Australian citizen or permanent resident) visas. They also include the non-points tested Skilled Designated Area Sponsored visa for skilled migrants with family sponsors in designated regions. Objectives of the GSM The GSM has three balancing objectives. These are to: deliver skilled migrants to strengthen and augment the Australian labour force; help sustain Australia s demographic future by complementing natural increase (births minus deaths) with managed immigration in the context of a belowreplacement level fertility rate and an aging population; and help address the skilled labour needs of regional Australia. The Points Test The GSM points test is applied to principal applicants for Skilled Independent, Skilled Independent Regional (introduced on 1 July 2004) and Skilled-Australian Sponsored visas. These three categories accounted for 54,940 or 77% of all Skill Stream visas granted in (The remaining Skill Stream visas, which were not points tested, and not included in the GSM, were issued in the Employer Nominated and Business Skills categories plus a small number of Distinguished Talent visas). DIMA March

7 Objectives of the Points Test The objectives of the points test are to: systematically and objectively select the skilled migrants most likely to contribute to the objectives of the GSM, as outlined above; and regulate the size of the Skill Stream according to planning levels set by the Government, by varying the number of points required to qualify for a GSM visa. Delivery of the GSM Applications for all GSM visas, from both outside Australia and from within Australia, are now processed in the Adelaide Skilled Processing Centre (ASPC). TERMS OF REFERENCE The terms of reference of this evaluation of the GSM and points test are to: 1. examine the efficiency and effectiveness of the current structure and operation of the GSM and points test (excluding issues relating to the numbers selected through this process, which is subject to policy considerations outside the ambit of this evaluation); 2. assess how well the GSM and points test are meeting their objectives as set out above, principally through an examination of the characteristics and labour market outcomes of GSM principal applicants. This examination should draw substantially on the results of: - the longitudinal surveys of immigrants to Australia (LSIA 1 and 2); - the recent DIMA survey of SDAS migrants; - the recent DIMA survey of former overseas students subsequently granted Skilled Independent visas; - the forthcoming third longitudinal survey of Migration Program entrants (first wave data to be available in August 2005); and - the three comparisons with overseas migration selection processes to be commissioned in conjunction with this evaluation. 3. examine the administration of the GSM points test in terms of its efficiency and effectiveness; 2 Evaluation of the General Skilled Migration Categories

8 4. recommend any changes deemed necessary to improve the administration, operation and outcomes of the GSM and points test, including drawing upon the comparisons of the operations of the Australian and overseas points tests; and 5. Deliver a report by February 2006 covering all of the above, and including an executive summary, with appendices containing the three overseas points test comparisons. The evaluation is also to take into account and build upon other studies of Australia s skilled migration processes, including: The Review of the Independent and Skilled-Australian Linked Categories (DIMA, 1999); and To Make a Contribution: Review of Skilled Labour Migration Programs (Parliament of the Commonwealth of Australia, Joint Standing Committee on Migration, March 2004). DIMA March

9 4 Evaluation of the General Skilled Migration Categories

10 Introduction Origin of the Evaluation On 14 April 2005, the Minister for Immigration and Multicultural and Indigenous Affairs, Senator the Hon Amanda Vanstone, announced the Migration Program. This program, of between 130,000 and 140,000 places, will contain a Skill Stream of 97,500 places, the largest on record. This expansion of the Skill Stream, for the eighth year running, comes at a time of skill shortages, a growing awareness of the implications of a below-replacement fertility rate for Australia s future labour force growth and increased public support for a well managed Migration Program. The skill shortages faced by Australia are particularly acute in some strategic sectors, such as mining and infrastructure, and have the potential to create production bottlenecks that threaten economic growth. This in turn has implications for people with fewer labour market skills, who have benefited from the steady expansion of the economy and the consequent decline in the general unemployment rate that have occurred over recent years. While the Government has stated that expansion of training opportunities for Australians, particularly in the traditional trades, is a priority to address the current situation, skilled and experienced migrants are also needed to help ensure that firms are not hampered from operating at maximum capacity by immediate labour shortages. While current shortages may, to a large extent, be short term and cyclical, they are also harbingers of a longer term, demographically driven tightening of labour supply. Australia s fertility rate has fallen sharply since 1961 to its current rate below 1.8 children per woman. The long term consequences of this are an aging population and smaller numbers of people of workforce age, which both contribute to an increasing dependency ratio. The rate of growth of people of workforce age has been slowing since On current trends, in little more than ten years, if not for immigration, this group would begin to shrink. At the same time, Australia is facing increasing competition for skilled migrants from countries facing similar demographic futures. Indeed, many countries, particularly in Europe and Japan (but also Canada with a fertility rate of 1.6) are facing a more rapid and acute shrinking of their labour force age populations. The UK is only the latest such country to enter the race for skilled migrants. DIMA March

11 Research suggests that we have certain inherent advantages in this competition, not least climate and lifestyle. It would be foolish to believe, however, that skilled workers seeking a better life will not have an increasing range of destinations to choose from in the future. These factors all point to the need for Australia to retain a highly effective system for choosing skilled migrants. Against this background, in mid-2005 the Minister for Immigration and Multicultural Affairs, Senator the Hon Amanda Vanstone, asked three independent immigration experts to examine Australia s selection processes for skilled migrants, in particular the General Skilled Migration (GSM) visa categories and the points test used in conjunction with the GSM. The role of the GSM categories within Australia s skilled migration strategy In announcing the Migration Program, Minister Vanstone set out the Government s priorities for selecting skilled migrants. The first priority is to target employer sponsored migrants, who move straight into jobs where there is a direct and clear need for their skills. These migrants are not included in this evaluation as a number of initiatives are already underway to assist Australian employers identify and sponsor skilled migrants for direct employment in their businesses. The second priority is to target migrants who have been sponsored by States and Territories as they are best placed to identify the skill needs of their cities and regions. Two of these programs, the points tested Skilled Independent Regional and the nonpoints tested Skilled Designated Area Sponsored (SDAS) visas are included in this evaluation as they are GSM visas. The third priority is to target migrants who have an occupation on an expanded and more responsive Migration Occupations in Demand List (MODL). The MODL in an inherent element of the points test and is therefore included in the ambit of this evaluation. Importance of the points tested GSM visas While priority has been given to employer and state/territory sponsored migrants in the Program, the GSM categories remain critically important. In , the points tested categories comprised 73% of all Skill Stream visas. In this proportion is expected to fall as the share of non-gsm employer and State sponsored visas increases. The continued importance of the GSM visas can be seen however, from the fact that 49,200, or half of the Skill Stream, will consist of Skilled Independent visas (this does not include the considerable number of SIR and SDAS visas that will also be granted in this year). 6 Evaluation of the General Skilled Migration Categories

12 In other words, the GSM categories will remain the major route to skilled migration in Australia in the immediate future. It is essential, therefore, to ensure that they continue to deliver the best skilled migrants to Australia. The Authors The authors of this report are Professor Sue Richardson, of the National Institute of Labour Studies, Flinders University, who has particular experience in analysing the labour market outcomes of new migrants to Australia, Associate Professor Lesleyanne Hawthorne of Melbourne University, who has extensive knowledge of skilled migration to both Australia and Canada, and Dr Bob Birrell, Centre for Population and Urban Research, Monash University, who is probably Australia s most experienced immigration analyst. The growing international competition for skilled migrants also prompted the inclusion in this evaluation of comparisons between Australia s skilled migration processes and those of two established immigration countries, New Zealand and Canada, and a third relative newcomer, the United Kingdom. These comparative papers are examined in depth in Chapter 5, and printed in full in Appendix A1 to A3. They have been written by leading immigration experts, Professor Dan Hiebert, University of British Columbia, Professor John Salt, University College London, and Professor Richard Bedford, University of Waikato. In the course of compiling this report, the authors have spent many hours talking to the diverse people and organisations who have an interest and a role in the selection of GSM migrants. These include the Commonwealth Departments of Employment and Workplace Relations, and Education, Science and Training, assessing bodies and staff of the Adelaide Skilled Processing Centre. DIMA would like to record its gratitude to the authors for the diligent and effective way in which they have addressed the terms of reference of the evaluation. Skilled migration makes a very significant contribution towards the social and economic fabric of Australia. This report will help ensure that Australia stays ahead of its international competitors and that the GSM continues to deliver skilled workers and future Australians of the highest calibre. Greg Mills Assistant Secretary Migration Branch 27 February DIMA March

13 8 Evaluation of the General Skilled Migration Categories

14 1 Description and Analysis of GSM Visas 1.1 General Skilled Migration Program description There are 12 different General Skilled Migration visas available: Three of these can be applied for, and granted, while the applicant is in Australia Five can be granted while the applicant is outside Australia One can be applied for, and granted, either in or outside Australia - conditions apply Three are only available to New Zealand citizens in Australia. Since very small numbers are involved, they are not discussed further in this chapter. Table 1.1 reports the migration category by visa subclass and offshore/onshore status for each of the 12 General Skilled Migration (GSM) visas. It also shows information about whether applicants have to meet a passmark requirement and what that requirement is. The equivalent previous visa subclass is shown in brackets where appropriate. Table 1.1: Visa subclass (previous visa subclass), passmark and poolmark current 18 May 2005 Off or Offshore onshore Onshore Migration Category (five available) (one available) Overseas student (three available) New Zealand citizen (three available) INDEPENDENT Independent visa subclass 136 (126) passmark poolmark AUSTRALIAN SPONSORED Australian sponsored visa subclass 138 (105) passmark poolmark STATE SPECIFIC and REGIONAL SPONSORED Designated Area Sponsored visa subclass 139 (106*) passmark not pts tested not pts tested not pts tested poolmark Skill Matching visa subclass 134 passmark not pts tested poolmark - Skilled State/Territory Nominated Independent Skilled - Independent Regional (Provisional) visa subclass 137 passmark - poolmark 70 visa subclass 495 passmark 110 poolmark 110 * Regional linked visa subclass 106, now Designated Area Sponsored subclass 139, but the regional area definition widened to include Melbourne since the late 1990s. DIMA March

15 On 14 April 2005, the Minister announced a Migration Program of between 130,000 to 140,000 places for This represents an increase of 20,000 places from the Migration Program of In the Skilled Stream will account for a total of 97,500 of these places, with a total of 76,900 dedicated to the General Skilled Migration program. The allocation of places across the GSM visa types for is shown in Table 1.2. For comparison, the number of persons approved in is also provided. Table 1.2: Allocation of places, General Skilled Migration Program and visas granted (principal and secondary applicants) Places Visas* granted allocated Principal Secondary Visa type Total Applicants Applicants^ Skilled Independent (subclasses 136, 880, 134) 49,200 41,317 24,888 16,426 Skilled Australian Sponsored (subclasses 138, 139, 881, 882) 17,700 14,515 6,244 8,271 State Regional Sponsored (subclasses 495 and 137) 10,000 3,972 1,527 2,445 Total 76,900 59,804 32,659 27,145 * includes 277 visaed under the previous subclasses 105, 106 and 126. ^ includes partners and children. Currently a Ministerial order operates to give priority to persons on the Migrant Occupation in Demand List (MODL) and to persons applying under the State-Specific and Regional Migration (SSRM) visa subclasses. Table 1.3 summarises the locational requirements for each of the visa categories discussed in Section C below. The Regional Sponsored Migration Scheme (RSMS) is included in the table because it is one of the visas that a Skilled Independent Regional (SIR) visa holder can apply for when seeking permanent residence. The Skilled Independent visa subclasses 136 and 880 and two of the Skilled Australian-Sponsored visa subclasses (138 and 881) do not have locational restrictions. 10 Evaluation of the General Skilled Migration Categories

16 Table 1.3: Locational requirements for selected visa subclasses State/Territo Skill Matching (subclass 134) ry Nominated Independent (STNI) (subclass 137) Skilled Designated Area Sponsored (SDAS) (subclasses 139 and 882) Skilled Independent Regional (SIR) (subclass 495) Regional Sponsored Migration Scheme (RSMS) (subclass 119) If the applicant is South Australia, Designated areas are All areas of Australia SIR visa holders nominated by a State Tasmania and identified by individual State are covered except may apply for or Territory Victoria and Territory Governments. Sydney, Newcastle, permanent Government they Currently all parts of Wollongong, NSW residence currently may settle in Australia except Sydney, Central Coast, under this visa South Australia, Newcastle, Wollongong, Melbourne, Perth, subclass after Western Australia, Perth and Brisbane are Canberra, Brisbane relevant time Victoria or Tasmania designated areas. and the Gold Coast. periods served. (as per STNI). If they The sponsoring relative must are nominated by a have lived in a designated After two years living All areas of regional employer all area of Australia for at least and 12 months Australia are areas of Australia are twelve months. employment covered except covered except From 1 July 2006, migrants (including self Brisbane, the Gold Sydney, Newcastle, who enter under the Skilled employment) in Coast, Newcastle, Wollongong, Designated Area Sponsored regional area can Sydney, Melbourne, Perth, category will be required to apply for permanent Wollongong, Brisbane and the Gold live in the same area as their residence under Melbourne and coast (as per RSMS). sponsor for a minimum of RSMS, STNI or Perth. two years before obtaining State/Territory permanent residence. Business Owners visas DIMA March

17 1.2 The points criteria and points assigned as of 1 July 2005 The following section provides a summary of the points available for the various criteria for which points are awarded. A brief summary of the requirements are provided. All applicants have to meet the Skill, Age and English assessment criteria and all gain points for the three following criteria. As can be seen below, the maximum number of points that can be gained from the three compulsory points assessment criteria is 110. Criteria Points Conditions SKILL 60 occupations with specific training qualification (degree or trade certificate) meet any Australian registration requirements 50 more general professional occupations qualification equivalent to Australian bachelor degree or higher (not necessarily related to nominated occupation) 40 other general skilled occupations qualification equivalent to Australian diploma or advanced diploma higher (not necessarily related to nominated occupation AGE (at time of application) years years years years ENGLISH LANGUAGE ABILITY 20 competent English Native English speaker or IELTS score 6 on each of 4 components: speaking, reading, writing, listening Assessing authority for nominated occupation may request occupational English test. This will give 20 points for competent English. 15 vocational English IELTS score 5 on each of 4 components: speaking, reading, writing, listening Post-secondary studies at institution where all instruction was in English 12 Evaluation of the General Skilled Migration Categories

18 All applicants have to meet the basic work requirements unless they meet the two-year Australian study requirement. All applicants under the overseas student visa subclasses 880 and 881 will gain at least five points for Australian qualifications. These and other applicants must assemble the extra points which they need to meet the current passmark from the following assessment criteria Criteria Points Conditions AUSTRALIAN QUALIFICATIONS 15 doctorate at Australian educational institute after a period of at least 2 (academic) years full-time study while in Australia PhD holders are the only 50-point occupations eligible under subclasses 880 and completed Masters or Honours (at least upper second class level) of at least 1 year study in Australia and before that had completed Australian Bachelor as a result of at least 1 year of study at an Australian institution while in Australia and the total period of Australian full-time study was at least 2 academic years 5 completed an Australian degree, diploma, or trade qualification while in Australia and studied full-time in Australia for at least 2 academic years towards the award. changed on 1 Sep 2005 to allow completion Australian study in minimum of 16 months if a summer term is involved. can be more than one diploma over two academic years RECENT WORK EXPERIENCE threshold requirements Basic requirement but no points given If 60-point occupation must have been in paid employment in any skilled occupation on Skilled Occupation List (SOL) for at least 12 of the 18 months immediately before applying. For some visa subclasses the relevant list is the State or Sydney & Selected Areas Skill Shortage List (SSASSL). If 40 or 50-point occupation as 60 point above but for at least 2 of the 3 years immediately before applying. For certain occupations a longer period may be required (e.g. Manager) Skill Matching and SDAS categories may be eligible with less work experience No work experience criteria if meet 2 years study in Australia requirement less than 6 months (from completion not graduation) before applying but this cannot be used to waive any specific work experience requirement imposed by the assessing body as part of a skills assessment. If use work experience obtained in Australia it must have been undertaken while applicant held a substantive visa not a bridging visa. This was changed on 1 Nov 2005 to allow work experience obtained while holding a Bridging visa A or B. SPECIFIC WORK EXPERIENCE points for more than recent work experience 10 If 60-point occupation and have worked in nominated occupation or closely related 60-point occupation for at least 3 of the 4 years immediately before applying (that is, have work experience specific to nominated occupation and an extra 2 years work experience). 5 If 40, 50 or 60-point occupation and have worked in any skilled occupation on the SOL for at least 3 of the 4 years immediately before applying (that is an extra 1 years experience if 40 or 50- point occupation but an extra 2 years for 60-point occupation) DIMA March

19 MODL migrant occupation in demand list and job offer Persons on the MODL are given priority during processing. BONUS POINTS 20 If nominated occupation is on MODL current at time the application is assessed and applicant has job offer for full-time employment in Australia in your nominated occupation from an organisation that has employed at least 10 people on a full-time basis for the 24 months immediately prior to the date the application was lodged. 15 If nominated occupation is on MODL current at time the application is assessed but no job offer. 5 for one of the following only: capital investment in Australia ($100,000 to be invested in an approved government investment for at least 12 months after notified by migration officer) Australian work experience (employed in Australia in a SOL occupation totalling at least 6 months in the 48 months immediately before the day on which the application is made while applicant holds a substantive visa authorising them to work. Work undertaken on bridging visa cannot be counted.) Fluency in a community language (other than English) on supplied list. Require professional level qualifications (written or oral) as evidenced by a qualification (of equivalent standard to an Australian degree) gained from a university where instruction was in one of the listed languages or by accreditation with the National Accreditation Authority for Translators and Interpreters (NAATI) at the professional level (Translater/Interpreter Level). Refer for testing information AUSTRALIAN REGIONAL CAMPUS Studying at a campus in a regional or low population growth metropolitan area 5 Has lived and studied for at least 2 years in one or more areas in regional Australia or low population growth metropolitan area. (Does not say academic years and requires evidence such as rental agreements, utility bills that span a two year period). On 1 November 2005 the regulations were changed so that the applicant only needed to demonstrate that they had studied at a campus located in one of the specified regional/low population growth metropolitan post codes rather than at a specified regional campus. All other course requirements are unchanged. The 16 month concession applying to the definition of Australian qualifications does not apply to this points category. A full list of the eligible areas including postcodes and eligible campuses can be found at Broadly the following areas are eligible: New South Wales except Sydney, Newcastle, the Central Coast and Wollongong Victoria except Melbourne metropolitan area Queensland except the greater Brisbane area and the Gold Coast South Australia Entire State Western Australia except Perth and surrounding areas Tasmania Entire State Northern Territory Entire Territory None of the Australian Capital Territory is included. 14 Evaluation of the General Skilled Migration Categories

20 SPOUSE SKILLS 5 if spouse satisfies the basic requirements of age, English language ability, qualifications, nominated occupation and recent work experience and has obtained suitable skills assessment from relevant assessing authority for their nominate occupation STATE/TERRITORY SPONSORSHIP (only SIR visa subclass 495, not relevant to STNI as this subclass is not points-tested apart from pool mark of 70 points) 10 if applicant has obtained sponsorship from an authorised State or Territory government agency introduced 1 July 2005 RELATIONSHIP (only Skilled Australian Sponsored subclasses 138, 881 and 862) 15 if applicant or spouse is a non-dependent child, a parent, a brother or sister, a niece or nephew of an Australian citizen or permanent resident who is willing to sponsor them; on 1 November 2005 the relationship was extended to aunts and uncles. DIMA March

21 1.3 Description and outcomes for components of the program a) Skilled Independent visa categories Visa subclass 136 (offshore) and visa subclass 880 (onshore overseas students) These two visa subclasses are discussed together because the same selection criteria are in use. Any recommended change in the system will influence both categories, though to different degrees. Outcomes for visa subclass 136 are provided first, then the outcomes for visa subclass 880. A discussion of both visa subclasses follows. Purpose Both subclasses are designed to augment Australia s skill base and to help fill skilled labour market vacancies. Visa subclass 880 is designed to take advantage of the fact that, other things being equal, applicants with Australian qualifications have a greater chance of employment in Australia. Assessment method in place to achieve stated purpose Mainly based on points allocated for: age English language skill level of occupation whether occupation is in demand (MODL) specific work experience Australian qualifications (required under subclass 880) In addition, points can be awarded for: spouse skills bonus points (for capital investment, Australian work experience or community language) In the case of overseas students, the threshold recent work experience required for visa subclass 136 is waived. Applicants gain from 5 to 15 points for their Australian qualification depending on its level. For more detail, see Points criteria and points assigned as of 1 July 2005 above. 16 Evaluation of the General Skilled Migration Categories

22 Rationale of the 136 and 880 visa subclasses Visa subclasses 136 and 880 are the only visas available to persons wishing to migrate permanently to Australia under the Skill program who do not have the option of sponsorship by relatives living in Australia, a State/Territory Government or employer. These subclasses were instituted in the aftermath of a major review of the skill selection system conducted during the late 1990s. The 136 visa subclass was introduced in mid-1999 (replacing subclass 126). The main objective of the skilled migration program at the time was skill augmentation. There was less attention to filling skill gaps in the Australian economy because there were relatively few at that stage. Reflecting this skill augmentation priority, the new selection system advantaged applicants with occupations involving a high level of vocationally specific academic or trade training. Occupations eligible for migration (the Skilled Occupation List) were classified into 60, 50 and 40 point categories. The most skilled occupations, including engineering, nursing, computing, accounting, teaching and some traditional trades, were allocated 60 points, and occupations with less emphasis on skill training were classified as 50 and 40-point occupations. Under the new system, the great majority of those selected in the 136 visa subclass held 60-point occupations. At the time, this was considered an appropriate outcome given the skill augmentation objective of the new selection system. A second major innovation flowing from the 1999 reforms was that persons trained in Australia were given additional points on this account. Furthermore, if they applied for permanent residence within six months of completing their course, they did not have to have any occupational experience (unlike all other applicants). In effect, there was a trade-off between Australian training and job experience. This initiative reflected concerns on the part of employers at the time of the dot.com/new economy boom in the late 1990s that Australia could become uncompetitive in these fields on account of a lack of the relevant skills (particularly in accounting and computing). Since many of the overseas students in Australia were being trained in these fields, it was argued that they should be given priority in the skilled migration selection system. These students were given further incentives to seek permanent residence on completion of these courses when a new set of visa subclasses (the 880, 881 and 882 subclasses) were created in mid-2001 which allowed former students to apply for permanent residence without having to leave Australia. Applicants had to apply within six months of completing their course. In the case of the main 880 subclass, they had to possess qualifications applicable to a 60-point occupation (although for those with an Australian PhD, a 50-point occupation was acceptable). DIMA March

23 What are the Skill Independent visa subclasses 136 and 880 delivering? Figure 1.1: Number of visas approved, principal applicants and accompanying, visa subclasses 136 and 880, to ,000 15,000 10,000 10,498 10,486 13,540 16,279 12,276 14,802 11,826 14,594 Principal Applicants Secondary 10,188 12,978 5,000 8, , ,284 1,353 7,049 1, Subclass 136 Subclass 880 Figure 1.2: Age of Principal Applicants approved under visa subclasses 136 and 880, to % 80% 60% % % 0% Subclass 136 Subclass Visa subclass 136 replaced visa subclass 126 on 1 July Persons applying before this date continued to be processed under subclass 126 (see table below). Visa subclass 126 is not included in the present analysis. Total Principal Applicants approved under subclasses 136 and 126, to Subclass 136 8,016 10,498 13,540 12,276 11,826 Subclass 126 3,195 1, Evaluation of the General Skilled Migration Categories

24 Table 1.4: Occupations of Principal Applicants approved under visa subclass 136, visas granted to MODL and Occupation General Managers Information Technology Managers Rest of Managers Managers & Administrators Medical Scientists Rest of Natural & Physical Sci Profs Architects & Lscape Architects Civil Engineers Electrical & Electronics Engrs Mechanical Prodn & Plant Engrs Engineering Technologists Rest of Building & Engineering Profs * 2211 Accountants 1,252 1,342 1, , Marketing & Advertising Profs Computing Professionals 2,960 3,576 2, , Business & Organisation Analysts Rest of Business & Information Profs * 231 Medical Practitioners * 2323 Registered Nurses * 2324 Registered Midwives * 2325 Registered Mental Health Nurses * 2382 Pharmacists * 2383 Occupational Therapists * 2385 Physiotherapists * 2391 Medical Imaging Professionals Rest of Health Professionals Primary School Teachers Secondary School Teachers Rest of Education Professionals Economists Other Social Professionals Rest of Professionals Professionals total 6,934 8,595 10,058 9,846 9,268 * 3322 Chefs Rest of Associate Professionals Associate Professionals * 4112 Metal Fitters & Machinists * 4113 Toolmakers * 4122 Structural Steel & Welding Trades * 4124 Sheetmetal Tradespersons * 4211 Motor Mechanics * 4212 Automotive Electricians * 4213 Panel Beaters * 4214 Vehicle Painters Electricians * 4312 Refrigeration & Aircon. Mechanics Carpentry& Joinery Tradespersons Plumbers * 4512 Bakers & Pastrycooks Cooks * 4931 Hairdressers * 4942 Upholsterers & Bedding Trades Rest of Tradespersons Tradespersons total 669 1,265 2,630 1,799 2,012 Total PAs subclass 136 (includes unknown) 8,016 10,498 13,540 12,276 11,826 ** Total Principal Applicants subclass 126 3,195 1, * Occupation or sub-component of occupation was on the MODL as of 8 September ** Total approved under previous visa subclass. DIMA March

25 Table 1.5: Occupations of Principal Applicants approved under visa subclass 880, visas granted to MODL and Occupation Information Technology Managers Rest of Managers Managers & Administrators Medical Scientists Rest of Natural & Physical Sci Profs Architects & Landscape Architects Civil Engineers Electrical & Electronics Engrs Mechanical Prodn & Plant Engrs Engineering Technologists Rest of Building & Engineering Profs * 2211 Accountants 927 1,164 2,437 4, Computing Professionals 3,177 2,966 4,576 5,114 Rest of Business & Information Profs * 231 Medical Practitioners 2 * 2323 Registered Nurses * 2324 Registered Midwives 1 * 2382 Pharmacists * 2383 Occupational Therapists * 2385 Physiotherapists * 2391 Medical Imaging Professionals Rest of Health Professionals Primary School Teachers Secondary School Teachers Rest of Education Professionals Social Professionals Rest of Professionals Professionals total 4,692 5,034 8,771 12,142 * 3322 Chefs Rest of Associate Professionals Associate Professionals * 4512 Bakers & Pastrycooks Cooks * 4931 Hairdressers * Other Tradespersons on MODL Rest of Tradespersons Tradespersons total Other including unknown 497 1,999 1, Total Principal Applicants 5,284 7,049 10,188 12,978 * Occupation or sub-component of occupation was on the MODL as of 8 September Evaluation of the General Skilled Migration Categories

26 Table 1.6: Occupations of secondary applicants approved under visa subclasses 136 and 880, major occupation groups and selected occupations, visas granted to Occupation Visa subclass 136 Stating labourforce occupation (major group and main occupations) Managers & Administrators Accountants Marketing & Advertising Profs Technical Sales Representative Computing Professionals Business & Organisation Analysts Other Business & Information Profs Rest of Professionals Professionals total Associate Professionals Tradespersons & Related Workers Clerical, Sales & Service Workers Production, Transport, Labourers & Related Workers Self Employed Total stating labourforce occupation , Not stating labourforce occupation Student ,140 1, Non-Working Child 2,564 4,567 6,432 5,930 4,920 Other (includes not stated, home duties) 2,466 4,562 7,449 6,894 8,298 Total not stating labourforce occupation 5,465 9,783 15,021 13,858 13,816 Total secondary 6,217 10,486 16,279 14,802 14,594 Visa subclass 880 Stating labourforce occupation (major group and main occupations) Managers & Administrators Professionals Associate Professionals Tradespersons & Related Workers Total stating labourforce occupation Total not stating labourforce occupation ,258 1,670 Total secondary ,353 1,714 DIMA March

27 Table 1.7: Country of citizenship and language background of Principal Applicants approved under visa subclasses 136 and 880 Visa subclass 136 Visa subclass By country and region Fiji Rest of Oceania United Kingdom 936 1,873 3,759 2,630 3, Irish Republic Germany, Federal Rep. Of Rest of NW Europe S & E Europe Nth Africa & Middle East Thailand Vietnam Indonesia ,107 1,408 Malaysia , ,113 Philippines Singapore Rest of Sth East Asia China, Peoples Republic of 900 1,092 1,128 1,773 1, ,321 2,139 2,655 Hong Kong Taiwan Japan Korea, Republic of Rest of North-East Asia Bangladesh India 1,280 1,283 1,892 1,885 1,861 1,668 1,674 2,222 2,433 Nepal Pakistan Sri Lanka Rest of Sthn & Central Asia Canada United States of America Rest of Americas South Africa, Republic of , Zimbabwe Rest of Africa Unknown By language background Main English-speaking* 1,636 3,085 5,336 3,937 4, ,64 Non English-speaking 6,375 7,407 8,202 8,338 7,813 5,050 6,834 9,954 10,18 8 Total 8,016 10,498 13,540 12,276 11,826 na 5,284 7, ,97 8 Per cent of Principal Applicants Main English-speaking* Non English-speaking Total na * Main English-speaking background countries are the United Kingdom, Irish Republic, United States of America, Canada and South Africa 22 Evaluation of the General Skilled Migration Categories

28 Table 1.8: Country of citizenship of professionals and tradespersons, Principal Applicants approved under visa subclasses 136 and 880 Major Occupation and Subclass 136 Subclass 880 region of citizenship Professionals UK & Ireland 711 1,238 2,237 1,793 2, South Africa USA & Canada China 850 1,040 1,029 1,657 1, ,914 2,547 Rest of NE Asia ,017 1,607 India 1,174 1,159 1,440 1,505 1,397 1,473 1,180 1,918 2,297 Rest of Sth & Ctrl Asia ,147 SE Asia 1,673 1,953 2,324 1,822 1,563 1,172 1,479 2,307 3,362 Rest 839 1,040 1,048 1,231 1, Professionals Total 6,934 8,595 10,058 9,846 9,268 na 4,692 5,034 8,771 12,142 Tradespersons & Related Workers UK & Ireland , , South Africa USA & Canada China Rest of NE Asia India Rest of Sth & Ctrl Asia SE Asia Rest Tradesprsns & Rel. Wkrs Total 669 1,265 2,630 1,799 2,012 na DIMA March

29 Issues arising The balance between offshore 136 and onshore 880 visa subclasses is moving towards the latter. As Table 1.9 shows, more principal applicants (PAs) were visaed under subclass 880 than visa subclass 136 in This means that the overall Skilled Independent category is becoming younger (see Figure 1.2 which shows the age distribution for the two visa subclasses) with 50 per cent of the 880s PAs in aged less than 24, compared to four per cent of the 136s. Table 1.9: Number of Principal Applicants visaed in the two Independent visa subclasses to s 880s Total Independents % 880s ,016-8, * 10,498 5,284 15, ,540 7,049 20, ,276 10,188 22, ,826 12,978 24, If the 1,063 visaed under subclass 126 in are included, the percentage falls to 31%. Occupational spread and skill level There was a heavy concentration of persons nominating accounting or computing as their occupation amongst those visaed, particularly among the onshore 880 visa subclass. In , seventy per cent of the visa subclass 880 PAs nominated either one of these two occupations, compared with 42 per cent of the PAs under visa subclass 136. The dominance of just two occupations amongst those visaed in the recent past means that the size of the intake from migrants with accounting and ICT qualifications was similar to the number of domestic aspirants wishing to enter the same occupation. For the immediate future (see below), this pattern will continue, though the balance will swing from computing to accounting. This is because when the passmark for visa subclass 880 was raised to 120 in April 2005, MODL points became a crucial determinant of which occupations were likely to be selected. Prior to April 2005, most overseas students who had completed training in Australia in a 60-point occupation were able to achieve the 115 passmark without any need to access MODL points. This is the main reason why most onshore graduates in ICT were able to obtain permanent residence under subclass 880. They did not receive MODL points, even when various computing specialities were listed on the MODL. The explanation is that some accrediting authorities require applicants to have work experience as a condition of allocating MODL points. This was the case for ICT specialities which were listed on the MODL to late 2003 and is still the case for the ICT specialities that were added to the MODL in late By contrast the accounting authorities do not require work experience as a condition of eligibility for MODL points. 24 Evaluation of the General Skilled Migration Categories

30 Since accounting was reinstated on the MODL in September 2004, 2 those with accounting qualifications were virtually assured permanent residence if they applied. For all other occupations not listed on the MODL or where a work experience requirement was a precondition, applicants under subclass 880 have to find an additional five points to be selected. For this reason, overseas students intending to apply for permanent residence currently have a powerful incentive to enrol in courses providing access to MODL points. For the immediate future the concentration in the onshore student program on accounting may diminish somewhat because of the expansion of the MODL in late 2005 to include a number of additional occupations will give some incentive to overseas students interested in permanent residence to enrol in courses delivering the required qualifications. 2 Accounting was removed from the MODL in September All remaining computing specialties (normally requiring 12 months experience) were removed from the MODL in October DIMA March

31 Implications of the 1999 and 2001 selection reforms for overseas students When the reforms advantaging overseas students trained in Australia were introduced in mid-1999 and mid-2001, it was not anticipated how enthusiastically overseas students and Australia s universities would respond to the new migration rules. In the case of the overseas students, a majority have since enrolled in courses which are believed to provide a relatively assured permanent resident outcome. Those with this objective have tended to enrol in relatively undemanding short courses where the curriculum has been defined as at the level needed for entry to a 60-point occupation by the relevant Australian accrediting agency. Such accreditation is required by DIMIA as one of the threshold conditions which an applicant for a subclass 880 (or 136) visa must meet (as well as obtaining the pass mark on the point test) in order to gain a permanent residence visa. Accounting and ICT (Information and Communications Technology) courses have proved to be the most attractive from the point of view of overseas students seeking permanent residence. In each case, the accounting accrediting authorities CPA Australia, National Institute of Accountants (NIA) and Chartered Accountants and the computing accrediting authority - the Australian Computer Society (ACS) only require three semesters specialised work in accounting or ICT, whether at the undergraduate or masters by coursework level, for the course to be regarded as meeting the requirements for professional level entry to accounting and ICT. Overseas students enrolling in a masters-by-coursework degree in an Australian university in ICT or accounting do not need to have any previous undergraduate training in their respective fields. They have been able to complete the compulsory three semesters study in their field, along with some cognate courses in just 18 months. In most cases these credentials are sufficient to gain the required professional accreditation for immigration purposes from the relevant accrediting authority. Since DIMIA introduced a minimum training period in Australia of two years as from mid- 2001, these masters courses have usually been extended to two years duration. This has been to meet DIMIA s requirements rather than those of the accrediting authorities. Since 2005 DIMIA has approved such courses being undertaken over a minimum 16 month period. Under DIMIA s ruling the two year duration refers to the amount of study normally included in a two-year training program. The ruling allows this study to be compressed into a shorter time period. For their part, Australian universities have responded to the new circumstances by developing new or modified courses which cater for the needs of overseas students anxious to gain permanent residence (and for a few full-fee domestic students). Australia s regional universities have been particularly innovative in this regard. Central Queensland University (CQU) and the University of Ballarat have led the way by establishing metropolitan campuses which cater mainly to overseas students and which focus on accounting and ICT courses, particularly at the masters by coursework level. 26 Evaluation of the General Skilled Migration Categories

32 Most other regional universities have followed their example. These universities have succeeded in capturing a significant share of overseas student enrolments at the expense of more traditional overseas student providers mainly because of their relatively low cost fee structure. 3 By 2004, there were 8,789 international students enrolled at CQU campuses, 4,513 of whom were located at the Sydney campus and 2,899 at the Melbourne campus. 4 Most of these students were doing Masters by coursework courses. For the most part, the courses are provided by commercial entities at arms length to the initiating regional universities. These providers, in turn, outsource the teaching mainly to sessional staff. There are a number of issues arising out of these developments from the point of view of the objectives of the GSM Program to augment Australia s skilled workforce and to provide skilled workers capable of meeting Australian employers needs. The first concerns the curriculum content of the courses in question and whether they can be regarded as equivalent to that needed to obtain professional level work with an Australian employer. In the case of ICT, as indicated, no preceding training in computing is required as a condition of enrolment for Masters by coursework courses. The curriculum content tends to be of a survey nature and oriented to computer literacy. The graduates do not normally achieve professional level training in particular computer languages, software development or computer system design. Such skills would normally be needed if a recent graduate is to gain an appointment at the professional level in the computing field. Nonetheless, almost all have been accredited by the ACS as programming professionals. In the case of accounting, the compulsory curriculum required is the minimum deemed by the accrediting authorities as necessary for entry into the profession. However, for full professional status these authorities require a further combination of accounting employment and additional study in specified accounting courses. This extra study is not currently required for immigration accreditation purposes. It could be argued that the limitations of these courses, from the point of view of professional level appointment, apply equally to domestic students. To a degree this is true. However, most of the growth in courses catering for overseas students who are oriented towards permanent residence has occurred at the Masters by coursework level. These courses have relatively few local student enrolments. Most domestic students seeking profession level appointments in computing or accounting would complete three or four year undergraduate courses. Also, domestic undergraduate students are much more likely to possess the communication and cultural skills to which employers give a high priority when making appointments. 3 Birrell, B. Immigration Rules and the Overseas Student Market in Australia, IDP, CQU Performance Reporting and Benchmarking, 2005, p. 40 DIMA March

33 This observation leads into a second issue, which relates to the communication skills of overseas students. Most of these students come from Asia and are not native speakers of English. Even those coming from the subcontinent of India, where their first degrees are usually taught in English, often need further training in English, as well as familiarity with Australian cultural norms, if they are to meet employer s communication expectations after graduation. When the 880 visa subclass was introduced, it was assumed that academic training in Australia would be sufficient to meet these deficits. This has turned out to be problematic, particularly for those taking masters by coursework courses because these courses are composed primarily of fellow overseas students (especially at the metropolitan campuses set up by regional universities). There is no mixing with local students at these campuses. Also, the short duration of the courses limits the exposure of overseas students to Australian cultural practices. A further complicating problem, discussed below, is that many of these students are beginning their courses with relatively low English levels. As a consequence of these developments, large numbers of overseas students trained in accounting and ICT are entering the Australian labour market with credentials and communication skills that are problematic from the point of view of Australian employers. In addition, most of the graduates have had no job experience in their field; thus the difficulties they are having in the labour market, as described in Chapter 3 below. DIMIA has already responded to these concerns by increasing the passmark to 120 on 1 April 2005 for the 880 visa subclass (as it had been done already with subclass 136 in May 2004). It has also tightened the administration of all the student subclasses, by increasing the minimum period of training in Australia from one to two academic years from mid Evaluation of the General Skilled Migration Categories

34 Analysis of assessment criteria for visa subclasses 136 and 880 Age The migrants selected under the offshore Skilled Independent subclass 136 are predominantly aged under 30, or 30 to 34. As Figure 1.2 shows, around 40 per cent of those visaed under subclass 136 were in the first group and around 30 per cent were in the second. Less than 30 per cent were aged 35 or older. This is an issue because the emphasis on youth implies that occupational experience has been discounted; in effect, experience is being traded off for youth. This outcome does not seem to be consistent with employer demands that the people they take on are work-ready that is, they hold the experience required for the tasks which they are supposed to do. This issue is particularly acute for the 880 visa subclass, because, as indicated above, 50 per cent of those visaed in were aged less than 25. Also, because the basic recent work experience requirement that has to be met by applicants under the Skilled Independent subclass 136 has been waived for the 880 visa subclass, few have had any work experience in their nominated occupation or, for that matter, in any occupation listed on the SOL. The only group of applicants where the emphasis is not on youth is amongst those visaed with occupations listed on the MODL. For example, in the case of nurses, in there were 909 visaed in the 136 visa subclass, all of whom were on the MODL. Of these, 45 per cent were aged 35 plus. English language assessment As the 880 share increased, so, too, did the proportion of Skilled Independent PAs who did not have to take an English language test. Until July 2004, it had been policy to waive this test for onshore applicants with Australian qualifications. Such applicants were deemed to be competent in English (a score of 6 on the IELTS test) without sitting the test. They were given 20 points for language. Since then, DIMIA policy has changed. Assessment Levels 3 and 4 applicants (AL 3 and 4 include most of the countries listed in Table 1.10) who want 20 points have to take an IELTS test and score a minimum of score six on each of four components of the IELTS test. The outcomes for those visaed in are shown in Table Analysis of the English language points for Chinese PAs granted approval under visa subclass 880 in shows that 43 per cent received 15 points for English; that is they only achieved five on the IELTS test (labelled vocational English). Applicants from some other countries, including Viet Nam and Thailand, achieved poor outcomes. This finding indicates that many of the 880 PAs do not possess competent English, implying that they will struggle to meet the communication standards most employers demand. DIMA March

35 Table 1.10: Percentage of PAs approved under visa subclasses 136, 880 and 881 receiving 15 points for English, Citizenship Number of PAs approved under subclass % of subclass achieving 15 points for English MESB 4, Thailand Viet Nam Indonesia 254 1, Malaysia 518 1, Singapore China 1,340 2, Hong Kong Taiwan Korea, South Bangladesh India 1,861 2, Sri Lanka Other NESB 2,236 1, Total 11,826 12, MESB = the main-english-speaking-background countries of the UK, Ireland, USA, Canada and South Africa. There are some caveats to this finding. Some visaed under subclasses 880 or 881 in would have applied before the introduction of the new rule and thus were deemed to possess competent English. Some others, who applied after the new rule was implemented, opted not to be tested because they were able to attain the passmark with 15 points. It is possible therefore that Table 1.10 underestimates the proportion of those visaed under the 880 and 881 subclasses who did not possess competent English. DIMIA s Adelaide processing office was unable to provide detail on the outcomes for those who took the IELTS test. Nonetheless, the officers who supervise the testing regime believe that the data shown in Table 1.10 give a good indication of the English levels of applicants from AL 3 and 4 countries. Appeals to the Migration Review Tribunal on the issue of English testing of AL 3 and 4 applicants have resulted in the overturning of some of DIMIA s decisions to require an applicant to take a test. There is a strong case for mandatory testing of English for overseas students from non-english speaking-background countries. As discussed further in Chapter 2, one of the reasons why some students are unable to achieve the competent English standard is that a majority of overseas students are currently coming to Australia on various packages which include preliminary Foundation Year or high school level courses which do not require them to achieve the minimum competent English standard required by DIMIA for persons seeking a student visa for direct entry into a university course. 30 Evaluation of the General Skilled Migration Categories

36 Skilled Occupation List (SOL) There is some flexibility regarding occupations eligible for migration under the GSM. If there is evidence of significant oversupply, as was the case in the mid-1990s with doctors, the occupation will not be listed on the SOL. Conversely, as the situation changed to one of severe shortage, doctors were added to the SOL in Nevertheless, there have been relatively few changes to the SOL since 1999 when it was first introduced. There has been some criticism of this inflexibility, including complaints from the Western Australian Government that some semi-skilled occupations like mobile plant operators should be added to the list. The Panel believes that the priority of the GSM (as stated earlier) should remain occupations involving high skill levels in vocationally specific academic or trade fields. Shortages in occupations which do not require such skills are best filled through the training of domestic workers. The classification of occupations on the SOL into 40, 50 and 60 point categories has not changed significantly since The original criteria by which eligible occupations were designated within these three categories was as follows: 40 points are available for generalist occupations which require diploma or advanced diploma-level qualifications; 50 points are available for generalist occupations which require degree-level qualifications, but which do not necessarily require training for a particular occupation; and 60 points are available for occupations which require degree (or higher) or trade certificate-level qualifications where entry to the occupation requires training in a body of knowledge specific to the occupation and which are generally regulated or governed by professional gatekeepers. This arrangement helps explain why biochemists, botanists and geophysicists are currently classified as 50-point occupations while picture framers and floor finishers (includes carpet layers) are classified as 60-point occupations. The former do not possess vocationally specific qualifications (yet have high levels of academic training) while the latter do have vocationally specific training (to AQF Certificate level III). All trades (with Certificate III qualifications) which are listed on the SOL are designated as 60-point occupations. This arrangement is inconsistent with the principle of encouraging immigration of migrants with high level skills. Some of the trades listed as 60-point occupations, like picture framer and floor finisher, do not involve high level trade training and partly for this reason the best option for filling vacancies is to encourage domestic training in the required skills. There has been a significant extension of new apprenticeships involving Australian Qualifications Framework (AQF) Certificate III since the late 1990s. Some of these fields require the training period to be far less than is the case for traditional apprenticeships (like fitting and turning). DIMA March

37 A better approach to the classification of occupations according to whether they justify 60-, 50- or 40-point designation would be to define 60-point occupations as those which require a) high level academic or trade skills, and b) vocationally specific knowledge which is crucial to employment in the occupation. According to these criteria, a biologist would remain a 50-point occupation because someone with this qualification does have a high level of academic skills yet the training lacks a strong vocationally specific component. However, picture framers and floor finishers do not involve high level trade skills (by comparison with carpenters or electricians) though their training is vocationally specific. Under the proposed classification picture framers and floor finishers would be classified as 50-point occupations. The issue is an important one because, as demand for places in Australia s GSM has increased, the passmark for selection has been increased as a control measure. This has meant that, under the current passmark of 120, the great majority of persons selected comprise those with 60-point occupations. This is appropriate given the policy priority on highly skilled migrants. There is a high level of demand for entry on the part of skilled migrants. Thus from the point of view of maximising the augmentation of Australia s skilled workforce, the selection system should focus on those with skills that are both of value to Australian employers and which cannot be readily made available through domestic training. Migrant Occupation Demand List (MODL) The main mechanism available within the selection system to advantage applicants with skills in demand is the MODL. The only occupations eligible for the MODL are those designated as 60-point occupations on the SOL. (As noted above, if an occupation is in severe oversupply, there is the option to remove it from the SOL.) The additional points for possessing an occupation on the MODL (whether with a job offer or not) are sufficient to ensure almost all applicants with such an occupation succeed in their application. This is true, for example, of onshore Chinese applicants who are accountants (currently on the MODL) and who only score 15 points on the English test. Conversely, applicants who do not have an occupation on the MODL will struggle to achieve 120 points, especially those applying under visa subclass 880. This is because, unlike subclass 136 applicants, they are unlikely to gain points for specific work experience. As Table 1.11 shows, more than 43 per cent of those visaed under the 136 subclass who scored 120 points or more did so because their nominated occupation was on the MODL. In the case of those visaed with 120 or more points under subclass 880, more than 80 per cent did so because of MODL points. 32 Evaluation of the General Skilled Migration Categories

38 Table 1.11: The importance of the MODL and non-work assessment items for Principal Applicants approved under the Skilled Independent subclass with 120 points or more, subclass 136 subclass 880 Approvals % Approvals % Neither MODL or non-work items 2, Both MODL and non-work items MODL only 2, , Non-work items only 1, Total approved in with 120 points or more 6, , * Non-work points include points for items that are not, in most cases, directly related to applicants potential to find work in Australia. They include the spouse skills, bonus points (one of capital investment, six months Australian work experience or community language) and points for an Australian qualification gained at a regional campus. As noted earlier, the importance of the MODL in meeting the passmark since it was raised to 120 has constituted a huge inducement to overseas students to enrol in the courses which will give them a qualification in a field which is on the MODL. By , 30 per cent of those visaed in the 880 category and 18 per cent of those visaed in the 136 visa category held accounting qualifications. These proportions will jump in subsequent years, reflecting the current increase in enrolments in accounting courses. The numbers of subclass 880 PAs scoring 120+ in who were accountants (because of MODL points) were much larger than the number of PAs scoring 120+ who were computing professionals (and therefore did not qualify for MODL points). See Table Table 1.12: Occupations of PAs approved under visa subclass 880 by points gained, < Total Accountants 112 1,335 2,563 4,010 Computing Professionals 235 4, ,114 Other 140 3, ,854 Total 487 9,130 3,361 12,978 Note that accountants were removed from the MODL for a period but were reinstated in September Computing Professionals (selected specialties with 12 months experience) were removed from the MODL in October DIMA March

39 Prospects of selection if applicants cannot gain points for the MODL With the passmark set at 120, applicants who cannot gain MODL points need extra points. This is true even of those who gain the maximum possible score on the three compulsory points-assessment items of skill, age and language (110). The extra points can be gained either from the remaining work-related assessment items (specific work experience and Australian qualifications) or from the non-work items (bonus points, spouse skills and Australian qualification gained at a regional campus) or some combination of these. Applicants (without a MODL occupation) under subclass 136 need at least a further ten points and most applicants under subclass 880 need at least a further five points. (The latter need fewer extra points than the former because they have at least five additional points for Australian qualifications.) Tables 1.13 provides an analysis of the PAs visaed in who gained 120 points without resort to points from the MODL or non-work items for visa subclass 136 (2,038 approvals) and visa subclass 880 (173 approvals). As is shown in the table, the vast majority (85 per cent) of those visaed under subclass 136 gained the needed 10 points through points for three years specific work experience. The only other way in which these points could be gained (without points from the MODL or non-work items) was through holding an Australian qualification. The handful of PAs (173) in the same situation under visa subclass 880 (also shown in Table 1.13) had to gain the required points through other means. The most common way was through achieving more points for Australian qualifications either 10 points for completing Honours or Masters combined with an Australian Bachelor degree or 15 points for a PhD qualification. A few gained points for specific work experience. Ninetyone per cent had no such work experience. Those with a pass Bachelor degree and no specific work experience could only achieve 120 points if they gained at least 5 points for the bonus or other non-work assessment items. Table 1.13: Number of PAs visaed with points who did not get points for MODL or non-work assessment items, subclass 136 subclass 880 Gained points for Number % Number % Australian qualifications with specific work experience Australian qualifications (10/15 pts only) without specific work experience No Australian qualifications but gained 10 points for specific work experience 1, Total gaining 120+ without MODL or non-work points 2, Evaluation of the General Skilled Migration Categories

40 The significance of non-work assessment items As shown in Table 1.11, 25 per cent of PAs under subclass 136 and 15 per cent of PAs under subclass 880 who scored 120+ points in gained points for the non-work assessment items. These non-work points can be gained via the five points allocated to each assessment item of spouse skills, regional study, or bonus points (for one of community language, Australian work experience or capital investment in Australia). As Table 1.13 indicates, in more than half of those visaed (with 120+ points) under subclass 880 who gained non-work points did so by receiving bonus points, mostly for the community language factor. The basis for the latter judgment derives from unpublished data supplied by DIMIA for those approved under subclass 880 in which reports that 345 out of the 371 who gained bonus points did so for community language). Table 1.14: Number of PAs visaed with 120+ points who gained points on non-work items subclass 136 subclass 880 Gained points for Number % Number % Bonus points 1, Spouse points Regional campus Total gaining non-work* 1, * Note separate items do not add to total because some applicants gain points on more than one assessment item. The Community Language factor favours applicants who have completed an overseas qualification (of equivalent standard to an Australian degree) taught in a community language. This is because applicants who have completed an overseas degree taught in English are not eligible for the community language points. Thus Masters students from the PRC who have completed an undergraduate degree in China will receive the Community Language bonus points, but Indian students, whose undergraduate degrees have usually been conducted in English, will not. Given the apparent significance of advanced English skills, this is problematic (see further discussion in Chapter 2). Issues arising While the 120 passmark remains in place, selection will be determined by how many points applicants can gain from access to points for the MODL, specific work experience or the non-work assessment factors. The non-work assessment factors are likely to play a key role in who gains selection under both the 136 and 880 subclasses. This means that, for thousands of applicants, the selection outcome will be determined not by characteristics that are important to Australian employers and to the overall augmentation of Australia s skilled workforce but rather by factors marginal to the workforce situation. DIMA March

41 As indicated, overseas students wishing to gain permanent residence are likely to adjust to this situation by enrolling in courses which lead to MODL points or pursue points for the non-work assessment items. This is an unsatisfactory situation because it is producing an excessive concentration in particular MODL occupations (and, as noted above, the focus is likely to be on relatively undemanding courses). Options for dealing with these issues include: a) making additional points available to persons who possess high level English skills; and b) creating a new temporary-entry post-education visa category which will provide overseas student graduates who cannot achieve 120 points the opportunity to gain additional professional- or trade-level training and/or work experience related to the nominated occupation in Australia. If these options are to work for onshore applicants, those who do not have work experience in their nominated occupation should not be able to access MODL points. Likewise, access to non-work points should be constrained. In these circumstances applicants will have a strong incentive to pursue one or other of the options described above. In the case of the non-work factors, the possible constraints are: 1) limiting access to community language points to those who can meet the requirements of the NAATI para-professional standard (formerly known as level 2). This standard requires a lower level of language skills than is required to gain 60 points for nominating the occupation of Translator/Interpreter on the SOL (the NAATI professional standard formerly known as level 3). The effect of this option will be to remove the points for community language for those who previously claimed it on the basis of completing a degree in a community language overseas. 2) the removal of Australian work experience as a component of the bonus points. In these circumstances points for such work experience would be gained through option b) above. 36 Evaluation of the General Skilled Migration Categories

42 b) Skilled Australian Sponsored visa categories Purpose Visa subclass 138 (offshore) and visa subclass 881 (onshore overseas students) To augment Australia s skill base and at the same time facilitate entry of family members Assessment method in place to achieve stated purpose Points assigned for the same criteria as used for the Skilled Independent visa subclasses 136 and 880, but there is provision for an additional 15 points where the applicant is sponsored by a relative (parent, child, brother/sister, uncle/aunt, extended to nephew/niece in 2005) who is an Australian citizen or permanent resident or an eligible NZ citizen who lives anywhere within Australia. Subclass 138 and 881 visa applicants can nominate any occupation on the Skilled Occupation List, unless their sponsor lives in Sydney. Restrictions for applicants whose sponsor lives in Sydney and Selected Areas If the migrant s sponsor is living in Sydney and Selected Areas, the nominated occupation must be on the Sydney and Selected Areas Skilled Shortage List (SSASSL) at the time of both application and assessment. To satisfy the basic recent work-experience requirements, the work experience of such applicants must be at the skilled level in an occupation on the SSASSL. Also, to gain points for specific work experience, applicants must have worked in an occupation on the SSASSL rather than the SOL. Likewise, points for Australian work experience and spouse skills are only given if the relevant occupations are on the SSASSL Extent and type of concessions Applicants under these visa subclasses gain two concessions. First, as noted above, all applicants benefit from an additional 15 points provided through their relative s sponsorship. Second, the passmark at 110 is ten points lower than the 120 currently required for approval under the Skilled Independent visa subclasses. The result is that applicants under visa subclasses 138 and 881 are required to assemble 25 fewer points on the other criteria than applicants under visa subclasses 136 and 880. As a result, applicants under the Australian Sponsored visa subclasses are not limited to 60-point occupations. Thus, for overseas students applying under subclass 881, a much wider range of tertiary qualifications are eligible. DIMA March

43 What is the Skill Australian Sponsored visa subclasses 138 and 881 delivering? Figure 1.3: Number of visas approved, visa subclasses 138 and 881, to ,000 4,000 4,014 Principal Applicants Secondary 2,214 2,468 1,615 1,142 3,364 3,000 2,584 2,000 1, Subclass 138 Subclass 881 Figure 1.4: Age of Principal Applicants approved under visa subclasses 138and 881, to % 80% % 40% % % Subclass 138 Subclass Evaluation of the General Skilled Migration Categories

44 Table 1.15: Occupations of Principal Applicants approved under visa subclass 138, to MODL and Occupation General Managers Information Technology Managers Rest of Managers Managers & Administrators Medical Scientists Rest of Natural & Physical Sci Profs Architects & Lscape Architects Civil Engineers Electrical & Electronics Engrs Mechanical Prodn & Plant Engrs Engineering Technologists Rest of Building & Engineering Profs * 2211 Accountants Marketing & Advertising Profs Computing Professionals Business & Organisation Analysts Rest of Business & Information Profs * 231 Medical Practitioners * 2323 Registered Nurses * 2324 Registered Midwives * 2325 Registered Mental Health Nurses * 2382 Pharmacists * 2383 Occupational Therapists * 2385 Physiotherapists * 2391 Medical Imaging Professionals Rest of Health Professionals Primary School Teachers Secondary School Teachers Rest of Education Professionals Economists Other Social Professionals Rest of Professionals Professionals total ,259 1, Building & Engineering Assoc Prof Finance Associate Professionals Office Managers Project & Program Administrators * 3322 Chefs Hotel & Motel Managers Rest of Associate Professionals Associate Professionals * 4112 Metal Fitters & Machinists * 4113 Toolmakers * 4122 Structl Steel & Welding Trades * 4124 Sheetmetal Tradespersons * 4211 Motor Mechanics * 4212 Automotive Electricians * 4213 Panel Beaters * 4214 Vehicle Painters Electricians * 4312 Refrigeration & Aircon Mechanics Carpentry& Joinery Tradespersons Plumbers * 4512 Bakers & Pastrycooks Cooks * 4931 Hairdressers * 4942 Upholsterers & Bedding Trades Rest of Tradespersons Tradespersons total Total Principal Applicants (incl unknown) ,615 2,214 2,468 DIMA March

45 Table 1.16: Occupations of Principal Applicants approved under visa subclass 881, to MODL and Occupation General Managers Information Technology Managers 2 Rest of Managers Managers & Administrators Medical Scientists 1 1 Rest of Natural & Physical Sci Profs Architects & Lscape Architects Civil Engineers Electrical & Electronics Engrs Mechanical Prodn & Plant Engrs Engineering Technologists 1 1 Rest of Building & Engineering Profs * 2211 Accountants Marketing & Advertising Profs Computing Professionals Business & Organisation Analysts Rest of Business & Information Profs * 231 Medical Practitioners * 2323 Registered Nurses 2 3 * 2324 Registered Midwives * 2325 Registered Mental Health Nurses * 2382 Pharmacists * 2383 Occupational Therapists * 2385 Physiotherapists 1 * 2391 Medical Imaging Professionals 1 Rest of Health Professionals Primary School Teachers Secondary School Teachers Rest of Education Professionals Economists Other Social Professionals Rest of Professionals Professionals total Building & Engineering Assoc Prof 321 Finance Associate Professionals Office Managers Project & Program Administrators 1 1 * 3322 Chefs 3323 Hotel & Motel Managers Rest of Associate Professionals Associate Professionals Electricians Cooks * 4931 Hairdressers 3 Rest of Tradespersons Tradespersons total Other including unknown Total Principal Applicants * Occupation or sub-component of occupation was on the MODL as of 8 September Evaluation of the General Skilled Migration Categories

46 Table 1.17: Language background of Principal Applicants approved under visa subclasses 138 and 881 Visa subclass 138 Visa subclass Main English-speaking* Non English-speaking ,071 1,539 1, Total ,615 2,214 2, Per cent of Principal Applicants Main English-speaking* Non English-speaking Total * Main English-speaking background countries are the United Kingdom, Irish Republic, United States of America, Canada and South Africa Table 1.18: Country of citizenship of professionals and tradespersons, Principal Applicants approved under visa subclasses 138 and 881 Major Occupation and Subclass 138 Subclass 881 region of citizenship Professionals UK & Ireland South Africa USA & Canada China Rest of NE Asia India Rest of Sth & Central Asia SE Asia Rest Professionals Total ,259 1,378 na Tradespersons & Related Workers UK & Ireland South Africa USA & Canada India Rest of Asia Rest Tradespersons & Rel. Wkrs Total na DIMA March

47 Table 1.19: State of residence of Principal Applicants visaed under subclasses 138 and 881 Per cent of Principal Applicants by year of arrival Residence (11mths) Visa subclass 138 Sydney NSW total Melbourne VIC total Brisbane QLD total Adelaide SA total Perth WA total ACT total Not stated Total Total subclass ,142 2,249 2,073 6,907 Visa subclass 881 Sydney NSW total Melbourne VIC total Brisbane QLD TOTAL Adelaide Perth WA TOTAL ACT Not stated Total Total subclass ,615 The total for each State includes those living outside the capital city as well as those whose location within the State is unknown. Table does not display locations where less than 0.5% of settlers live but their numbers are included in the total. Source: Settlement Database Total Issues arising with subclass 138 As noted earlier, there is currently a large 25-point concession to applicants sponsored by relatives in Australia under this subclass. The concession was increased from 20 to 25 points on 14 April 2004 when the pass mark for visa subclass 136 increased from 115 to 120, but no parallel increase was introduced for the passmark for visa subclass 138, which stayed at 110. Successful applicants who benefit from this concession are not required to live near their sponsoring relatives. About half settle in Sydney and 15 to 20 per cent in Perth (according to the DIMIA settlement database). 42 Evaluation of the General Skilled Migration Categories

48 In comparison to visa subclass 136, those approved under visa subclass 138 are older (50 per cent are aged 35 or more, compared with 30 per cent of 136s), they are more likely to have more family members accompanying them (over the three years to , for every PA under subclass 138, there were 1.6 accompanying family members, whereas, for PAs under the 136 subclass, there were 1.2 accompanying family members). As regards skill levels, the main difference with the visa 136 subclass is that there a greater diversity of occupations. Computing and accounting professionals accounted for only 14 to 15 per cent of the PAs visaed, compared with more than 40 per cent of PAs approved under visa subclass 136. Another difference is the significant presence of associate professionals and, within the professional category, of several 50 points occupations mainly business professionals amongst subclass 138 (see Table 1.20). Table 1.20: Broad occupation of Principal Applicants visaed under visa subclasses 138 and 136, to Visa subclass 138 Visa subclass Per cent of Principal Applicants Managers & Administrators Professionals Associate Professionals Tradespersons Other (mostly unknown) Total Total PAs visaed 1,615 2,214 2,468 13,540 12,276 11,826 Per cent of PAs excluding other (mostly unknown) occupations Managers & Administrators Accountants Computing Professionals Rest of Business Professionls Professionals total Associate Professionals Tradespersons Total PAs excluding other occpns 1,392 1,901 2,112 13,520 12,259 11,814 Issues arising with subclass 881 The issues arising for visa subclass 881 are similar to those raised for subclass 138. They receive a large 25 point concession and, like the 138s, there is no requirement that those visaed live near their relatives. Most settle in Sydney (see Table 1.19). The existence of the 881 subclass and its significant concessions complicates the task of managing demand under the 880 visa subclass. As indicated in Figure 1.3, the numbers visaed under this subclass doubled between and to reach 855 Principal Applicants in The issues raised in discussion of the 880 visa subclass apply equally to this subclass though perhaps with even more force. This is because those who have found it difficult to meet the standard required for an 880 visa (60-point occupation for those without a PhD and passmark of 120) have a strong incentive to seek out a potential relative to sponsor them. It is also the main onshore change-of-status option for overseas students whose training in Australia is in a 50-point occupation. DIMA March

49 c) Skilled State Specific and Regional Migration Categories Visa subclasses 139 Designated Area Sponsored (offshore) and 882 (onshore overseas students); 134 Skill Matching and 137 State/Territory Nominated Independent; 495 Skill Independent Regional Introduction The State Specific and Regional Migration (SSRM) visa group emerged out of concerns on the part of some states that Australia s migration settlement pattern was being skewed towards the larger metropolitan centres, particularly Sydney. 5 Some, but not all, states also believed that they should have a role in identifying local skill shortages because they had a better grasp over these circumstances than did the Commonwealth authorities. Some, including Victoria, South Australia and Tasmania, also wished to promote migration levels within their jurisdictions because of a policy commitment to population growth. Their priority was state growth. As a consequence, the initial SSRM visas (detailed below) functioned on a state-wide, rather than on a regional, basis. In the early years Victoria and South Australia were the main participants, with the majority of migrants settling in Melbourne and, to a lesser extent, in Adelaide. As the Joint Standing Committee on Migration reported in its September 2001 Review of State- Specific Migration Mechanisms, this conflation of state and regional has caused endless confusion and much criticism because of the lack of a regional focus. 6 Perhaps in response to this criticism, as well as complaints from the New South Wales Government about excessive concentration of recently arrived migrants in Sydney, the Australian Government introduced a new regional specific migration category (the SIR visa, discussed further below) on 1 July For this visa, the eligible locations (see Table 1.3) are defined as areas with low population growth and beneath a certain population size. This definition explicitly excludes Melbourne. This issue of eligible locations for the SSRM visa categories is significant because Attachment A of the terms of reference for this inquiry specifically focuses on the extent to which the GSM program helps address the skilled labour needs of regional Australia. 5 New Faces, New Places, Review of State Specific Migration Mechanisms, Report of the Joint Standing Committee on Migration, 2001, p. 4 6 ibid., Ch Evaluation of the General Skilled Migration Categories

50 Visa class 139 Skilled Designated Area Sponsored (SDAS) Purpose Visa subclass 139 reflects the state concern noted above, notably some states concerns about population growth. From mid-2006 this subclass will change to a two-stage threeyear provisional visa which can lead to permanent residence if the migrant lives for a minimum of two years and works or studies for at least one year in the designated area of the family sponsor. A matching onshore student visa (subclass 882) was introduced on 1 July Unlike visa subclass 139, it has not been changed to a two-stage visa. Assessment method in place to achieve stated purpose The applicant has to have a relative who is willing and able to sponsor them, and who is one of the following: an Australian citizen, an Australian permanent resident or an eligible New Zealand Citizen. The relative/sponsor must be one of the following: parent, child, brother/sister, uncle/aunt, grandparent, cousin. From 1 November 2005, nieces and nephews were added to this list. The eligible relative must live, and have lived, in one of the following designated areas in the 12 months before the applicant lodges their application: ACT, South Australia, Northern Territory, Tasmania, Victoria, Queensland except Brisbane and the Gold Coast, New South Wales except Sydney, Newcastle and Wollongong and Western Australia except Perth. Melbourne is included in the list of eligible locations. This arrangement dates to negotiations between the Kennett Victorian and Commonwealth Governments at the end of the 1990s. Extent and type of concessions The 139 and 882 visa subclasses are not points tested. The applicant must have an occupation listed on the SOL. By contrast, with the points-tested visa subclasses, where very few applicants will pass unless they have a 60-point occupation, all 50 and 40-point occupations are eligible under these visa subclasses. Basic recent work experience requirements are also less stringent for subclass 139 (requiring half that for subclass 136). The applicant s qualification must be accredited by the relevant accrediting authority, and applicants must not be aged over 45 and must possess post-secondary qualifications. In most cases they must possess vocational English (that is, must score at least 5 on each of the four components of the IELTS test). However, the lower standard of functional English is acceptable (4.5 on the four components of IELTS), if arrangements are made with a participating State or Territory Government to upgrade English skills after the visa is granted. Previously a qualification gained from at least two years full-time study at an institution where instruction is in English was sufficient to demonstrate the required vocational English language ability for subclass 882. Since 1 November 2005, applicants from countries where English is not the main language spoken have been required to undertake an IELTS test. DIMA March

51 What are the Skill Designated Area Sponsored visa subclasses 139 and 882 delivering? Figure 1.5: Number of visas approved, visa subclasses 139 and 882, to ,000 4,309 Principal Applicants Secondary 4,000 3,758 3,000 2,000 1,550 2,607 2,579 2,247 1, Subclass 139 Subclass 882 Figure 1.6: Age of Principal Applicants approved under visa subclasses 139 and 882, to % 80% % 40% % % Subclass 139 Subclass Evaluation of the General Skilled Migration Categories

52 Table 1.21: Occupations of Principal Applicants approved under visa subclass 139, to MODL and Occupation General Managers Information Technology Managers Rest of Managers Managers & Administrators Medical Scientists Rest of Natural & Physical Sci Profs Architects & Lscape Architects Civil Engineers Electrical & Electronics Engrs Mechanical Prodn & Plant Engrs Engineering Technologists Rest of Building & Engineering Profs * 2211 Accountants Marketing & Advertising Profs Computing Professionals Business & Organisation Analysts Rest of Business & Information Profs * 231 Medical Practitioners * 2323 Registered Nurses * 2324 Registered Midwives * 2325 Registered Mental Health Nurses 2 2 * 2382 Pharmacists * 2383 Occupational Therapists * 2385 Physiotherapists * 2391 Medical Imaging Professionals 1 Rest of Health Professionals Primary School Teachers Secondary School Teachers Rest of Education Professionals Economists Other Social Professionals Rest of Professionals Professionals total , Building & Engineering Assoc Prof Finance Associate Professionals Office Managers Project & Program Administrators * 3322 Chefs Hotel & Motel Managers Rest of Associate Professionals Associate Professionals * 4112 Metal Fitters & Machinists * 4113 Toolmakers * 4122 Structl Steel & Welding Trades * 4124 Sheetmetal Tradespersons * 4211 Motor Mechanics * 4212 Automotive Electricians * 4213 Panel Beaters * 4214 Vehicle Painters Electricians * 4312 Refrigeration & Aircon Mechanics Carpentry& Joinery Tradespersons Plumbers * 4512 Bakers & Pastrycooks Cooks * 4931 Hairdressers * 4942 Upholsterers & Bedding Trades 3 3 Rest of Tradespersons Tradespersons total Other including unknown Total Principal Applicants ,550 2,579 2,247 * Occupation or sub-component of occupation was on the MODL as of 8 September 2004 DIMA March

53 Table 1.22: Occupations of Principal Applicants approved under visa subclass 882, visas granted to MODL and Occupation Managers & Administrators total Medical Scientists Rest of Natural & Physical Sci Profs Architects & Lscape Architects Civil Engineers Electrical & Electronics Engrs Mechanical Prodn & Plant Engrs Engineering Technologists 3 2 Rest of Building & Engineering Profs * 2211 Accountants Marketing & Advertising Profs Computing Professionals Business & Organisation Analysts Rest of Business & Information Profs * 2323 Registered Nurses * 2382 Pharmacists 1 2 * 2385 Physiotherapists 3 Rest of Health Professionals Primary School Teachers Secondary School Teachers Rest of Education Professionals Economists Other Social Professionals Rest of Professionals Professionals total Building & Engineering Assoc Prof Finance Associate Professionals Office Managers Project & Program Administrators * 3322 Chefs Hotel & Motel Managers Rest of Associate Professionals Associate Professionals * 4112 Metal Fitters & Machinists 1 * 4211 Motor Mechanics 1 * 4212 Automotive Electricians 1 * 4512 Bakers & Pastrycooks Cooks 4 5 * 4931 Hairdressers Rest of Tradespersons Tradespersons total Other including unknown Total Principal Applicants * Occupation or sub-component of occupation was on the MODL as of 8 September Evaluation of the General Skilled Migration Categories

54 Table 1.23: Language background of Principal Applicants approved under visa subclasses 139 and 882 Visa subclass 139 Visa subclass Main English-speaking* Non English-speaking ,057 1,841 1, Total ,550 2,579 2, Per cent of Principal Applicants Main English-speaking* Non English-speaking Total na * Main English-speaking background countries are the United Kingdom, Irish Republic, United States of America, Canada and South Africa Table 1.24: Country of citizenship of Professionals, Associate Professionals and Tradespersons, Principal Applicants approved under visa subclasses 139 and 882 Major Occupation and region of citizenship Subclass 139 Subclass Professionals UK & Ireland South Africa USA & Canada China Rest of NE Asia India Rest of Sth & Central Asia SE Asia Rest Professionals Total , na Associate Professionals UK & Ireland South Africa USA & Canada China Rest of NE Asia India Rest of Sth & Central Asia SE Asia Rest Associate Professionals Total na Tradespersons & Related Workers UK & Ireland South Africa USA & Canada China Rest of NE Asia India Rest of Sth & Central Asia SE Asia Rest Tradespersons & Rel. Wks Total na DIMA March

55 Table 1.25: State of residence of Principal Applicants visaed under subclasses 139 and 882 Per cent of Principal Applicants by year of arrival Residence (11 mths) Total Visa subclass 139 Sydney NSW total Melbourne VIC total Brisbane QLD total Adelaide SA total Perth WA total Hobart TAS total Darwin NT total Canberra ACT total Not stated Total Total subclass ,724 2,073 6,722 Visa subclass 882 Sydney NSW total Melbourne VIC total Brisbane QLD total Adelaide SA Total Perth WA total Hobart ACT Not stated Total Total subclass ,155 The total for each State includes those living outside the capital city as well as those whose location within the State is unknown. Where only the capital city is shown, there are no (or very few) PAs living outside this area. Source: Settlement Database 50 Evaluation of the General Skilled Migration Categories

56 Issues arising for visa subclass 139 The 139 visa subclass is expanding rapidly. There were 2,247 visas issued to PAs in (compared with 2,468 for the Skilled Australian Sponsored visa subclass 138). The occupations of PAs arriving from overseas as settlers over the years from to are shown in Table The distinctive aspect of these occupations is their diversity. This is much wider than is the case for the Skilled Independent subclass because, as noted, all applicants with occupations on the SOL are eligible, not just those with 60-point occupations. There are large numbers of persons coming under 50- point occupations such as Marketing and Advertising Professionals, and Office Managers. There are two employment-related issues which are relevant to the review of the GSM. One is the relatively untargeted nature of the occupations being selected. Many are in the management and clerical area where skill shortages would not appear to be a significant concern. Another is the relatively low level of English that is acceptable. Generally Level 5 (vocational English) is required, but in some circumstances Level 4.5 (functional English) is deemed sufficient. These characteristics would appear to explain the relatively poor employment outcomes for PAs in this visa subclass (see Chapter Two). Another concern is the inclusion of Melbourne as an eligible designated area. Nearly two-thirds of migrants visaed under subclass 139 are locating in Melbourne (see Table 1.25). There does not appear to be any convincing rationale as to why migrants sponsored under this concessional category should be permitted to settle in Melbourne. The change to a provisional visa due to be introduced in mid-2006 would have merit if it were about ensuring that migrants under subclass 139 (who have gained permanent residence under a highly concessional scheme aimed at addressing regional needs) actually stayed in a regional area. In reality, the inclusion of Melbourne as a designated area means that relatively few of the migrants sponsored will have to live in a regional area even after the new rules come into effect. The only additional constraint in the visa is that in order to obtain a permanent resident visa, the applicant will have to work or study for a 12 months in a designated area. Issues arising for visa subclass 882 The number of visas issued under the 882 category is also growing rapidly. Further expansion is likely given that applicants who cannot achieve the points required for application under the 880 subclass will have a strong motive to find a sponsor living in a designated area. Most are likely to locate in Melbourne, so like visa subclass 139 above, there is no regional benefit associated with this visa subclass, and yet significant selection concessions are involved. In addition, unlike the 139 visa, there is no provisional visa requirement preceding permanent residence. DIMA March

57 Non-points tested Skill Matching visa subclass 134 The Skill Matching visa has been designed to help overcome skill shortages by helping migrants who cannot meet the Skilled Independent passmark to settle in parts of Australia where their skills and abilities are in demand. To be granted a Skill Matching (subclass 134) visa, the applicant must be nominated by a participating State or Territory government and must hold an occupation which the relevant State/Territory authority indicates is in shortage in their state or territory. Not all Australian States or Territories participate in this scheme. Currently participating States/Territories are South Australia, Tasmania, Victoria and Western Australia. Employers can also nominate persons to fill vacancies which they cannot fill from the local labour market. If migrants are nominated by a regional employer, all areas of Australia are covered except Sydney, Newcastle, Wollongong, Melbourne, Perth, Brisbane and the Gold Coast. Since 1 November 2002, concessions have been made to the language requirements so that generally applicants need functional English (that is, an overall band score of 4.5 on the four components of IELTS) if sponsored by an employer, or vocational English if nominated by a State/Territory. Some State/Territory-nominated applicants with functional English, who make acceptable arrangements with a participating State or Territory government before their visa is granted, can undertake study to upgrade their English after the visa is granted. Currently these upgrade arrangements are in place in South Australia and Tasmania. Another concession is that the recent work experience threshold is six months rather than the 12 months required for most other visa subclasses. Most of those nominated appear to be classified for visa purposes under the STNI visa subclass 137. Hence there are very few migrants visaed under the Skill Matching visa subclass 134 (see Figure 1.7). For this reason, a detailed analysis of the outcomes for this visa subclass is not included. Figure 1.7: Number of visas approved, visa subclass 134, to Principal Applicants Secondary 72 Number approved Evaluation of the General Skilled Migration Categories

58 Skilled STNI visa subclass 137 Purpose The purpose is to allow participating State Governments to promote migration to their States to meet State-specific skill shortages. Assessment method in place to achieve stated purpose Applicants need to obtain sponsorship from an approved State/Territory Government agency (currently South Australia, Tasmania, Victoria and Western Australia). Each of these States sponsors on a statewide basis. There is an attempt to address regional skill needs. However, aside from expecting migrants to embrace a commitment to living in a regional area, there are no mechanisms within the visa conditions to require those sponsored to locate in a regional area. States make their decisions on who to sponsor by inviting prospective applicants to indicate their interest. Migrants are advised of the option through the respective State websites. States then determine whether the applicant has the characteristics (including occupation) suitable for nomination under the STNI program. States can also interrogate the Skill Matching Data Base for prospective persons they may wish to sponsor. No job is arranged by the nominating government. The applicant s occupation must be on the nominating State/Territory s Skills Shortage List and the applicant must meet the poolmark in the GSM points test (70 points). States draw their information on job shortages from a variety of sources, including industry bodies. Extent and type of concessions There is no points test apart from meeting the current poolmark of 70 points. The applicant s occupation must be on the SOL. This is a substantial concession relative to the assessment criteria for the Skilled Independent category (visa subclass 136). The visa also confers immediate permanent residence and, as indicated, does not involve any restrictions on settlement location. As Table 1.29 shows, the main destination is Victoria with many living in Melbourne. DIMA March

59 What is the Skill STNI visa subclass 137 delivering? Figure 1.8: Number of visas approved, visa subclass 137, to ,000 1,500 Principal Applicants Secondary 1,627 Number approved 1, Figure 1.9: Age of Principal Applicants approved under visa subclass Per cent of principal applicants Evaluation of the General Skilled Migration Categories

60 Table 1.26: Occupations of Principal Applicants approved under visa subclass 137, visas granted to MODL and Occupation General Managers Information Technology Rest of Managers Managers & Administrators Medical Scientists Rest of Natural & Physical Sci Profs Civil Engineers Electrical & Electronics Engrs Mechanical Prodn & Plant Engrs Engineering Technologists 1 16 Rest of Building & Engineering Profs * 2211 Accountants Computing Professionals Rest of Business & Information Profs * 231 Medical Practitioners 1 * 2323 Registered Nurses * 2324 Registered Midwives * 2325 Registered Mental Health Nurses * 2382 Pharmacists * 2383 Occupational Therapists 2 * 2385 Physiotherapists * 2391 Medical Imaging Professionals Rest of Health Professionals Primary School Teachers Secondary School Teachers Rest of Education Professionals Economists 1 1 Rest of Professionals Professionals total Building & Engineering Assoc Prof Finance Associate Professionals 2 3 * 3322 Chefs Rest of Associate Professionals 1 3 Associate Professionals * 4112 Metal Fitters & Machinists * 4113 Toolmakers * 4122 Structl Steel & Welding Trades * 4124 Sheetmetal Tradespersons 4 4 * 4211 Motor Mechanics * 4212 Automotive Electricians * 4213 Panel Beaters * 4214 Vehicle Painters Electricians * 4312 Refrigeration & Aircon Carpentry& Joinery Plumbers * 4512 Bakers & Pastrycooks Cooks * 4931 Hairdressers * 4942 Upholsterers & Bedding Trades Rest of Tradespersons Tradespersons total Total Principal Applicants * Occupation or sub-component of occupation was on the MODL as of 8 September Both Chefs and Hairdressers expected to have relevant trade level or higher qualification and at least 3 years relevant experience following the completion of that formal qualification to qualify for MODL. DIMA March

61 Table 1.27: Language background of Principal Applicants approved under visa subclass Number of Principal Applicants Per cent of Principal Applicants Main English-speaking* Non English-speaking Total * Main English-speaking background countries are the United Kingdom, Irish Republic, United States of America, Canada and South Africa Table 1.28: Country of citizenship of Professionals and Tradespersons, Principal Applicants approved under visa subclass 137 Major Occupation Selected regions Professionals UK & Ireland South Africa USA & Canada China Rest of NE Asia India Rest of Sth & Central Asia SE Asia Rest Professionals Total Tradespersons & Related Workers UK & Ireland South Africa India Rest of Asia Rest Tradespersons & Related Workers Total Table 1.29: State of residence of Principal Applicants visaed under subclass137 State/Territory - Nominated Independent Per cent of Principal Applicants Residence (11 mths) Total SYDNEY NSW total MELBOURNE VIC total BRISBANE QLD total ADELAIDE SA total WA total TAS total Not stated other Total Total number ,519 Table does not display locations where less than 0.5% of settlers live but their numbers are included in the total. The total for each State includes those living outside the capital city as well as those whose location within the State is unknown. Source: Settlement Database 56 Evaluation of the General Skilled Migration Categories

62 Issues arising from above The numbers visaed under the 137 subclass are increasing sharply (though from a low base). The visa subclass is potentially open-ended because it allows participating States to sponsor as many persons as they wish (subject to the constraints of the job shortage list that each State itself constructs). Currently, as Table 1.26 shows, the range of occupations being selected is relatively diverse and focused on professional and trade fields where concern has been expressed about shortages. In more than half the PAs visaed were tradespersons. There are two issues of concern about the STNI visa. The first is that this visa subclass is likely to impact on the prospects for greater regional dispersal of migrants. The SIR (discussed below) was instituted in mid-2004 for this purpose. Like the STNI, the SIR visa requires State sponsorship for persons whose occupations are in short supply, though in the case of the SIR visa the shortages have to be in regional areas. The problem, from the point of view of attracting migrants to regional areas is that the STNI is a statewide visa which offers immediate permanent residence. Thus it is hard to see why prospective migrants would be attracted the provisional SIR visa (detailed below). The second issue is that some states have a commitment to utilizing the SSRM visas for the purpose of reaching demographic goals. To the extent that is the case, they may be tempted to sponsor large numbers of migrants, some of whom may have difficulty finding employment. The record at present is good, as indicated in the range of occupations of PAs shown in Table As noted above, this shows that more than half are traditional tradespersons, including substantial numbers of metal workers, motor mechanics and electricians. Partly as a consequence of the occupational breakdown, PAs under this visa subclass show an excellent employment record in Australia (see Chapter Two). For this reason the Panel simply wishes to flag the need for close monitoring of the STNI visa outcomes, but makes no further recommendations for revision on the rules governing this visa subclass, except those related to increasing the threshold level for English (see Chapter 5). DIMA March

63 Skilled Independent Regional (Provisional) (subclass 495) Purpose This visa category has two objectives. One is to encourage former overseas students to locate in a regional area on completion of their studies in Australia. The other is to encourage (offshore and onshore) applicants who have applied for the Skilled Independent subclass 136 but who can only achieve 110 points (rather than the 120 required) to locate in a regional area. The labour-market implications of this visa category will vary according to whether it is primarily an onshore (student-based) program or an offshore program. In the first year of operation ( ), 87 visas were issued onshore and 535 offshore. Assessment method in place to achieve stated purpose Applicants are required to undergo the points test, including meeting all threshold requirements. They also need sponsorship from a participating State government. Currently most states are participating. Prospective migrants must possess an occupation identified as in short supply in a regional location. States are in the early phase of developing the procedures necessary to compile the relevant occupation list. The SIR visa is a two-stage visa, the first stage of which involves a temporary-resident visa where the applicant must first live and work in regional Australia or a low population growth metropolitan area for at least two year and work full-time for at least one year. They can then apply for a permanent-resident visa through a range of existing permanent State and regionally specific visas. As will be evident, these are rather onerous conditions relative to the STNI visa which delivers immediate permanent residence without any restrictions on settlement location. Extent and type of concessions Overseas students applying within Australia The encouragement for overseas students derives from a passmark set at 110 rather than 120 for students applying under the 880 visa subclass. Also, applicants with 50 and 40-point occupations may apply, whereas for the 880 visa only those with 60-point occupations are eligible. 58 Evaluation of the General Skilled Migration Categories

64 Offshore applicants Applicants for the Skilled Independent subclass 136 who fail to achieve the 120 passmark but with 110 points may be invited by the Australia Government to apply for the SIR visa. Other migrants may apply direct for the SIR visa. In addition, from 1 July 2005, applicants sponsored by a State or Territory Government only need achieve another 100 points to be eligible, because such sponsorship confers an additional ten points. With the extra ten points gained from State/Territory sponsorship, an applicant under visa subclass 495 has a 20 point advantage relative to applicants under visa subclasses 136 and 880. Notwithstanding this concession, the SIR visa remains a much tougher proposition than the STNI visa. If the SIR visa is to work, the STNI visa requirements may have to be tightened. As long as prospective migrants can gain State nomination and settle in a metropolitan area, they are unlikely to seriously consider the regional option. DIMA March

65 What is the Skill SIR visa subclass 495 delivering? In , the first year of operation of the SIR visa, 622 PAs were granted visas. As a group, they tended to be older than those visaed under subclass 136, although nine per cent were aged Another 23 per cent were aged 25-29, 25 per cent 30-34, 29 per cent and the remaining 14 per cent were older again. They were accompanied by 818 Secondary Applicants. Table 1.30: Occupations of Principal Applicants approved under visa subclass 495, visas granted to MODL and Occupation General Managers Information Technology Managers 10 Rest of Managers 14 1 Managers & Administrators Medical Scientists 4 Rest of Natural & Physical Sci Profs Architects & Lscape Architects Civil Engineers Mechanical Prodn & Plant Engrs Engineering Technologists 14 Rest of Building & Engineering Profs 21 * 2211 Accountants Marketing & Advertising Profs Computing Professionals Business & Organisation Analysts 21 Rest of Business & Information Profs 55 * 2382 Pharmacists 1 * 2383 Occupational Therapists 1 Rest of Health Professionals Primary School Teachers Secondary School Teachers 14 Rest of Education Professionals Economists Other Social Professionals 15 Rest of Professionals 33 2 Professionals total 436 Associate Professionals total 15 * 4112 Metal Fitters & Machinists 7 * 4113 Toolmakers 3 * 4122 Structl Steel & Welding Trades Electricians 10 * 4312 Refrigeration & Aircon Mechanics Carpentry& Joinery Tradespersons Plumbers 3 * 4512 Bakers & Pastrycooks Cooks 18 * 4931 Hairdressers 1 Rest of Tradespersons 77 Tradespersons total 133 Other including unknown 138 Total Principal Applicants 622 * Occupation or sub-component of occupation was on the MODL as of 8 September Evaluation of the General Skilled Migration Categories

66 Table 1.31: Country of citizenship and language background of Principal Applicants approved under visa subclass 495 By country and region Oceania 11 United Kingdom & Ireland 153 Germany, Federal Rep. Of 11 Rest of NW Europe 19 S & E Europe 23 Nth Africa & Middle East 15 Malaysia 18 Philippines 13 Singapore 23 Rest of Sth East Asia 18 China, Peoples Republic of 93 Japan 11 Korea, Republic of 16 Rest of North-East Asia 13 India 102 Rest of Sthn & Central Asia 35 Canada & USA 8 Rest of Americas 17 South Africa, Republic of 15 Rest of Africa 8 By language background Main English-speaking* 176 Non English-speaking 446 Total 622 Per cent of Principal Applicants Main English-speaking* 28 Non English-speaking 72 Total 100 * Main English-speaking background countries are the United Kingdom, Irish Republic, United States of America, Canada and South Africa Table 1.32: Country of Citizenship of Professionals and Tradespersons, Principal Applicants approved under visa subclass 495 Major Occupation Selected regions Professionals UK & Ireland 73 South Africa 12 USA & Canada 3 China 79 Rest of NE Asia 31 India 73 Rest of Sth & Central Asia 28 SE Asia 62 Rest 75 Professionals Total 436 Tradespersons & Related Workers UK & Ireland 69 South Africa 1 USA & Canada 3 India 22 Rest of Asia 19 Rest 19 Tradespersons & Related Workers Total 133 DIMA March

67 Table 1.33: State of residence of Principal Applicants visaed under subclass 495 Skilled - Independent Regional (Provisional) by year of arrival Per cent of Principal Applicants Residence Pre (11 mths) Total SYDNEY NSW total MELBOURNE VIC total BRISBANE QLD total ADELAIDE SA total PERTH WA total HOBART TAS total DARWIN NT total NOT STATED OTHER Total Total Source: Settlement Database Issues Occupational focus For the offshore group, a diverse range of occupations are eligible. The diversity of these occupations amongst the visas granted in is shown in Table It is likely with the extra ten points concession granted for State sponsorship from mid that more business professionals (with 50-point occupations) and associate professionals will access this visa subclass. The only limitation on eligibility is where a participating State places limits on applicants with particular occupations. Currently the Victorian Government limits the range of occupations according to judgments made by participating regional areas. The Victorian Government also has some general restrictions. For example, as from 1 July 2005, no offshore applicant with a computing professional occupation can apply. However, international ICT students who have studied in Australia are still eligible. The Riverina Regional Development Board, which is one of several designated authorities in NSW with the responsibility to initiate sponsorships, has a similar list of eligible occupations. These are mainly professional and trade occupations. 62 Evaluation of the General Skilled Migration Categories

68 Because the SIR visa is in the very early stages it is too early to make any judgments about any need for revision. The SIR visa may be attractive to former overseas students who cannot meet the 120 passmark for the 880 visa. The problematic nature of these arrangements lies in whether former overseas students from Asia will be able to find employment in regional areas, especially if their communications skills are limited. At present, overseas students who cannot achieve six on IELTS (competent English) are the most likely to apply for a SIR visa. In the case of prospective migrants located overseas, those who cannot meet the criteria for the Skill - Independent subclass 136 are likely to seek sponsorship from particular State governments under the STNI category rather than apply for the SIR visa. This is because the STNI visa offers immediate permanent residence and does not require location in a regional area. The outcome will depend on how liberal the State governments are in sponsoring applicants under the STNI umbrella. Will the sponsored migrants stay in the regions? After the initial two-year stay on the temporary visa, subclass 495 visa holders can apply for permanent residence. They must do so under one or other of the various Regional and State-specific visa categories. These include the STNI and SDAS visa subclasses, discussed elsewhere. In both these subclasses, Melbourne is an eligible location. English language capability Like the other points-tested GSM subclasses, persons who only possess vocational English (Level 5 on the IELTS test) are eligible for selection. This is problematic because, as the Riverina Regional Development Board indicated in its submission to the Panel, regional employers are unlikely to employ a migrant without competent English. DIMA March

69 Location of settlers arriving from overseas under the GSM Program Table 1.34 provides another source of information on the state of intended residence of skilled migrants. It shows the number of settlers arriving in Australia in the years to under the GSM visa subclasses by state of intended residence as supplied on the passenger cards filled in by all persons arriving in Australia from overseas. Table 1.34: Settlers arriving under General Skilled Migration Program, Principal Applicants only, by year of arrival and state of intended residence, to Fin. Per cent Total Visa subclass Year NSW VIC QLD SA WA TAS NT ACT Total INDEPENDENT 126 Independent , , Skilled Independent , , , , ,268 AUSTRALIAN RELATIVE SPONSORED 105 Skilled Australian Linked , Skilled Australian Sponsored , , ,542 AUSTRALIAN RELATIVE SPONSOR LIVING IN DESIGNATED AREA 106 Regional Linked Skilled Designated Area Sponsored , ,426 NOMINATED BY STATE/TERRITORY or EMPLOYER 134 Skill Matching Skills State/Territory Nominated Independent Skilled Independent Regional (SIR) Evaluation of the General Skilled Migration Categories

70 2 Labour Market Outcomes of Points Tested Migrants 2.1 Measuring Success The purpose of this chapter is to draw on the information contained in a survey of recent migrants to see what insights may be obtained that will assist in any reshaping of the skilled migration program. We focus exclusively on the outcomes of skilled Primary Applicants (PAs). The success of the skilled migration program, and of each of its elements, must be evaluated against its intended purposes. We understand that the principal purpose is to increase the supply of workers who have skills that are in high demand in the Australian workplace especially those where there are persistent shortages evident. The emphasis of the program is also on selecting migrants who have high level skills. Such migrants increase the average skill levels of the Australian workforce and enhance the stock of human capital. Migrants who have high level skills, in areas that have high demand and are experiencing difficulty in recruiting, are likely to be able to find jobs rapidly after arrival and to be financially independent. They are also likely to be able to find jobs that use their skills, and provide a good level of pay. Each of these is evidence of successful settlement and early contribution to the Australian economy. The GSM program is also playing a role in assisting nominated regions of Australia to have the quantity and types of skills that their local labour markets require. With these objectives of the skilled migration program in mind, we are able to identify criteria for judging the degree to which migrants selected as skilled Primary Applicants can be deemed to have been successful. We are particularly interested in the differences of outcomes between migrants selected under different visas, and between migrants with particular characteristics. These characteristics are chosen to reflect the types of criteria that can be used as the basis for selection. Examples are age, qualifications, whether experienced in a MODL occupation and whether or not sponsored. For the most part, we do not focus on criteria that, while observable, are not acceptable as selection criteria, such as sex, religion or country of origin. The migrant characteristics on which we focus are: Age English proficiency Qualifications, including whether an Australian qualification DIMA March

71 Visa category Whether sponsored, and by whom Whether had an occupation that is on the MODL. The criteria that we use to judge the degree of success in the labour market are: The proportion who are employed (including self-employed) The proportion who are employed fulltime Wages earned Occupation Whether use their qualifications in their job Whether employed in a MODL occupation Level of satisfaction with their job. 2.2 The Data Our evaluation of migrant outcomes is based primarily on data collected in 2005 in the Survey of Recent Migrants. Between April and September 2005, DIMA surveyed all immigrants who had been in Australia for about 6 months. The survey was conducted by mail, and sent to 20,617 recent migrants. Forty four per cent, or 9,138, responded. Of these, 3,696 were PAs who came as skilled migrants. It is this last group that is the basis for our analysis. We note that a response rate of only 44 per cent raises the likelihood of response bias: ie, those who responded are likely to be in some ways systematically different from those who failed to respond. For example, respondents may be more proficient in English, or more happy about their experience in Australia, than are nonrespondents. We cannot know the extent of any such bias, but it means that we should not attach any importance to small differences between groups, and cannot be definite that the evidence from the respondents accurately represents the experience of the whole group. The other data that we use come from a more comprehensive sample survey of recent migrants, conducted by DIMA in 2000 and 2002 (the Longitudinal Survey of Immigrants to Australia LSIA2). This survey, like the SRM, first contacted migrants 6 months after arrival. But it then followed up the same migrants with a second interview 18 months after arrival. At the time of the second interview, 844 skilled PAs were interviewed (from the original 1016 skilled PAs at the time of the first interview). It is thus able to provide a picture of outcomes both soon after arrival, and when migrants have had more time to become established. 66 Evaluation of the General Skilled Migration Categories

72 Does the 6 month story tell the whole story? Six months after arrival is very early to judge the settlement experience of people who have made a lifetime move. Like all new entrants to the labour market, it is likely to take many immigrants some time to find a job that is a good match between what the employer wants and what they have to offer. Six months after arrival is also very early to judge the success of the migration selection process. For this reason, our first step is to see whether the indicators of success that can be observed six months after arrival (as in the data from the SRM) give a reliable account of the relative success of the same migrants a little further down the settlement track ie, 18 months after arrival. To do this, we use the data from LSIA2, selecting only those who were skilled PAs. Table 2.1 shows how labour market status changed between the two waves of LSIA2 ie, as migrants moved from being 6 months in Australia to being 18 months in Australia. Table 2.1:Employment status of skilled PAs, 6 months and 18 months after arrival (from LSIA2) Employment status 6 months after arrival Employed Unemployed Not in LF Employment status 18 months after arrival Employed 72% 6% 6% Unemployed 1% 2% 2% Source: Calculated from LSIA2 data file (weighted data). Not in LF 2% 2% 7% The table shows that the longer term employment status of skilled PAs was correctly shown by their 6 month status for 81 per cent of migrants. The other 19 per cent changed status in the 12 month period between the two waves of interviews. Of these, two thirds moved from not having a job to being employed. It is clear that the longer term employment picture is better than that which is observed just 6 months after arrival. In that time, 12 per cent of migrants moved from not employed to employed whereas only 3 per cent of migrants who were employed at the time of the first interview were not employed 12 months later. For our purposes, it is especially important to know whether the disadvantage that is apparent for some groups at 6 months persists as migrants spend longer in Australia, is diminished, or is amplified. The visa categories of migrants in LSIA2 are rather different from those in the SRM (for example, there was no onshore student visa). So direct comparisons are not possible. But we can see that the poorer employment record of Skilled Australian Linked migrants, relative to Independent migrants, in LSIA2 was substantially diminished over the succeeding 12 months. Over that time, an additional 16 per cent of SAL migrants found work, whereas only an additional 7 per cent of Independent migrants found work. Table 2.2 shows the improvement in the employment picture over the 12 months for people with different levels of English proficiency and other characteristics. As is to be expected, people who had superior English proficiency did rather better early on in obtaining jobs. For example, after 6 months, 78 per cent of those who spoke English DIMA March

73 only or best (of skilled PAs) were employed, while only 65 per cent of those who said they spoke English well had jobs 10 per cent were not in the labour force. Table 2.2 shows the proportion of people with each level of English language competence, qualification and whether or not had a MODL job, who moved from not employed (either unemployed or not in the labour force) into jobs between wave 1 of the survey, 6 months after arrival, and wave 2 of the survey, 18 months after arrival. Table 2.2:Migrants who moved into employment in the 12 months between waves 1 and 2 of LSIA2, by specific attributes Per cent employed at Entered Employment Wave 1 between Wave1 and Wave2 Total 23 English Ability Only or Best Very Well Well Qualification Not Well/Not At All Degree or higher Trade Job in county of origin On MODL (1999) Not on MODL In total, 23 per cent of skilled PAs who were not employed at wave 1 had found a job by wave 2. This confirms that the picture that we get after migrants have been in Australia only 6 months is not a very firm basis on which to evaluate their success or otherwise. It is especially relevant to note that those with the least command of English struggled to find jobs after 6 months, but were the ones to make the greatest employment gains over the subsequent 12 months. This pattern is repeated for those distinguished by qualification and by whether or not they had MODL job prior to migrating. In each case, those with the more favourable attributes had greater early success in finding jobs. But the others closed the gap substantially in the ensuing 12 months. DIMA has done a separate survey of onshore former students who were granted skilled visas onshore between July 2001 and January Approximately 6,300 responses were received. A more extensive follow up survey of a smaller subset of the original sample was conducted via the internet in April We are informed that these data show almost no improvement over two years in the extent to which these former students use their qualifications in their job. This finding suggests that onshore former students are an exception to the overall conclusion of the previous paragraph. In terms of the objectives of the GSM, it is worrying. 68 Evaluation of the General Skilled Migration Categories

74 For skilled migrants, having a job is a necessary requirement for a successful labour market outcome, but it is not enough. The skilled migration program would not be meeting its objectives if people selected for their skills could only find unskilled work. To evaluate the sorts of jobs that people moved into, and the gains made even by people who were employed early on, we examined the changes in wages of migrants over the 12 month interval between the two waves. Table 2.3 shows, by various attributes, the percentages of migrants who had wage increases or decreases. Table 2.3:Wage changes for skilled PAs, 6 months and 18 months after arrival (LSIA2 %) Wage Increase Wage Decrease Net (+/-) Total English Ability Age Qualifications Visa Category FCR Job MODL Only or Best Very Well Well Not Well/Not At All University Trade Other Skilled-Australian Linked Independent Business-ENS MODL Not MODL Notes: (1) Data are calculated from LSIA2 data file (weighted data). (2) Cell content is the proportion of that group which changed. For example, 41% of those who spoke English Only or best had an increase in wages while 20% had a fall (and the balance, 39%, had no change). Those who made the most gains in wages were young people who had university qualifications but did not speak English very well. This table supports the earlier conclusion that those who did best early on tended to make smaller gains in the subsequent 12 months than those who had more of a struggle initially. Note that there are no onshore former overseas students in this sample, so that the gains to young people with university qualifications cannot be extrapolated to the recent experience of the 880/1 visa group. DIMA March

75 2.3 The Overall Picture Migrant characteristics To provide the context for understanding the outcomes of recent skilled migrants, we begin by presenting some basic descriptive information. Table 2.4 shows the per cent of the (skilled PA) survey respondents in each of the main visa categories, and by other selected characteristics. For ease of presentation and analysis, DIMA grouped the different visa sub-classes in the 6 that are set out in the table above. The 6 groups comprise the following individual visa classes: Offshore Australian sponsored 105,138 Offshore business sponsored 127, 128, 129, 130, 131, 132, 160, 162, 163, 165,119,120,121,124,134,161,164 (inc ENS/RSMS) Offshore independent 126,136,137 Skilled Designated Area Sponsored (SDAS) 139 Onshore business sponsored 805, 840, 841, 844, 845, 846, 855, 856, 857, 858,892 (inc ENS/RSMS) Onshore former students. 880,881,882. Most migrants in the sample came as 880 or 136 visa holders. 70 Evaluation of the General Skilled Migration Categories

76 Table 2.4:Selected characteristics of recent skilled Primary Applicants Characteristic % of total Visa Category Offshore Australian sponsored 6 Offshore Business ENS/RSMS 5 Offshore Independent 32 SDAS 5 Onshore Business ENS/RSMS 13 Former overseas students 40 Age Sex Female 39 Male 61 Speak English Only or best 44 Very well 22 Well 28 Not well 4 Not at all <1 Qualification Ph D 3 Masters degree 24 Bachelor degree/post-grad diploma 53 Diploma 11 AQF Cert 3 or 4 1 Trade qualification 8 Other qualification 0 Use qualification in job Labour force status Often 55 Sometimes 22 Rarely 20 Employed 83 Unemployed 12 Not in labour force 5 Occupation in No Answer 2 Australia Managers and Administrators 7 Professionals 41 Associate Professionals 10 Tradespersons and Related Workers 8 Advanced Clerical and Service Workers 2 Intermediate Clerical, Sales and Service Workers 14 Intermediate Production and Transport Workers 4 Elementary Clerical, Sales and Service Workers 8 Labourers and Related Workers 4 Source: Derived from the SRM data file. From Table 2.4, we can see that our respondents are predominantly Offshore Independent migrants or former students who have recently graduated from an Australian educational institution. About 18 per cent have been sponsored by business (a few in this group are sponsored by regions). They are young, well-educated and about half say they are using the skills for which they have been selected, in their current job. Nearly all are in the labour force, and 83 per cent have a job. They fill a mixed bag of jobs. While over half are in professional or managerial jobs and 8 per cent are in trades jobs, around 30 per cent are in relatively low skill jobs including the 12 per cent who work in elementary service or labouring jobs. DIMA March

77 Comparison with LSIA2 We show briefly how the most recent skilled migrants compare with their counterparts who came to Australia in late 1999/2000 as surveyed in LSIA2. In sum, they have done very well, at least in finding work. Compared with the earlier group, they have higher rates of employment and are much less likely to be out of the labour force (see Figure 2.1). Figure 2.1: Comparison of labour force status of skilled PAs, 6 months after arrival: 2000 (C2) and 2005 (C3) % Labour Force Status of Skilled PA's 83% C2W1 C3W1 76% 15% 10% 12% 5% Employed Unemployed Not in Labour Force C2W1 is the first wave of LSIA2; C3W1 is the Survey of Recent Migrants. Note that all the descriptive tables and graphs in this chapter use weighted data. This is a very satisfactory result. The migrants in LSIA2 had much better employment outcomes than did their counterparts in the first longitudinal survey (LSIA1), who arrived in the early 1990s (Richardson et al, 2003). The most recent migrants have done better still. Indeed, a labour force participation rate (ie, the proportion who are in the labour force either employed or looking for work) of 95 per cent is extraordinarily high. By way of comparison, for the Australian population as a whole, aged (ie, the closest match we could get to the age bracket of the skilled PAs), the participation rate was 83 per cent in In some other respects, however, the outcomes of the most recent group of migrants do not look so strong. Migrants were asked to rate their level of English proficiency, choosing among five options. Figure 2.2 shows that the most recent cohort had lower levels of self-assessed English proficiency than the former group. There was a 10 percentage point fall in the proportion who rated themselves at the highest level of proficiency. Perhaps more important, there was a substantial rise in the proportion who said that they only spoke English well as distinct from very well or better. Very few in either cohort did not speak some English reflecting the threshold English test for selection as a skilled migrant. 72 Evaluation of the General Skilled Migration Categories

78 Figure 2.2: Comparison of self-assessed English proficiency of skilled PAs, 6 months after arrival: 2000 (C2W1) and 2005 (C3W1) % Self-Assessed English Proficiency of Skilled PA's by Cohort 54% 44% C2W1 C3W1 29% 19% 22% 22% 10 0 English Only or Best 6% 4% English Very Well English Well English Not Well/Not at All Note: These are statistically significant differences. As we shall see later, skilled migrants who fall into the bottom two categories of English proficiency are quite severely penalized in the labour market. While the most recent migrants are highly qualified, these qualifications only assist the Australian labour market if they are used in jobs that migrants are able to get. The oftcited concern about the highly trained IT specialist who drives a taxi is a familiar expression of this point. Figure 3 shows how the two cohorts compare in the extent to which they were able to (or in fact did) put their qualifications to work in the jobs that they attained six months after arrival. DIMA March

79 Figure 2.3: Comparison of use of qualifications by skilled PAs, 6 months after arrival: 2000 (C2) and 2005 (C3) % How Often Skilled PA's use Qualification in Job by Cohort 71% C2W1 C3W1 55% 22% 20% 20% 9% Often Sometimes Rarely Note: These are statistically significant differences. As with English proficiency, the latest migrants do not do as well as the earlier group in using their qualifications. It is highly likely that these two points are related that is, it is harder for the recent group to get jobs that use their qualifications because their English is not as good. And it is highly likely that both differences are attributable to the high proportion of recent skilled migrants who are recent graduates of Australian educational institutions. We look at these suppositions in more depth later in this chapter. 2.4 Differences by Visa Category In this section we look at the broad visa categories to see whether there are systematic differences in their outcomes on our measures of labour market success. The different visa categories distinguish those who come as independent skilled migrants, those who are sponsored by employers or regions or family, and those who are former students of an Australian educational institution. This last group includes both the independent former students (880 visa), and those who have been sponsored by family (the 881 and 882 visas). Labour market status We start with the basic question of labour market status are there differences in the proportions of the different visa categories that have jobs or are unemployed? It is clear from Figure 2.4 that the answer is yes. Migrants who are sponsored onshore by employers, by the nature of the visa, have virtually 100 per cent employment and 93 per cent of that employment is fulltime. The other two groups that have high levels of employment are former overseas students (but only 73% are fulltime), and offshore independent migrants (85% fulltime) each at over 80 per cent employed. 74 Evaluation of the General Skilled Migration Categories

80 Figure 2.4: Comparison of labour force status of skilled PAs, by visa class: 2005 (C3) % % Employed/Unemployed Skilled PA's by Visa Category Employed 20% Offshore Australian Sponsored 77% Offshore Business ENS/RSMS Unemployed 82% 11% 13% Offshore Independent 69% 23% SDAS 99% 1% Onshore Business and ENS/RSMS 83% 12% Onshore Former Overseas Students Note: a) These are statistically significant differences. b) The percentages do not add to 100, because they do not include those who are not in the labour force: thus it is a % of the whole visa class, rather than a % of those in the labour force. Offshore migrants who are sponsored especially those sponsored by family or by a region do least well in obtaining employment soon after arrival. Almost 30 per cent of the latter two groups are not employed. Furthermore, at least a quarter of those who are working are only employed part-time. While we cannot be completely certain of the reason for this lower rate of employment, it is likely that it is caused in part by the less stringent selection criteria that these two concessional categories require. In saying this, we are aware that these two visas are intended to serve several purposes: Australian-sponsored skilled migrants both increase the wellbeing of their families by joining them in Australia, and bring skills to the Australian workforce. Regional sponsored migrants have the potential to make a contribution to their region in addition to the skills that they bring. Nonetheless, it is important to monitor closely the degree to which the concessions that are embedded in these skilled visas diminish the extent to which these visa groups meet the main purpose of the General Skilled Migration program. The Onshore former overseas students do well in obtaining jobs soon after graduation, although 22 per cent of these jobs are part-time. The proper comparison for this group is all Australian recent graduates, and we use data from the Graduate Destination Survey to make this comparison. For all bachelor graduates in the workforce, 81 per cent had fulltime and a further 12 per cent had part-time jobs (Gradstats, 2005). While these figures are not fully comparable with the RSM data, they suggest that the former overseas students were doing a little less well than graduates in general (having more not employed and especially in having more employed part-time). DIMA March

81 Occupation One of the key measures of success of the skilled migration program is whether migrants find employment in skilled occupations. The Australian Standard Classification of Occupations has a hierarchy that is based on the level of skill that is required to perform jobs. We would expect skilled migrants to find work in the higher level occupations if the GSM program is meeting its objectives. If, despite their qualifications, skills and experience, they end up working in elementary or intermediate level jobs, then settlement could not at that time be judged a success. We note that migrants who worked in the lower level jobs (ASCO 6-9: Intermediate and Elementary) were much less likely than those in higher level jobs to be using their qualifications. For example, between 50 and 82 per cent of those working in the top four occupations said they used their qualifications often (the highest being Professionals), whereas the comparable percentages for Intermediate (about one quarter) or Elementary (about 10%) were much lower. Table 2.5 shows, at a high level, the occupational distribution of recent skilled migrants, by the type of visa. Table 2.5: Differences in occupation by visa category, for skilled PAs: 2005 (C3) Occupation in Australia (ASCO 1-digit) Offshore Australian Sponsored Offshore Business ENS/ RSMS Offshore Independent per cent SDAS Onshore Business and ENS/ RSMS Onshore Former Overseas Students No Answer Managers & Administrators Professionals Associate Professionals Tradespersons & Related Workers Advanced Clerical and Service Workers Intermediate Clerical, Sales & Service Workers Intermediate Production & Transport Workers Elementary Clerical, Sales & Service Workers Labourers & Related Workers Total Persons , , Evaluation of the General Skilled Migration Categories

82 Business nominated migrants are most likely to be found in the managerial ranks. Very few are working in lower level jobs, which confirms that this visa category is having its desired effect. The offshore independent migrants are also concentrated in the higher level occupations, but more in the professions than in managerial jobs. This too looks to be a very satisfactory occupational pattern. The same cannot be said for the other visa categories. The Offshore Australian sponsored group has 18 per cent of their number working in elementary jobs, and a further 28 per cent working at an intermediate skill level. Thus almost half can be judged to be working below the level that would be expected of a skilled migrant. A similar picture emerges for former overseas students, where only one third of these graduates from Australia s universities are employed in professional jobs. This is much fewer than for other recent Australian graduates. The SDAS migrants have by far the least satisfactory pattern of employment for a skilled migrant group. Only 18 per cent are employed as managers or professionals, while half are in lower skill level jobs. Use of qualifications Our next measure of success is the extent to which recent migrants who have jobs actually use their highest qualification in their work. In Figure 2.5, we show how this varies by visa status. Figure 2.5: Comparison of use by skilled PAs of their highest qualification, by visa class: 2005 (C3) % How Often Skilled PA's use Qualification in Job by Visa Category 49% Often 25% Offshore Australian Sponsored 54% Rarely Offshore Business ENS/RSMS 63% 20% 17% Offshore Independent 41% 33% SDAS 70% 9% Onshore Business and ENS/RSMS 46% 25% Onshore Former Overseas Student Note: These are statistically significant differences. DIMA March

83 For ease of presentation, we have focussed on the extremes of the distribution of judgements about how often migrants use their qualifications (percentages refer only to those who have jobs): thus we have left out the middle group, who use their qualifications sometimes. There are quite strong differences by visa class in the proportions who frequently use their qualifications. Those who are nominated onshore by a business are very likely to use their qualifications a great deal as, to a lesser extent, are offshore independent migrants. But only one third of SDAS migrants, and less than half of offshore family sponsored and onshore former students use their qualifications much in their jobs. Indeed, of the regional sponsored migrants, more say they rarely use their qualifications than say that they often use them. In terms of use of qualifications, there is a clear divide between people who speak English best or very well, and people whose English is less proficient than this. Of the former group, 60 per cent use their qualifications often and only 16 per cent use them rarely or never. For the latter group (29% of skilled migrants), about 30 per cent rarely use their qualifications and around 40 per cent use them often. It is not surprising that people who are more skilled in English have superior prospects of using their qualifications. Many of the skills acquired at university or in vocational courses (possibly including trades qualifications) require team work, high levels of literacy and relationships with customers and suppliers to be effectively deployed. Job satisfaction There is a strong association between the proportions who use their qualifications in their job and the proportions who like the work that they are doing. Figure 6 shows, by visa class, the levels of job satisfaction. This is an important measure of labour market success. People who do not like their work are likely to be less productive, and to seek alternative employment (including by moving to another location). Migrants who are sponsored by business, both offshore and onshore, are the ones who most like the work that they do. These groups have negligible numbers who dislike their job. This is understandable, in that people who are sponsored by an employer will have a good idea of what they are coming to, before they migrate. Former onshore students and SDAS migrants do not much like their work. Fewer than half say they like their job, and up to 22 per cent say they dislike it. A table that we do not display here shows that those who do not use their qualifications in their job are much less likely to enjoy their work. For example, of those who say that they like their job, fully 77 per cent use their highest qualification often. In contrast, of those who dislike their job, 85 per cent say they rarely or never use their qualification. 78 Evaluation of the General Skilled Migration Categories

84 Figure 2.6: Comparison of job satisfaction of skilled PAs, by visa class: 2005 (C3) Job Satisfaction of Skilled PA's by Visa Category Like the job Job is OK Don't care/dislike Job 81% 71% % 37% 13% Offshore Australian Sponsored 20% 3% Offshore Business ENS/RSMS 57% 31% 11% Offshore Independent 41% 36% SDAS 22% 17% 1% Onshore Business and ENS/RSMS 44% 40% 14% Onshore Former Overseas Students Note: These are statistically significant differences. Earnings The best single measure of successful labour market outcomes is the income that migrants are able to earn. High incomes are systematically linked to high productivity, as employers are only willing to pay approximately what an employee is worth to their business. Earnings are a useful summary of the value of the contribution that a migrant is making to the Australian economy. They are also important for the material wellbeing of the migrant her or himself, and as such are an independent indicator of successful settlement. Table 6 shows two aspects of the weekly earnings from all sources of migrants, by visa class. First, it shows the proportion who earn $674 per week or more (of those who had a job). This figure (which equates to $35,000 pa) is selected as being commensurate with the minimum fulltime earnings of all but unskilled Australian workers and is somewhat below the median starting salary of $40,000 for recent graduates (Gradstats 2005). DIMA March

85 Table 2.6: Comparison of weekly earnings of skilled PAs, by visa class: 2005 (C3) Visa class % earning $674+ per week Average earnings: $ per week Offshore Australian sponsored Offshore business ENS/RSMS Offshore independent SDAS Onshore business ENS/RSMS Onshore former o/s student There are striking differences in the earnings profile of the different visa groups. As we have seen with other measures, SDAS migrants and onshore former overseas students have much poorer outcomes than the other groups and following them are the offshore Australian sponsored. As in many other respects, the best performers are the onshore business nominees. Indeed, a quarter of this group were earning more than $2,000 per week within 6 months of arrival in Australia. The offshore independent migrants were also doing well. In making these comparisons, it is important to point out that we are not comparing like with like. Onshore former overseas students are just beginning their working lives. They are exempt from any requirement to have work experience. The median Australian graduate earned, in 2005, about $40,000 pa in their first fulltime job after graduation 7 and the table shows that 40 per cent of former overseas students are able to reach $35,000 (this means, of course, that 60%, did not, which compares with the 50% of all recent graduates who earned less than $40,000). While it is reasonable to judge the success of former overseas students in terms of their ability to get a job that uses their qualifications, and which gives them some job satisfaction, it is not reasonable to expect them to be earning amounts that are similar to independent or business sponsored migrants. When compared with their peers, they are not doing too badly. The median fulltime wage for accounting graduates in the Graduate Destination Survey was $35,500. This compares with the average wage in all jobs for onshore former students many of whom were accounting graduates- of $33,333. The MODL Skilled migrants are given priority in selection if they have a skill that has been deemed to be in relatively high demand and short supply. The Department of Employment and Workplace Relations constructs, from their extensive information on areas of shortage and surplus in the Australian labour market, a list of occupations in demand. Migrants who have the skills necessary (including experience in a relevant job for offshore applicants) to fill a vacancy in an occupation in demand get bonus points in their application, and priority in the timing of selection. In this section, we see whether migrants who were employed prior to migration in occupations that are on the MODL do 7 Gradfiles, accessed from 80 Evaluation of the General Skilled Migration Categories

86 systematically better in the Australian labour market. We do not have direct evidence from the survey as to whether these migrants did in fact receive MODL recognition. Twenty per cent of the skilled PAs had worked in MODL jobs prior to migrating (that is, in jobs that were on the MODL at the time that they migrated late 1999). Most of their prior MODL jobs (70%) were professional, while 27 per cent were in the trades. Figure 7 shows whether having been employed previously in a MODL job has a systematic impact on the labour force status of recent migrants. We used the MODL list of May We coded respondents answers to the questions about what job they had in their former home country, into those jobs that were on the 2005 MODL and those that were not (at the 4 digit ASCO level). We have no information about whether respondents actually received MODL points in their application. This method also does not allocate MODL status to onshore former overseas students, since most of these will not have had prior employment. Figure 2.7: Impact of MODL status of prior employment on labour force status of skilled PAs, 2005 (C3) % Labour Force Status of Skilled PA's by MODL Status of Job in Former Home Country 85% 83% MODL Not MODL 10% 12% 4% 5% Employed Unemployed Not in Labour Force Note: These are NOT statistically significant differences. In aggregate, those who had experience in MODL jobs did not do better in terms of being in the labour force or finding a job, than people who were not on the MODL. While being employed is an essential part of successful labour market outcomes, it is just the beginning. We look next at whether migrants with MODL experience do better in terms of the use of their qualifications in their Australian job. DIMA March

87 Figure 2.8: Impact of MODL status of prior employment on use of qualifications in Australian job of skilled PAs, 2005 (C3) How Often Skilled PA's use Highest Qualification in Australian job by MODL status in Former Country 71% 51% MODL Not MODL % 24% 15% 22% 10 0 Often Sometimes Rarely Note: These are statistically significant differences. The picture shown in Figure 2.8 gives clear support to the view that skilled migrants who have previous experience in a MODL occupation will make better use of their qualifications in their Australian job. One reason for this is that the large number of onshore former overseas students mostly do not have prior work experience, so cannot qualify as having a MODL occupation. They are also much less likely than other skilled migrants to be using their qualifications in the job that they have soon after graduating. This does not mean that they will not be able over time to find a job that uses their qualifications. At this stage we have no evidence either way as to whether they want to and will be able to find work in the field in which they have graduated (mostly IT and accounting). In the next table we look at a different question. Do migrants who come under the different visa classes have different propensities to be in a job that was on the MODL in 2005? The short answer is yes, as shown in Table 2.7. Table 2.7: Percentage of skilled PAs who were in a 2005 MODL occupation, by visa category, 2005 (C3) Visa Category Per cent of migrants in 2005 MODL job Offshore Australian sponsored 13 Offshore business ENS/RSMS 24 Offshore independent 31 SDAS 11 Onshore business ENS/RSMS 24 Onshore former o/s student Evaluation of the General Skilled Migration Categories

88 Table 2.7 shows that the three categories with the more modest labour market success onshore students, offshore Australian sponsored and SDAS migrants again are the ones where migrants are least likely to be meeting the identified skills needs, as expressed in the MODL. On this test, the Offshore independent migrants shine fully 31 per cent of them being employed in MODL occupations. This contrasts with the regional and Australian sponsored migrants, of whom only 11 and 13 per cent respectively were in MODL jobs. Overall difference by visa category We emphasise that the information that we have on the degree of labour market success refers to a time that is very early in the Australian career of recent migrants. There is no doubt that some find their feet more quickly than others, and that the degree of difference in outcomes is attenuated over time. Nonetheless, there are some quite strong differences in outcomes that are unlikely to disappear in the short term. The migrants who do best are those who are sponsored directly by an employer, especially those who are sponsored onshore. They have the highest levels of employment, employment in high level jobs, use of their qualifications, job satisfaction and earnings. Interestingly, they are not the ones who are most likely to be employed in MODL occupations. That title goes to Offshore Independent migrants (visa 136). The Offshore Independent migrants also have very satisfactory outcomes on the other dimensions that have been measured. There is nothing in these data to suggest that the Offshore Independent, or the Business nominated programs need to be modified. The other three main programs are more problematic. The Offshore Australian sponsored group have worse outcomes in terms of employment, use of qualifications, job satisfaction, employment in a MODL job and earnings than the Independent and business sponsored groups. The differences are usually quite large. For example, while Independent migrants on average earn $1015 per week, the Offshore Australian sponsored earn almost a quarter less, at $779. They are 10 percentage points less likely to be employed and 14 percentage points less likely to use their qualifications if they do have a job, than are the Independents. But in most respects they do better than the Regional sponsored and the Onshore students. The one measure on which the Onshore students do reasonably well is in their ability to find a job even if that job is often not in a skilled occupation, pays less than the typical graduate job, and gives little job satisfaction. While it is not reasonable to expect recent graduates to do as well in the labour market as the Offshore Independents do, there are still many signs that this group is not doing especially well. We look more closely at their outcomes in a later section, distinguishing sponsored from independent former students. DIMA March

89 The SDAS group can fairly be compared with the Offshore Independents, and the comparison is worrying. The regional sponsored migrants do poorly on most measures (relative to the other groups). They have the lowest level of employment and highest unemployment (at 23%). They have relatively few of their number working in skilled jobs. They are the least likely to use their qualifications (only 33% do so often). They have the lowest job satisfaction fully 22 per cent saying that they dislike their job. Apart from the recent graduates, they have the lowest average wage only 60 per cent of the wage of Independent migrants. And they have the lowest proportion who have MODL jobs. 2.5 How Much Does English Matter? Our own analysis, plus that of many others, consistently affirms that competence in the language of the settlement country has a powerful impact on the labour market outcomes of immigrants. In this section, we provide some evidence on the importance of English proficiency to the outcomes of recent skilled migrants to Australia. The questionnaire in the Survey of recent Migrants (as in the LSIA) asked respondents to choose among specified options to describe their level of competence in English. The options were: What language do you speak best? If English, coded as English best. If not English, they were asked how well they spoke English, with the following choices: Very well Well Not well Not at all We have no way of aligning the answers of respondents to an objectively measured test of English proficiency such as IELTS. Furthermore, we suspect that respondents vary quite widely in how they interpret the choices they were given. Despite these flaws in the quality of the data, there are systematic relationships between self-assessed English and labour market outcomes. Figure 2.9 gives an overview of the link between English proficiency and labour force status. It shows that consistently, those with better English are more likely to be employed and distinctly less likely to be unemployed. The relationship, however, does not seem to be linear. Although there are only 5 per cent of skilled migrants who rated themselves as speaking English not well or not at all, this group does have decidedly worse outcomes than those who speak English well or best. 84 Evaluation of the General Skilled Migration Categories

90 Figure 2.9: Comparison of labour force status of skilled PAs by English proficiency, by visa class: 2005 (C3) % Labour Force Status of Skilled PA's by English Proficiency English Only or Best English Well English Very Well English Not Well Employed Unemployed Not in Labour Force Note: These are statistically significant differences. Those with better English are also more likely to use their qualifications in their job. Table 2.8 shows this relation. Table 2.8: How Often Skilled PA s Use Highest Qualifications in Job by English Proficiency English Proficiency Often Sometimes Rarely / Never No Answer Best 61% 20% 17% 2% Very Well 60% 24% 15% 1% Well 44% 25% 29% 2% Not Well 37% 21% 34% 9% Total Persons 6,172 2,458 2, As with employment, the key distinction is between those who speak English very well and those who have lesser command of the language. The former group are almost indistinguishable from those whose native tongue is English, in terms of the frequency with which they use their qualifications. The latter group are much less likely to be able to use the qualifications for which they have been selected as skilled migrants. DIMA March

91 This division is reinforced by regression analysis. When explaining variation in weekly earnings, we find that those who speak English very well have a small earnings penalty, relative to those who speak it best (about 5%). But those with lesser proficiency have an earnings penalty of about 30 per cent. Table 2.9: Link between employment outcomes and levels of English proficiency, for graduates and tradespeople: 2005 (C3) Occupation Highest Qualification English Ability Only or Best Very Well Other ALL SKILLED PA s % NOT EMPLOYED Masters Bachelor Trade ASCO 1-3 Masters (Professional, managerial Bachelor semi-professional) ASCO 4 Trade (Trade) ASCO 6-9** Masters (Intermediate and Bachelor unskilled service and manual) Trade VISA CLASS: 880 NOT EMPLOYED Masters Bachelor ASCO 1-3 Masters Bachelor ASCO 6-9** Masters Bachelor Notes: Figures presented are percentages of total number with each level of qualification, except where marked with (**) where they are percentages of those employed. A question of interest is whether people who have professional qualifications have a greater need for English proficiency than do those with trade qualifications. We do not have the capacity to analyse this question in detail. But we can throw some light on this by comparing the employment outcomes of those with professional qualifications, and those with trade qualifications, according to their English proficiency. Table 2.9 distinguishes the key English proficiency groups those for whom English was their best or only language; those who said they spoke English very well; and the remainder. We then show, for those with Masters degrees, those with Bachelor degrees or postgraduate diplomas; and those with trade qualifications, whether they were employed, and whether they were working in an occupation that was commensurate with their qualification. 86 Evaluation of the General Skilled Migration Categories

92 The table shows that for the graduates, those who did not speak English at least very well were much more likely to be not employed; about half as likely as those with better English to be employed in a job commensurate with their skills; and about twice as likely to be employed in a relatively low skilled job. Six months after arrival, the level of English proficiency has a strong impact on the extent and quality of employment that graduates are able to obtain. Among those with Masters degrees, the differences between those who spoke English best and those who spoke it very well were not large. In contrast, these differences in level of command over English were associated with substantially worse outcomes for those with Bachelor level qualifications for the less proficient (but still good) English speakers. For those who speak English best or only, people with Masters degrees were less likely to be employed in professional jobs and more likely to be employed in lower skilled jobs than those with just bachelor qualifications. These patterns apply to the independent onshore students (visa 880) as well as to the whole group. The impact of English proficiency on employment and use of qualifications is less pronounced for people with trade skills. Nonetheless, it is clear that those who do not speak English at least very well have distinctly higher levels of unemployment, and of employment in lower level jobs. We conclude that in most dimensions of labour market success, the key is to have a level of English language competence that enables the respondent to report that they speak English at least very well. We equate this to about a 7 on IELTS, although it is a big stretch to do so. IELTS covers speaking, reading, listening and writing, whereas the survey question asks only about speaking. IELTS defines level 7 as a good user who Has operational command of the language, though with occasional inaccuracies, inappropriacies and misunderstandings in some situations. Generally handles complex language well and understands detailed reasoning. There is clearly a strong need either to use IELTS score on survey questionnaires, or to do a study that establishes the robustness and link with IELTS of self-assessed responses to questions about how well the respondent speaks English. It is interesting to report here the findings of DIMA from their surveys of former overseas students, that former overseas students with an IELTS score of 7 had a 55% chance of finding a skilled job, compared with a 38% chance for those with an IELTS score of less than Private communication from DIMA. DIMA March

93 2.6 Analysis By Detailed Visa Category The visa groupings that we have been using so far were supplied by DIMA. They add together a number of individual visa categories, on the basis of shared characteristics. This is done to make analysis easier, by reducing the number of individual categories that must be dealt with in each piece of analysis. Despite the convenience, some information is lost in the construction of groups that do not strictly match actual visa categories. In this section, we examine some outcomes of selected individual visas. These have been chosen to enable us to look in more detail at groups of immigrants who may be seen to be comparable, but where some are doing better than others. The visa categories are: 136, 137, 138, 139, 880, 881, 882. The 13x visas are for offshore applicants while the 88x visas are for onshore former overseas students. The numeraire visa is the 136. This is the visa used by skilled overseas migrants who have no particular concessions (such as for region, or sponsorship). If people who come on other visas do worse than this group, then the differences can be seen as a measure of the cost of the concessions that underlie the other visas. We remind the reader that our data are collected only 6 months after arrival (or after grant of permanent residency, in the case of former overseas students). As we showed in section 2.1, the gap in performance between skilled independent migrants and skilled Australian sponsored migrants diminishes as migrants spend a further 12 months in Australia. The big picture of the differences in labour market outcomes by detailed visa category is revealed in Table Visas 880, 881, 882 are the overseas student version of visas 136, 138, 139, respectively. The visa that has the best outcomes on almost all the measures used in Table 2.10 is the State/Territory Nominated Independent (137). A high proportion of these migrants have trade qualifications. Almost all are employed, they use their qualifications at a high rate, like their jobs, earn a good wage and have a relatively small number (one third) employed in lower skill level jobs (ASCO 6-9). The number of respondents on the 137 visa is not large, and it would be advisable for DIMA to keep a close track of the relative success of this group, to see if it is sustained at the level indicated in Table The 136 visa has very satisfactory outcomes. Employment is high, as are levels of qualifications. This group has the highest average earnings of all the visas in the table which is an excellent summary of the quality of the jobs they have obtained. This visa has the lowest proportion (one in five) employed in lower skilled jobs. 88 Evaluation of the General Skilled Migration Categories

94 Table 2.10: Labour market outcomes of skilled PAs, by detailed visa category: 2005 (C3) Employment Status Visa 136 Visa 138 Visa 139 Visa 880 Visa 881 Visa 882 Visa 137 per cent Employed Unemployed NILF Income $52,580 $40,602 $34,800 $33,547 $32,806 $30,736 $43,327 Qualification per cent Masters Bachelor Diploma Trade Job Satisfaction Like OK Use Qualification Often Rarely Occupation Intermediate or less (ASCO 6-9) English Proficiency Only or Best Very Well Other Total 2, , When measured against the 136, the onshore students do not do so well. But, as we have remarked before, this is a tough test, since these former students are just beginning their working careers. They have been successful in achieving a high level of employment, even if up to half of that employment is in lower skill jobs. On every measure, the Australian sponsored overseas students do a little worse than the independent former students, and the Designated Area Sponsored onshore students do worse still. Indeed, although there are only 266 of them in the sample, they earn well below the wage that would be expected even of a recent graduate, only one third use their qualifications in their job, and 57 per cent work in lower level jobs. A striking feature of the 880 visas is the low level of self-assessed English proficiency, relative to the other visas. Of most importance, given the other evidence in this chapter, almost half report speaking English less than very well. We know from the information in Table 9 that those who do not speak English at least very well have a much reduced chance of being employed at all, and especially of being employed in a job that is commensurate with their qualifications. It is clear that two years of study at an Australian educational institution cannot be guaranteed to ensure that students have mastered professional level English. DIMA March

95 The other interesting comparison is the concesssional offshore visas 138 and 139. In many ways, the 139 group do worst of all, given that they already have work experience. They earn only two thirds of the wage of Independent migrants (136) and use their qualifications at half the rate. They have clearly the highest rate of unemployment of all the visa categories and more than half are working in jobs that are not very skilled. While they have quite high levels of formal qualifications, they use these often in only one third of cases. The differences in employment, earnings, use of qualifications and employment in lesser skilled jobs is much greater for the offshore concessional group than for the onshore former student concessional group. This is especially so for a comparison of 136: 139 and 880: 882. There are a number of reasons why the concessional migrants might be hampered in obtaining good employment soon after arrival/ grant of visa. These reasons include age, English competence, marital status, sex, qualifications, country where qualifications were obtained, whether had a MODL job in former country, numbers of children, weeks in Australia, and country of birth. The best way to see if there is any systematic difference among the visa categories, once these possible factors have been taken into account, is to use a multiple regression. In a regression that uses first hourly then annual earnings as the dependent variable, and controls for the factors set out in the previous paragraph, we find systematic differences in the earnings of people who come under different visas. Table 2.11 summarizes the earnings penalty associated with each visa relative to the earnings of an otherwise similar person who came on a business-sponsored visa. Table 2.11: Earnings penalty associated with different visa categories: regression results, 2005, C3 Visa % reduction in hourly wage % reduction in annual earnings The first column shows the percentage reduction in hourly wages that a person who came on the designated visa will typically experience, relative to the wages of a person on a business-sponsored visa. In estimating this effect, we hold constant people s sex, qualification, level of English proficiency, age, aspects of previous work experience, marital status, children, country of birth and the country where they obtained their qualification. The overall explanatory power of the regressions is acceptable, at 36 per cent of the variance for the hourly wage regression and 16 per cent for the annual earnings regression. The difference between the two regressions is that annual earnings vary because both hourly wage and number of hours worked vary. The sort of attributes that explain variance in wages are not so successful in explaining variance in hours worked. In both regressions, the coefficient on every visa category was significantly different from zero. 90 Evaluation of the General Skilled Migration Categories

96 People who came on business sponsored visas, as we have seen in Table 6, have mostly done very well. Relative to them, all the other visa categories have substantially lower average annual earnings. This shows up in the regressions as a significant negative coefficient on each of the visa categories that are listed in Table 11. We note that migrants from Asia have lower earnings than those from the other source countries, and there is a correlation between type of visa and country of origin. If we do not control for country of birth, then the negative impact of several of the listed visas is increased. Relative to the 136 visa, migrants on all the other listed visas have lower hourly and annual earnings, although the difference between the 137 and 136 is small. For the rest, the penalty is large around 30 per cent for hourly wages and between 30 and 64 per cent for annual earnings. The visa categories that do worst on annual earnings are the 138, 139 and 882. These are the Australian sponsored visas, where successful applicants faced a lower pass mark, or were not points tested. The large negative effects for annual earnings reflects the fact that these groups have more difficulty in finding fulltime work, as well as face a wage penalty when they do find a job. The 139 migrants, who do so poorly on most of the measures of labour market outcome, have an hourly wage penalty that is similar to that of the onshore former students. They do, however, have the largest penalty of all in terms of annual earnings. This is suggesting two things. The first is that something about these migrants that we cannot observe is making it hard for them to find fulltime work. Once they do find such work, they have lower hourly wages mainly because they have the sorts of characteristics (eg English competence, qualifications, sex) that lead others with similar characteristics also to have lower hourly wages. 2.7 Conclusion Despite their limitations, the data that we have analysed (principally the Survey of Recent Migrants) enables some reasonably robust conclusions to be drawn about the labour market success or otherwise of recent skilled PAs. First, the Business nomination and Offshore Independent visa categories are fulling the objectives of the skilled migration program in a very satisfactory manner. In all respects, migrants who came under these visas had achieved good labour market outcomes very early (ie, within 6 months) in their settlement period. As LSIA longitudinal data show, migrants rarely go backwards once they have found decent employment in Australia. We can thus be confident that the good outcomes that we can observe after 6 months will be sustained, and indeed improved upon, with longer duration of settlement. The only likely cause of more adverse outcomes would be a serious recession, that caused difficulty for Australian as well as immigrant skilled workers. The data also show that the migrants who come with the greatest level of concessions in the GSM (139, 882) clearly do much worse than the other visa categories. We cannot be DIMA March

97 sure of the reasons for this, but they find it much harder to obtain fulltime jobs and in particular to obtain jobs that are appropriate for a skilled person. It is very likely that part of the reason is lower level English competence. We expect, on the evidence from the LSIA discussed in section 2.1, that the gap in outcomes for these visa categories will moderate with time in Australia. But it would be surprising if it did not persist for some years at worrying levels. A judgement needs to be made on whether the gains to the community and to family wellbeing are sufficient to warrant the substantially lower contribution that these migrants make to the objectives of the skilled migration program. In saying this, we note that they represent quite a small part of the overall skilled intake (as indicated by the survey data). The other concessional group the 138 and 881 visa subclasses also do less well than their non-concessional counterparts (136 and 880). The differences are most pronounced for the offshore migrants, and are large enough to suggest that the concessions are undermining somewhat the contribution to the labour market of the GSM. We have argued that the success of the 880 migrants should not be judged in comparison with the offshore independent migrants (136), because they are recent graduates with no work experience. They clearly do much worse than the 136 migrants, on all criteria except proportion in employment. We have, to the extent possible, compared their outcomes with Australian recent graduates. On this test, they are not doing well. One reason is likely to be that, on the whole, they are not taking courses that lead to high paying jobs, such as geology, dentistry, law or the health professions. They are very strongly concentrated in accounting and IT. But still they had average earnings that were below the median for accounting graduates. There is good reason to believe that the onshore former student program is not working as well as it should and as it could. The reasons are likely to be a) the level of English proficiency of the recent graduates; b) their concentration in a small number of fields of study; c) the quality of some of the courses undertaken. All the evidence in this chapter supports the importance of threshold levels of English competence as a key to success in the labour market. 92 Evaluation of the General Skilled Migration Categories

98 3 Operational Issues in Skilled Migration 3.1 Skilled Migration Policy and Operational Procedures Virtually all skilled applicants reaching Australia s points threshold are approved to migrate (subject to health and character requirements). Within this context, GSM policy decisions exercise a profound impact on the scale and type of applications received. Until 1999, for example, international students were ineligible to apply for the program. By 2005 (as we have seen) they represented the largest selected cohort. The allocation of 20 points to the Migration Occupations in Demand List in coincided with an immediate jump from 2,413 MODL applications the previous year to 12,986 (up from 9% to 42% of all GSM applicants, see Table 3.1). The recent expansion of trade occupations on the MODL is having a comparable effect, with 4,035 of all applicants tradequalified, compared to just 599 in (a sixfold increase). In April 2004 and 2005, the government s increased passmark for offshore and onshore applicants coincided with dramatic short-term drops in GSM applicant demand. The shift in April 2004 to the minimum two year study requirement for international students also depressed numbers over an extended period in , given the timelag effect. (See Figure 3.1.) DIMA operational staff must deal with this volatility - factoring policy, resource, integrity and efficiency objectives into the delivery of defensible and transparent selection procedures (a major challenge). Impressive operational gains have been achieved since 1999, most notably in relation to: The introduction of a highly centralised processing system at DIMA s Adelaide Skilled Processing Centre (ASPC), based on the employment of 100 specialist staff; Pre-migration screening of Principal Applicants credential recognition and English language ability (out-sourced to regulatory and language assessment bodies); Development of world s best practice measures designed to assure the integrity of the skill migration program (considered in section 3.4); and Recent implementation of e-lodgement for GSM categories, aimed at yielding further efficiency gains. DIMA March

99 Table 3.1: Skill Level of GSM Principal Applicants, Compared to Total GSM Applications % Total known 31, % Total MODL 12,986 42% Professional 8,742 67% Associate Professional 209 2% Trades 4,035 31% Total known 27, % Total MODL 2,413 9% Professional 1,672 69% Associate Professional 142 6% Trades % Source: Adelaide Skilled Processing Centre, Department of Immigration, Multicultural and Indigenous Affairs, November 2005 Despite these gains the analysis below addresses four operational areas considered by the Panel to warrant further attention, namely: The calibre of onshore training and work experience; English language ability; Assessment of offshore training and work experience; and Select issues related to occupational field (including assessment of shortages). The discussion draws on interviews conducted with over 70 Federal and State insiders, including senior policymakers and case officers whose work impacts on selection processes 9. (See Appendix B for a summary of sources.) All were asked to provide frank comment on emerging as well as established issues, with no individuals sourced by agreement. We would like to acknowledge here their time and valued contribution. 9 Federal and State bodies in addition to DIMA were consulted, including the Department of Education Science and Training and the Department of Employment and Workplace Relations, given their significant responsibilities in relation to skill migration; State education, employment, regulatory and migration bodies; and representatives of select Australian professional and trade bodies responsible for pre-migration credential assessment and English language issues. 94 Evaluation of the General Skilled Migration Categories

100 Figure 3.1: The Impact of Skill Migration Policy Changes on Total GSM Applications ( ) DIMA March

101 3.2 The Calibre of Onshore Training and Work Experience Context As demonstrated in the preceding chapters, Australia s skilled migration program can no longer be considered in isolation from its export education industry, including the motivation, regulation and practices of providers. Between 1996 and 2000, 26% of Federal government funding in real terms was removed from the Australian tertiary sector (Lawnham and Illing, 2000). To compensate for this, Australian universities accelerated their transformation from academy to global business, expanding their recruitment of international fee-paying students in a process dubbed academic capitalism (Slaughter & Leslie 1997). The link between international study and migration is longstanding. According to a national survey in the mid-1990s, 78% of students from China were motivated to enrol in Australian courses by an ultimate wish to migrate, compared to 64% of students from Hong Kong, 48% from the Philippines, and 43% from Singapore and Malaysia (Nesdale et al 1995). Following 1989 and the crackdown on students at Tianenman Square, Australia accepted some 37,000 Chinese who had originally arrived as fee-paying students, but ended up securing refugee status (Shu & Hawthorne 1996). In 1999, as we have seen, international students became immediately eligible to migrate, and from July 2001 could be processed within Australia if they applied immediately on course completion. By the start of 2002 such students represented around half of all skilled applicants a seeming win-win situation leading simultaneously to a 30% surge in demand for Australian tertiary courses. Growth in international student enrolments was led by China (an increase of 77%) followed by Hong Kong, Singapore, the US, Malaysia, Thailand, Japan and Korea (Colebatch 2002). By ,000 international students were enrolled in Australian university courses: two-thirds in Australia and one-third offshore (IDP Education Australia 2002). Australia had become the fifth most popular global destination after the US, Germany, the UK and France, attracting the world s highest proportion of international students in tertiary education (17.7%), with the fastest rate of growth (IDP 2005; OECD 2004). By 2004 Australian universities were earning an estimated $1.9 billion of revenue per year from this source, compared to $791 million in 1999, with six institutions relying on international student flows for more than 20% of their income (Macquarie, UTS, Wollongong, RMIT, Central Queensland and Curtin Universities) (Illing 2006a; 2006b). In July 2005, 304,035 international students were enrolled across all Australian education sectors, with non-university courses growing fast (Australian Education International 2005, see Table 3.2). China and India were the most important single sources, contributing 71,747 and 24,462 students respectively (19% and 30% growth over the previous year). As demonstrated in Chapter One these flows were migration-driven, with 66% of students from India and 38% from China converting to permanent residence, including 41% of students enrolled in IT courses (Birrell 2005). Their presence had 96 Evaluation of the General Skilled Migration Categories

102 become critically important to Australian institutions, in a context where there is now less than 1% annual growth (after a decade of double digit figures), with negligible or negative 2005 enrolment trends evident from most other sources (Illing 2006a). While university enrolments have been the norm, students are reportedly highly responsive to rapidly emerging opportunities in the trades sector. By trades or related fields were listed as 60 point occupations, many associated with relatively modest bodies of knowledge. (See discussion in section 3.5.) Select aspects of the international student experience were explored in the interviews, to probe potential reasons for the inferior work outcomes many achieve relative to offshore Independent migrants. Despite comparable employment rates in the first six months (82-83%), as demonstrated by Chapter Three, onshore students are characterised by: Annual salaries of around $33,000 (compared to $52,500 for offshore Independents); Average weekly earnings of $641 (compared to $1,015); Lower job satisfaction, with 44% liking their work (compared to 57%); and Far less often use of formal qualifications in current work (46% compared to 63%). Four issues are examined in turn below, with English treated separately given its degree of importance: Governance of the Australian export education sector; Tertiary sector issues; The proliferation of VET-sector courses; and Quality assurance of off-shore Australian courses. Table 3.2: International Student Enrolments in Australian Education Courses by Origin (July 2005) International Student Source Country (All Australian education sectors) Total Enrolments Growth China 71, % India 24, % South Korea 21, % Hong Kong 19, % Malaysia 18, % Japan 16, % Indonesia 14, % Thailand 13, % Singapore 9, % USA 11, % Other 82, % Total 304, % Source: Adapted from Australian Education International data, 14 September 2005 DIMA March

103 Governance of the Australian Export Education Sector Australia s Federal and State governments have cultivated public-private education delivery in the past 10 years across all sectors, with international students choosing between university, TAFE, Registered Training Organisation, Foundation, Secondary and English language courses the first three leading directly to skilled migration. While informants affirm Australia s commitment to quality provision, including world s best practice in relation to the Education Services for Overseas Students Act (ESOS 10, developed in 2001 and currently being refined), the potential for compromise in standards related to academic entry, progression and exit was also frequently noted. Governance of Australia s export education industry is complex. DEST generates education policy and strongly supports the public-private provider mix - considering there to be remarkably few issues around the quality of supply of education to whoever wants it, with good and bad occurring in both sectors. DIMA issues student visas, engages with the ESOS process, and later re-encounters students as they apply for skilled migration. While the Department learns of problematic education sector issues, it has minimal power to address these. State and Territory governments are other key players in international education - in Victoria (for example) three separate departments dealing with eligibility to enrol international students (the CRICOS code 11 ), oversight of course quality assurance by sector, and support for the labour market integration of skilled migrants. Tertiary Sector Issues Australia s onshore student program has been dominated to date by self-regulated universities. The point to note here is the scope for conflict of interest which can impact on graduate employment outcomes, despite many providers maintaining exemplary standards. According to DEST, the National Office of Overseas Skills Recognition has no role in assessing the calibre of international students prior education a process left in the hands of providers who may have incentive to: Enrol students with inadequate levels of English (see section 2.0); Award generous credit for prior study; Provide high levels of academic support; and Facilitate course progression, despite variable academic performance. The process of quality assurance is reportedly complicated by the speed of recent developments Franchising has become possible - for example one prominent regional 10 The ESOS Act was independently evaluated in 2004, resulting in a comprehensive set of recommendations designed to convert the existing National Code to a set of unambiguous and wellmonitored standards for implementation across Australia. 11 CRICOS = the Commonwealth Register of Institutions and Courses for Overseas Students. The ESOS Act requires providers of courses to international students to register their institution and courses with DEST, with state education departments required to approve these prior to registration or promotion to overseas students. 98 Evaluation of the General Skilled Migration Categories

104 university commissioning a TAFE college in another state to deliver its courses to international degree students. Within a multi-sector education environment, informants concede the scope for international student problems to fall between the cracks. For example poor training may be picked up by employers post-course and postmigration, rather than in advance by the regulatory bodies. There is no trigger to alert if students simultaneously enrol in two full time courses, despite this clearly compromising time allocation to study (a practice which definitely occurs). While in theory courses are based on nationally consistent standards these can be difficult to police, with governance systems struggling to catch up. Level of cultural enclosure A second issue with the potential to affect graduate employability relates to onshore students degree of cultural enclosure. In 1999, when international students became immediately eligible for migration (as stated), DIMA assumed significant acculturation to occur in the process of study, a transition likely to boost immediate employment prospects. The majority of international students however have studied to date in Australia with peers, allowing minimal opportunity for mainstream interaction. Indian students, as stated in Chapter One, have tailored both level and subject choice to maximise GSM points. By ,224 were enrolled in Masters by coursework degrees (around 25% of all international student enrolments, compared to 918 Indian enrolments in 2001). The majority chose fields such as IT (2,411 compared to 1,331 in 2001), management & commerce (1,560 compared to 446) and engineering (801 compared to 176). Many were concentrated at purpose-designed city campuses, where they constituted 50% of the student body or more, most notably at: Central Queensland University (920 Indian students); Ballarat University (827); Victoria University of Technology (463); University of Southern Queensland (331); and RMIT University (315) (Birrell 2005). Regional city premises may contain no local students at all created for and catering exclusively to export education needs, supported by the provision of intensive academic services. While there are reportedly benefits in such a model (in terms of training efficiency and social ease), students intercultural and communicative skills development may be limited - one of the factors contributing to low English scores (see Table 3.4, plus discussion in relation to English). DIMA March

105 Degree of job readiness A third issue raised by informants is onshore graduates degree of job readiness with this integrally linked to the calibre and speed of their Australian training, as well as their level of commitment to a nominated GSM field. Such concerns are exacerbated where students lack cognate undergraduate degrees (as raised in Chapter One), or have enrolled in the shortest possible Australian course supported by minimal practical training (eg a Masters degree in IT with no Bachelor level studies related to the field an issue now addressed by the Australian Computer Society through a mandatory period of post-qualification experience; see Kinnaird 2005). The Proliferation of VET-Sector Courses Registered Training Organisation courses have reportedly proliferated at a speed that defies comprehensive regulation, often largely or solely motivated by skilled migration. Within this context there maybe considerable variation in the quality assurance and accreditation models used by different sectors: universities and TAFE colleges subject to self-accreditation and peer review, while VET courses are governed by policy formation at the Federal, State and even local levels. States committed to becoming primary destinations for international students operate in a fast-changing industry - affirming the need for regular two-way consultations with DIMA in relation to policy, English and visa regulation requirements. Informants concede the impossibility of investigating standards for every course, in a context where there may be 1,000 RTOs in a single state (compared to 20 TAFE colleges), with a handful of public servants monitoring performance. Site visits at point of accreditation, and licence renewal checks (after 5 years) are the norm. Intervening checks largely occur if time and resources allow these. Within such a period, the scope of a college s educational practice may transform affecting the delivery of a course in a specific discipline. In one notable example (following a change to the MODL) an RTO shifted from training electrical linesmen to training cooks overnight, reportedly with the same staff and students, and lacking a kitchen. (DIMA has since implemented a range of measures to address such abuses, chairing a late 2005 conference with State Government registration bodies and DEST to develop strategies to deal with questionable providers 12.) DIMA may see a hundred international students who graduate on from the same small college on the same day, and it rings alarm bells.) Doubt was expressed by informants concerning the calibre of select RTO courses - some providers perceived to be demonstrating rather than teaching skills, and in-house experience provided rather than proper industrial training. One noted, There are some wily entrepreneurial players, who exist solely to funnel 12 From 1 November 2005 overseas students applying for GSM were required to meet the 2 year study rule solely on the basis of enrolment in CRICOS-registered courses. From 1 July 2006 it is intended that DIMA will further tighten the requirement that any qualification gained in Australia whilst the holder of a student visa and used as the basis of a skill assessment must be from a CRICOS-registered course. 100 Evaluation of the General Skilled Migration Categories

106 students into skill migration. According to a senior State government informant concerned with education quality assurance, We re all operating in this self-interest circle and migration is fuelling it You ve got a large number of people whose task is to sell at any price. If an institution is unscrupulous and profit-driven enough it has the potential to do all kinds of things Audit systems don t pick up a lot and international students are unlikely to complain. The government recognises there is light regulation appraisal, and has a chosen assumption that you re dealing with scrupulous providers. Quality Assurance of Off-Shore Australian Courses Quality control mechanisms governing Australian providers offshore were also conceded to be inadequate, in a context where DIMA officers state academic transcripts are not required to define if an Australian qualification is gained on or offshore (eg for Independent offshore applicants based in Hong Kong or Malaysia). Jurisdictional barriers and resource limitations compound QA problems, with definite impact on the appropriacy of training (as described by this senior informant): If universities are operating offshore, in principle AUQA (the Australian university quality assurance body) covers audits. If it s the VET sector, theoretically the Australian Qualifications Training Framework (does), but there is uncertainty around this. A lot of States and Territories are unsure if they can legally operate outside their jurisdictions. There is no real requirement to audit private Australian providers (eg operating in North China). There is also nothing in the State fee structure for courses to cover the expensive and time-consuming offshore auditing process. For example what is the language of instruction offshore? An Australian college may offer a metal scaffolding course in South East Asia. By definition no metal is involved or available it s all bamboo! But States/Territories may have no jurisdiction or will to send assessors to see what type of training is indeed happening. Conclusion As demonstrated above, Australian providers may have significant conflict of interest in relation to international students. Despite quality control measures, an increasing number are dependent for status, financial viability and (in select cases) survival on international student fees, with students in turn strongly motivated to qualify for skilled migration. Such dependence has the potential to compromise academic standards in relation to entry, exit and performance, which in turn may impact on perceived levels of work readiness in the early post-migration period. DIMA March

107 While aware of these issues, it is clear DIMA has minimal operational control of education processes. Within this context the Panel considers substantial numbers of international students would benefit from undertaking significant periods of training and/or industrial experience following completion of onshore courses, prior to applying for skilled migration. In the process many would overcome deficits relative to offshore Independent applicants in the eyes of employers. Models already exist in the tertiary and TAFE sectors. Australia pioneered the development of labour market bridging programs for recently arrived skilled migrants in the 1980s and 1990s, including field-specific courses designed to address specific employment barriers. In the field of engineering, for example, 10 models existed by 1994, the focus ranging from computer languages for select fields, to intensive training in local regulations, examination preparation, specialist engineering terminology, extended industrial experience (etc). Comparable initiatives have developed in the nursing, accounting, medical and IT professions, and select trades (Hawthorne 1994; 2005). Extended periods of stay would also assist onshore applicants if necessary in both English language and acculturation development. As demonstrated by Chapter Four, a growing number of countries are exploring the value of extended two-stage migration. 3.3 English Language Ability Context The impact of poor English language skills on skilled migrants can hardly be overestimated. As early as 1985, low English was demonstrated to triple the unemployment risk for males, while doubling it for females, a disadvantage confirmed by all subsequent studies (eg Chiswick & Miller 1992; Wooden & Robertson 1989; Richardson & Ilseley 2001; Hawthorne 1997, 2005). By 1989 limited English was considered to represent an awesome and devastating barrier for migrants at every stage of the employment life cycle in Australia (Office of Multicultural Affairs, 1989: 39). Moreover research demonstrated that as education level increased the labour market position of immigrants vis a vis the Australian-born systematically deteriorate(d) (Wooden 1994: 230). Comparable trends are evident in other immigrant-receiving countries such as Canada, demonstrating that the higher an immigrant s official language capability, the greater the employment and earnings opportunities, with host country language ability the particular form of human capital that seems to matter most (Thompson & Worswick 2004; Hiebert 2006 in the current volume). 102 Evaluation of the General Skilled Migration Categories

108 From 1989 there was growing demand in Australia for the introduction of pre-migration English language screening a process commencing in the medical and nursing fields, and extending from 1993 to 1996 to over 100 Occupations Requiring English. As early as 1983 the first major Australian report on skilled migrants had highlighted a need to conduct detailed language audits in key professions, to determine not merely the level but type of specialist English competence required for employment. In that report s view, There is no kindness for anyone involved (migrants, their future clients employers, training institutions, etc.) in lowering standards (eg by ignoring realistic requirements for English proficiency and cultural understanding) The solution is to make realistic requirements, to judge them validly and reliably, and to provide the means by which those requirements can be met (Committee of Inquiry on the Recognition of Overseas Qualifications 1983: 105-6). In 1988 the Committee to Advise on Australia s Immigration Policies addressed English language ability in the context of points allocation the following way: English should not be a make or break factor when there are other factors on which the applicant scores well enough to get into the (migration applicant) pool. But it must be included in any selection system which recognises the importance of skills and where there are two applicants who score equally on other factors, English must be decisive In assessing English proficiency, the level of English required by the immigrant to carry out the duties of his or her occupation in Australia should be the primary consideration (Committee to Advise on Australia s Immigration Policies 1988: 92). With the emergence of the knowledge economy, and the vanishing of backroom jobs, sophisticated English ability has become even more important. According to a national employer interviewed in relation to migrant engineers, Designing something and working on it is not a case of giving a once-off bundle of information It has to involve constant feedback, and quite often it s easy to see in an interview that (the migrant) is only getting a very small percentage of the conversation. And once an employer perceives that they become very, very frightened If the employer can t be sure that a person understands what s happening around them, then they are going to have a great deal of difficulty getting a job, even as a draftsman (Hawthorne 1994: 69). DIMA March

109 Such views were strongly re-affirmed by representatives from the information technology, engineering, medical, nursing, trades and select regional employment sectors in the course of the current review. Within this context, four operational issues are briefly examined in terms of skilled migrants English language ability the first two applying to offshore and onshore applicants, the remainder to onshore international students: The standard of English required for skilled employment; The integrity of English language testing; Pre-entry IELTS levels for international students; and Test exemptions. The Standard of English Required for Skilled Employment Despite the continued strength of UK migration, the majority of skilled applicants to Australia use English as a second language. (See Table 3.3 for the top 10 source countries of GSM applicants from July 2003 to November 2005.) In engineering for instance, according to the latest data from Engineers Australia, around a quarter of July-September 2005 applicants for pre-migration assessment were derived from ESB source countries (255), compared to 78% (930) from more linguistically diverse groups. In the Australian Nursing and Midwifery Council (ANMC) received 1,421 GSM nursing applications, up from 969 the previous year. The ANMC currently handles around 2,000 credential assessments per annum two-thirds derived from onshore and onethird from offshore applicants, from around 40 different source countries (ANMC 2005). As demonstrated by Chapter Two, relatively poor English language ability is associated with reduced early employment outcomes: the key (overall) distinction found being between (GSM migrants) who speak English very well and those who have a lesser command of the language, resulting in a 30% earnings penalty. In consequence, that chapter concluded, in most dimensions of labour market success, the key is to have a level of English competence that enables the respondent to report that they speak English at least very well. Within the fast-changing knowledge economy, DIMA s specification of IELTS Band 5.0 as the threshold required for GSM applicants is problematic. IELTS Band 5.0 falls well short of current Australian employer requirements a level defined as Modest by the British Council rather than Vocational (the term utilised by DIMA): Has partial command of the language, coping with overall meaning in most situations, though is likely to make many mistakes. Should be able to handle basic communication in own field. 104 Evaluation of the General Skilled Migration Categories

110 Table 3.3: Top 10 Countries of Citizenship for GSM Applicants, to (Year to Date) No. % No. % July-Nov No. % India 7, UK 5, India 2, China 5, India 5, China 2, UK 4, China 4, UK 2, Malaysia 2,029 6 Malaysia 1,947 6 Malaysia Indonesia 1,990 5 Indonesia 1,525 5 Philippines Singapore 1,490 4 Hong Kong 1,439 4 Indonesia Hong Kong 1,199 3 Singapore 1,242 4 Hong Kong Korea 1,033 3 Sri Lanka 1,028 3 Korea Sri Lanka Philippines Sri Lanka Philippines Korea Singapore Source: Adelaide Skilled Processing Centre, supplied December 2005 In terms of performance, a migrant with IELTS Band 5.0 would generally speak hesitantly and often inaccurately at interview, with multiple grammatical errors in a written report limitations likely to be viewed as inadequate for skilled employment. Engineers Australia now defines IELTS 6.0 as its minimum requirement for subprofessionals as well as engineers. A recent IT paper stated The English language skills actually required for ICT professional work may well be closer to the Band 7.0 IELTS of the medical/health professions than to the current (Australian Computer Society) default minimum of Band 5 (Kinnaird 2005: 73). Australia s health professions have mandated IELTS Band 7.0 ( Good User, defined below) as the lowest allowable standard for clinical registration, with no other level considered safe: Has operational command of the language, though with occasional inaccurancies, inappropriacies and misunderstandings in some situations. Generally handles complex language language well and understands detailed reasoning. As noted in Chapter Two, high level English also confers a substantial employment benefit on trade-qualified migrants, although there is no evidence to date to allow systematic assessment of trade-specific language requirements. Within the above context the Panel believes an IELTS score of Band 5.0 to be inadequate for entry to the GSM program, with Band 6.0 a more appropriate threshold requirement. Given that a rating of IELTS 7.0 or above is likely to facilitate immediate migrant employment in most fields, higher English language facility should be rewarded by increased points allocation. New Zealand, for example, lifted the IELTS average required for skilled migrants to 6.5 in 2002, with 6.9 the current average for Principal Applicants (Immigration New Zealand forthcoming). The Panel notes there is no current evidence to warrant the lower English levels for regional GSM selection currently permissible. DIMA March

111 The Integrity of English Language Testing Integrity in language testing is vital to assuring score accuracy, with the bulk of testtaking to date occurring offshore. In relation to this it should be noted that Australia and other immigrant-receiving countries have experienced significant problems related to candidate substitution and security violations in recent years. In China, the world s largest IELTS centre until overtaken by India (87,000 administrations per year in 26 test centres operating at capacity), the following measures have recently been required to address this issue: Encrypted online registration (to mask identity information); Use of an electronic ID verification system; Photo enrolment on the actual test day to minimise substitution; Maintenance of an imposter database in Beijing (made available to all test supervisors in order to aid recognition); Scanning of candidate photos taken the day of administration against the imposter database and all other photos of candidates; Training of Embassy and IELTS staff in facial recognition techniques; Provision of public notice on these procedures to all candidates; and Appointment of a full-time IELTS Security Manager. With the global growth of fraud, the Panel strongly endorses such measures as essential to ensure accurate point of entry assessment. A second operational issue concerns the potential value of offering the revised Test of English as a Foreign Language (TOEFL) test as an alternative to IELTS - an option we understand DIMA to be aware of. IELTS scores are somewhat unstable: a student having a 40% chance of securing a different result on re-testing, based on a.77 published reliability rate for speaking and writing. According to a prominent academic consulted, the latest TOEFL test has a number of advantages relative to IELTS, being: Internet based; Associated with greater stability of scores (a.9 correlation); Simultaneous administration in secure test centres around the world, with greater integrity than IELTS at somewhat lower costs; and A capacity to elicit superior information concerning test takers capacity to communicate in an academic setting. The Panel considers there to be merit in accepting TOEFL as an alternative approved measure of English language ability to IELTS. 106 Evaluation of the General Skilled Migration Categories

112 Pre-Entry IELTS Levels for International Students Three additional problems in terms of English specifically affect international students (potentially depressing their immediate employment outcomes). Institutional English language requirements Firstly, there is evidence to suggest that many international students enter and exit Australian courses at IELTS levels far below the published guidelines: a practice that pipelines directly to ultimate skilled migration. As noted in Chapter Two, an indicative DIMA survey 13 conducted in late 2004 found 43% of China students applying for GSM visas had IELTS scores of Band 5.0 when tested on completion of their Australian qualifications, with students from Vietnam (36%), Thailand (29%), Taiwan (24%) and Korea (23%) also performing poorly (see Table 3.4),. This score lies well below the defined entry-level requirements of virtually all universities, colleges and RTOs, suggesting many vary their selection procedures regardless of published minimum standards. An extraordinary range of language measures may also be deemed allowable for example one regional university listing a page of language alternatives to IELTS. While no research exists on the level of compromise occurring across Australia s export education industry, its likely impact on student achievement within target courses would be significant. IELTS scores and student visa entry requirements Secondly, DIMA definition of IELTS scores for visa issue is based on the perceived level of source country risk, as well as the language requirements of a target course - a questionable policy, in the view of the Panel, allowing entry levels as low as Band 4.0 or 4.5 for low risk VET-sector students compared to Band 5.5 from countries such as China. Realistically, international students entering Australia with minimal English levels could need 18 months or more of training in order to meet defined tertiary or TAFE entry requirements (a 0.5 band improvement on the IELTS scale often taking 4-6 months). Many however will have been issued ELICOS 14 visas for much shorter periods of time. Some reportedly also complete less than the English training prescribed (the provider being responsible to assure this, with DIMA undertaking no additional monitoring). According to informants there can be a serious risk of provider compromise here feedependent institutions permitting enrolment by students in courses for which they are inadequately prepared, allowing the persistence of serious English language deficits to GSM migration. ( If the education provider accepts them, DIMA accepts that advice. ) 13 As explained in Chapter Two this must be regarded as indicative of the situation, since some students were not tested unless requiring 20 English points, and others omitted given the date of their applications. 14 ELICOS = English Language Intensive Courses for Overseas Students. DIMA March

113 Table 3.4: Language Scores of Former International Students Approved (Sub- Class 880) by Major Country of Origin Select Source Country ESL Points: 0 ESL Points: 15 (IELTS 5) ESL Points: 20 (IELTS 6) Total Number Tested China 0% 43% 56% 2,655 India 0% 5% 94% 2,433 Indonesia 0% 16% 84% 1,408 Malaysia 0% 16% 84% 1,113 Hong Kong 1% 17% 83% 863 Korea 0% 23% 76% 474 Singapore 0% 10% 90% 440 Bangladesh 0% 23% 77% 436 Sri Lanka 0% 10% 90% 360 Japan 0% 18% 82% 248 Taiwan 0% 24% 76% 231 Pakistan 1% 9% 90% 224 Thailand 2% 29% 70% 200 Vietnam 0% 36% 64% 200 Source: Adapted from Table 1.10 in Chapter One, based on DIMA data (unpublished) Visa packaging A related problem concerns the trend to visa packaging, in order to guarantee the certainty of course access. Substantial numbers of international students are currently awarded combined English and study packages at their point of entry to Australia, based again on unrealistic assumptions of likely IELTS gains. This allows guaranteed progression to courses in a defined period of time, at whatever level of English short ELICOS training has provided (eg 20 weeks). According to the peak ELICOS body, English Australia, many such students are nowhere near the study target levels, yet their enrolment proceeds. In the organisation s view, It would be to Australia s benefit to open access (to better English training) for international students at point of entry, and tighten it up at the point of entry to the receiving institution. Cultural enclosure during studies (as we have seen) may further inhibit such students development of fluency. The recent approval of a 16 month accelerated Masters by DIMA is likely to compound such problems: no standard definition of summer semesters reportedly yet supplied, allowing a further reduction in the length of Australian training. Test Exemptions Given the difficulty of DIMA influencing access to courses, the Panel believes it is essential to test all onshore applicants at the point of application for skilled migration, regardless of their completion of Australian courses or other claimed exemptions (unless native speakers of English). The provision of extended ELICOS language visas prior to study commencement also merits consideration. 108 Evaluation of the General Skilled Migration Categories

114 Conclusion Overall, the Panel concludes there are multiple reasons why the inferior early employment outcomes secured by onshore applicants may reflect inadequate English language levels. These should be addressed by: Mandating a GSM threshold score of IELTS Band 6.0 rather than 5.0 at the point of assessment for skilled migration; Awarding higher points for possession of advanced English language ability (IELTS 7.0 or above); Exempting only native English speakers from externally validated assessment at the point of transition to skilled migration; and Ensuring all GSM applicants have completed a minimum of two years study in Australia. In the case of trades applicants, a threshold score of IELTS Band 5.5 is recommended, subject to commissioned research to verify the actual employment level of English required (likely to vary by trade field, as recognised in the 1993 list of Occupations Requiring English 15 ) Assessment of Offshore Training and Work Experience As noted at the start of the current chapter, DIMA outsources GSM qualifications assessment to 27 approved regulatory and professional bodies (oversighted by DEST), with Trades Recognition Australia covering 180 VET-sector occupations - the rationale being these bodies legal control of the recognition process (Hawthorne 2005). Given a separate Federal Government review has recently examined this process, minimal operational comment is provided on assessment here. It is worth noting however that high levels of immediate recognition occur in select fields (for example 73% of engineering and 60-70% of all trade applicants). The scale of applications is also strongly influenced by GSM policy. (See Figure 3.2 for engineering applications , compared to overall GSM trends [Figure 3.1].) Lower recognition levels however prevail in many occupations, reflecting differential levels of training, limits to the Australian research base, and/or serious barriers to securing adequate data. In operational terms, DIMA officers are required to use assessment advice by the regulatory bodies in order to determine baseline eligibility for skilled migration. Following this the Department is required to assess the status of subsequent work experience a frequently challenging process offshore, and one requiring rigorous integrity procedures. Brief examples of the problems inherent in credential assessment are provided first, to demonstrate the barriers this can impose on proceeding with skilled migration. 15 In 1993 public safety trades (such as electrician) were defined as requiring testing on the same basis as the majority of professions. DIMA March

115 Assessing the Calibre of Offshore Courses Nursing The Australian Nursing and Midwifery Council commissioned a detailed recent report to facilitate the assessment of nursing qualifications from the Former Yugoslavia Republic (the source of substantial numbers of overseas-qualified nurses in the 1990s). Taking here just one of these new geopolitical nations, as an example, The research process required correspondence and documentation in six languages, across 13 states within the newly constructed nation. Wholesale systemic change was found to have occurred from the commencement of war in 1991, through to the current period when the country is being educationally influenced by the European Union. The nurse education system, it is clear, has been profoundly influenced in the past 20 year period by war, partition and urgent health service shortages - in some periods leading to an abbreviation of study, followed by a reversion to training norms in peace. Despite the ANMC s best efforts, peak nursing bodies have been difficult to locate, with attempts to secure information eliciting minimal or no response. A further complication concerns the division between elite and baseline nurse training institutions (both accorded Registered Nurse status in the past), as well as the relative calibre of university compared to college and hospital RN training. Within such a context it may prove impossible to secure specific detail concerning curricula, clinical training, subjects, level of supervision, or expertise at specific points in time (essential in order to assess the registerability of individual nurses). Lacking such data, competency-based assessment in Australia is considered to remain essential (ANMC 2005). Medicine Methodological barriers such as these affect many other fields, including those closely associated with public safety. In medicine, for instance, the latest available data show courses to have proliferated globally in the past 30 years, principally in Asia (India, China and the Philippines) and Africa. 1,981 such schools were listed by the International Medical Education Directory by March 2005 across 170 nations. Minimal information however is available to date concerning the calibre of curricula, clinical training, student selection, or the length of training across many Asian and African courses (Boulet et al 2005). Within this context the Australian Medical Council has committed significant resources to refining the examination process, including preparing the Multiple Choice Examination to be administered offshore, based on a pooling with Canada of around 7,000 MCQ test items. 110 Evaluation of the General Skilled Migration Categories

116 Barriers to Assessing Claimed Offshore Work Experience While DIMA remains at arms length from the GSM qualification assessment processes, it is directly engaged with checking the value of claimed work experience an increasingly challenging function in the context of international fraud. The prevalence of fraud The Department has made impressive gains in addressing fraud since 1999 (in the Panel s view one of several examples of operational best practice). The Adelaide Skilled Processing Centre handled 10,000 fraud cases in 2005 (many submitted by overseas posts), with skilled occupations accounting for 40% of all referrals. An extraordinary 91% of such cases concerned the calibre of claimed employment (compared to 7% for qualifications), over a quarter related to the trades (28%). The Integrity Branch aims to collect and analyse fraud very effectively the repatriation of cases allowing for comprehensive data analysis, supplemented by overseas post site checks. The latest computer and research-based strategies are used to stay ahead of the game, in a context where fraud always moves to the area of least resistance, and the Department s priority is to analyse trends while simplifying case handling. Integrity initiatives and outcomes Fraud profiles are regularly established, linked to electronic alerts which are immediately circulated to DIMA processing officers. While it is difficult to conduct checks in far-flung places, these are essential to carry out in China for example leading to the discovery of a bogus place of employment, where prompt sheets were stuck to the wall, defining how to give appropriate referee responses to enquiries from Canada versus the USA versus Australia. Specific projects are developed by DIMA to test anecdotal information for example to assess whether fraud in country X is nationally or provincially based, and fairly address this. Additional research probes the effectiveness of phone checks versus site visits by DIMA post officers, and assesses location-specific fraud trends (most recently in Russia, Africa and the Philippines). In close to 17,000 fraud referrals were forwarded to overseas posts and onshore offices by the ASPC, relating to the General Skilled Migration, Offshore Students, Business visas (457 and 459) and Sponsored Visitor caseloads. This represented a 38% increase over More than 2,300 cases of fraud were detected, including 1,238 in the GSM caseload double the level of the previous year, suggesting improved operational effectiveness. An additional 1,111 cases of fraud were detected related to offshore students - China and India levels respectively being 19% and 10%, and the highest overall incidence relating to India, China, Pakistan, the Philippines, and the Middle East. As noted, such fraud may ultimately impact on skilled migration. DIMA March

117 In operational terms Integrity staff define a select trend, analysing the full relevant case-set in order to build an overall picture. Developments by specific occupation, country of origin and other key variables are monitored (including the identity of any agents involved). Some 10% of fraud referrals lead to site visits (rising to 50% in one country), with case officers trained to recognise the impact of changed DIMA regulations on claimed bonus points for experience (including the potential for applicants to make a 60 point claim that gets them over the mark ). Reports are electronically flashed throughout the network, with rogue agents referred to the Agent Monitoring Group in Canberra (charged with passing case profiles to all relevant officers). It is important to note here that DIMA s Integrity staff work on a constructive as well as a negative basis. Best practice is rewarded, for example in relation to migration agents (on whom a comprehensive database now exists). From mid-2004 a new project enlisted agents in China, Thailand, India and Indonesia - all recommended by the relevant post, and willing to commit to a code of ethical practice. Those selected were given a unique 7 digit number, allowing data to be gathered of relevance to monitoring fraud. While terminated if behaving poorly, the majority will be rewarded with priority visa processing (as for lower risk countries) including the future right to e-lodge. This represents a significant commercial and efficiency advantage, with extension of the trial to additional countries about to start. While the majority of fraud cases and site checks relate to claimed work experience, current offshore operational challenges also reportedly include assessment of: The standard of informal sector or industry-based courses reported to be highly problematic in trade fields such as hairdressing and plastering, whether such applications are derived from the UK or from less typical locations. ( The UK is the backbone of current cases We have to check plasterers in family businesses, and mobile hairdressers to see if they have a chair, an appointment book etc. ) The calibre of offshore institutions, including whether these issue the claimed qualifications for GSM applicants. ( The referral process puts the burden back on DIMA to assess in practice actual skills levels. ) Fraudulent bank statements for students and parents (any problems with documentation for two year Australian courses having the potential to contaminate the GSM application process further down the track). 112 Evaluation of the General Skilled Migration Categories

118 E-lodgement of Applications From July 2005 the ASPC introduced e-lodgement for onshore GSM applicants. By late % of all onshore GSM applications were e-lodged, with this process shortly to be extended offshore. The aims here are improved efficiency and informational gains through a virtualisation of the application process, key elements being as follows: Stage 1 = Declaration that the applicant has met all GSM eligibility criteria, possessing the necessary documentation to support their claim. Stage 2 = Provision of corroborative scanned documentation at time of application. The efficiency benefits should be significant, including the potential for applications to be lodged at any time on the net (regardless of location or timezone); automatic generation of a document checklist; capacity to track the application s progress online; and near immediate grant for eligible applicants. Additional gains should include improved consistency in decision-making; automatic links with organisations able to provide direct data inputs (eg IELTS scores); the provision of a client friendly system, designed to guide skilled applicants through eligibility requirements and processing needs, assisted by hyperlinks to external data sources and readily available technical support. Further processes will be automated in the future, with some low risk visas having autogrant facility. Most importantly, in terms of defining patterns of work experience fraud, data will be pooled from an ever expanding set of sources for planning as well as research purposes. Conclusion DIMA s highly centralised Adelaide Skilled Processing Centre handles all GSM applications with the exception of low risk student applications, which are dealt with in Perth. Its repatriated model has improved both uniformity and efficiency in terms of processing, based on an unprecedented level of training and information sharing, while freeing overseas post officers to conduct security checks and other locally-based tasks. The reported efficiency gains have been substantial. In ,711 visas were delivered, 43,079 offshore and 16,632 onshore. Improved numbers of applications have been handled, with a 177% increase in offshore cases and a 185% increase in onshore cases in July 2005, compared to the pro rata average. Fraud detection, particularly related to claimed work experience, has greatly improved. Faster clearance of application backlogs has become the norm, supported since July 2005 by e-lodgement for onshore skill migration applicants. (For example the median processing time for onshore 136 applicants by late 2005 was 4 months, compared to 14 months for the offshore equivalent, where more complex checks are involved.) DIMA March

119 The Panel considers impressive gains to have been made in terms of offshore case handling, in particular through measures designed to improve the integrity, efficiency, and empirical base of the GSM program. These benefits seem certain to be enhanced by the forthcoming extension of e-lodgement to offshore cases. At the same time additional resources will be required to support the posts in their assessment of GSM work experience claims. A number of informants also warn there could be risks in the virtualisation of the application process, in case integrity levels are compromised (eg through scanned documentation fraud). This must be addressed in future operational processes Select Issues Related to Occupational Field (Including Shortages) The Migration Occupation in Demand List As established in Chapter Two, the Migration Occupations in Demand List has unprecedented policy significance in the context of the raised GSM passmark (120 points) and the MODL s point allocation. Established in 1999, the MODL was designed to factor labour market demand back into GSM selection, the aim being to target occupations or specialisations that are in widespread, persistent and ongoing shortage, in fields sufficiently large that increased entry by (skilled migrants) would not lead to surpluses in the Australian labour market. The Department of Employment and Workplace Relations was charged with providing expert advice in relation to demand to DIMA, preparing a list to be updated once (now twice) per year. In formulating the MODL, DEWR assesses the scale of Australian labour market demand in occupations with 1500 positions or more, leaving the needs of smaller occupations to be addressed by the Employment Nomination Scheme. Skill levels are expected to be reasonably high, based on degree, diploma or trade qualifications. Supply profiles by field are developed, drawing on labour market surveys, graduate employment outcomes, current and future growth trends (including demographic shifts), variations of employment demand by state, and studies of the ease with which advertised vacancies can be filled (factoring in the source and perceived standard of recent appointees). Key criteria for inclusion of an occupation on the MODL include: Evidence of a national demand for an occupation (DEWR s skills in demand research); The skill level of the occupation and the existence of an Australian assessment authority; Employment size for the occupation; The unemployment rate for the occupation; and Employment growth in the occupation or persistency of skill shortages. 114 Evaluation of the General Skilled Migration Categories

120 Three issues concerning the MODL emerged in the course of the consultations, to be briefly addressed here: The risk of developing gluts; The calibre of training; and The relevance of MODL lists to regional shortages. The Risk of Developing Gluts MODL applicants are guaranteed prioritisation within the GSM selection process assessed ahead of other applicants regardless of field of qualification (whether bricklayer or accountant), the scale of proven demand (eg doctor versus hairdresser), or the status of provider (Registered Training Organisation, TAFE College or University). In the current policy context moreover, according to a senior DIMA informant, virtually all MODL applicants subject to health and character checks will pass: We do grant visas to anyone and everyone who qualifies for the points test. There is no situation where some applications are never processed or not processed for an inordinate length of time. The median processing time for onshore 136s is 4 months and for offshore 136s it is 14 months. The difference is because of things like character checking which take longer for offshore applicants. We also currently give priority to applicants with a MODL occupation. If we were to introduce another level of prioritisation, what criterion would we use and would it be defensible? From an operational perspective it seems important to question this lack of prioritisation, given Australia s past experience with migration-related gluts (engineering in the early 1990s, and IT in the recent period) (Hawthorne 1994; Australian Computer Society [ACS] 2005; Kinnaird 2005). According to the Australian Computer Society, for example, the GSM had contributed around 16,000 people to the ICT workforce as of June 2004, or 10% of the total labour market in a context of minimal local demand. While this reflected onshore student flows (not the MODL), the GSM tap took time to turn off, despite evidence in that migration was not needed to meet the growth demand for computing professionals, including around 50% new graduates from Australian courses. By definition, the liberal accreditation standards of the ACS itself were a major cause of this problem 16. So was the onshore education industry, with 14,936 new international IT enrolments by 2004 (57% of the total), compared to 2,410 in 1997 (prior to international students immediate eligibility for skilled migration (Kinnaird 2005). 16 The Australian Computer Society accredited onshore Masters degree graduates as programmers when the majority had no professional knowledge of any programming language, and thus limited attractiveness to local employers DIMA March

121 In the context of the 120 point pass mark, the point to make here is that possession of a MODL occupation is one of the key determinants of permanent residence, in a context where DEWR stops short of quantifying national demand by field. The allocation of up to 20 points to MODL occupations, as we have seen, coincided with a rise from 2,413 MODL applications in to 12,986 the following year (primarily from offshore). DEWR currently provides however no estimate of the number of hairdressers required in Australia relative to nurses or accountants a process with an inherent risk of gluts. Within this context, it is worth noting accounting to date has attracted 25% of GSM applicants for , compared to 19% in and 13% in (12,457 people to November 2005). (See Tables , and Figures ) Substantial numbers of international students are also progressing through onshore accounting courses, many likely to graduate in 1-2 years without the requirement for preliminary work experience now applied to new IT graduates who seek MODL points. (See Chapter One) It will be important to monitor such trends in Demand could also potentially surge in the trades, given their recent prevalence on the MODL. In the trades constituted 6 of the top 10 offshore application fields (see Table 3.6). According to Trades Recognition Australia, on and offshore VET-sector demand is proliferating at this time, with many applications derived (according to DIMA and TRA officers) from very informal training systems. Hairdressers, for example, did not feature in the top 10 GSM list in Their numbers rose rapidly to 668 in , and 335 from July to November While these are primarily offshore applicants to date (89% in ), informants state substantial additional numbers are training as hairdressers onshore. Like the professional bodies, trade associations have limited resources to assess overseas institutions, with TRA building up infrastructure as it handles 14,200 applications per year. It is important to affirm DIMA and DEWR are confident the recently implemented six monthly monitoring process will prevent the development of any MODL-related labour market gluts. Expanding the range of occupations should also diminish the risk. Given the scale of accounting applications in process however, and the onshore study pipeline effect, the Panel believes it is appropriate to remove immediate access to the MODL for onshore applicants. To ensure former students are job-ready, they should also be given incentive to complete the post-qualification labour market training the Panel has proposed (a process as relevant to trade-qualified applicants as for those in the professions). 116 Evaluation of the General Skilled Migration Categories

122 Figure 3.2: The Impact of Skill Migration Changes on Credential Assessment Applications to Engineers Australia, by Month ( ) Applications by Month January February March April May June July August September October November December The Calibre of Training in Select MODL Fields There are clearly excellent research findings associated to date with the MODL. According to Richardson (2005), the LSIA 3 provides strong validation of its selection effectiveness in relation to offshore applicants. Within 6 months of arrival, 71% of skilled PAs with MODL occupations report using their highest qualification often in their Australian job, compared to 51% of other GSM migrants. Substantially higher proportions earn $962-$1499 per week (ie relatively good incomes). As demonstrated by LSIA 2, MODL Principal Applicants are also more likely than other skilled migrants to increase their salaries within the first 18 months of settlement (49% compared to 42%). By definition, however, the positive LSIA 3 employment outcomes linked with the MODL occupations above reflect the fields prevailing in a period when just 4 trade qualifications were listed (hairdresser, cook, refrigeration & air conditioning mechanic), and the MODL list was profession-based (IT, accountant, hospital pharmacist, retail pharmacist, physiotherapist, registered nurse, midwife, mental health nurse, sonographer, radiation therapist, with IT shortly to be extracted). (See Table 3.7.) Caution should therefore be taken in assuming these LSIA 3 findings will be replicated in the period ahead, in a context where the range of MODL occupations has expanded and transformed. DIMA March

123 Concern was expressed by a range of informants at the quality of some MODL fields now involved not a criticism of the trades per se (3-4 years training with supervised practice) but inclusion of the slighter technical fields. Three issues were raised in relation to this: That the body of knowledge could fall well short of the intended 60 point occupation threshold (eg in hairdressing and bricklaying); That the calibre of offshore and onshore training as well as supervised practice in such fields could be very difficult to assess sited in the less formal sectors, with minimal data available concerning offshore providers (even in the UK), and the quality of Australian providers sometimes in question; and That a number of MODL fields seemed appropriate to reserve for Australian Welfare to Work participants, rather than imported labour. Table 3.5: Top 10 Nominated Occupations (Applications) and , Total GSM Cases Occupation Cases % Occupation Cases % Accountant 3, Accountant 5, Systems programmer 3, Systems programmer 3, Applic/analyst programmer 1,960 7 Applic/analyst programmer 1,551 5 Systems manager 1,000 4 Registered nurse 1,421 5 Registered nurse Systems manager Cook Hairdresser Building & eng professional Building & eng professional Marketing specialist Computing professionals Business/ info professional Cook Mechanical engineer Business/ info professional Source: Adelaide Skilled Processing Centre, DIMA, December Table 3.6: Overall Top GSM Nominated Occupations (Applications) in the MODL Offshore ( ) MODL Nominated Occupations Cases % 1. Accountant % 2. Registered nurse % 3. Hairdresser 597 7% 4. Toolmaker 432 5% 5. Motor Mechanic 359 4% 6. General Electrician 347 4% 7. Fitter 288 3% 8. Civil Engineer 287 3% 9. Metal Machinist (First Class) 247 3% 10. Chef 202 2% Source: Adelaide Skilled Processing Centre, DIMA, December Evaluation of the General Skilled Migration Categories

124 Figure 3.3: Top 5 GSM Onshore Nominated Occupations per Month (Applications), Source: Adelaide Skilled Processing Centre, supplied December 2005 Figure 3.4: Top 5 GSM Offshore Nominated Occupations per Month (Applications), Source: Adelaide Skilled Processing Centre, supplied December 2005 DIMA March

125 In hairdressing, for example, 2 years training is currently the norm, with competencies likely to include maintain a safe clean and efficient work environment, schedule and check-out clients, sell products and services, prepare clients for salon services, coordinate salon tasks, treat hair and scalp, dress (style) hair (National Training Information System 2006). The following comments were typical of operational officers handling such applications: It would be fine if in future Australian Qualification Framework (AQF) 3 qualifications were not on the MODL list there should be consistency about what AQF3 qualifications in relation to 60 point occupations on the MODL mean! It takes 6-12 weeks to achieve some competencies on the AQF3, whereas an automotive mechanic needs at least 3 years. There s no mechanism in the selection process to stop disproportionate numbers of people applying in a few fields International students are looking at the entire repertoire of courses on offer and may well choose the cheapest easiest course, with the Registered Training Organisation sector surging. International students in Australia may work at lower skill levels than the level typically required in industry if they flow through to skill migration, will employers value this level of practical training? Trades Recognition Australia introduced 900 hours (work experience requirement) to try to ensure proper quality of training but in essence the 900 hours are being provided through the (same) college in-house training. It s nothing like a proper commercial business in many cases. Table 3.7: Migration Occupations in Demand List by Select Date ( ) Year Professions Trades and Vocational Occupations 1999 (June) IT, Accountancy, Physiotherapist, Registered Nurse, Sonographer Boilermaker, Machinist, Pastry Cook, Refrigeration & Air Conditioning Mechanic, Welder 2002 (Oct) IT, Accountant, Hospital Pharmacist, Retail Pharmacist, Physiotherapist, Registered Nurse, Midwife, Mental Health Nurse, Sonographer, Radiation Therapist Hairdresser, Cook, Refrigeration & Air Conditioning Mechanic 2005 (Nov) Accountant Civil, Mining, Petroleum, Chemical Engineers General Practitioner, Anaesthetist, Dermatologist, O&G, Ophthalmologist, Emergency, Paediatrician, Pathologist, Psychiatrist, Specialist Physician, Radiologist, Surgeon, Registered Nurse, Midwife, Mental Health Nurse, Dentist, Dental Specialist, Hospital Pharmacist, Retail Pharmacist, Occupational Therapist, Physiotherapist, Speech Therapist, Podiatrist, Radiographer, radiation Therapist, Nuclear Medicine Technologist, Sonographer Computing professionals specialising in CISSP, E- commerce security, network security, SAP and SIEBEL (added by January 2006) Chefs, Fitter, Metal Machinist, Toolmaker, Metal Fabricator, Welder, Sheetmetal Worker, Motor Mechanic, Automotive Electrician, Panel Beater, Vehicle Painter, General Electrician, Electrician, Refrigeration & Airconditioning Mechanic, Electrical Powerline Tradesperson, General Electronic Instrument Tradesperson, Electronic Equipment Tradesperson, Carpenter & Joiner, Fibrous Plasterer, Bricklayer, Solid Plasterer, General Plumber, Pastrycook, Cook, Cabinetmaker, Hairdresser, Furniture Upholsterer Source: Adapted from tables prepared by Department of Employment and Workplace Relations (2005) 120 Evaluation of the General Skilled Migration Categories

126 Within this context the Panel considers it appropriate for DIMA to review the MODL occupations, including the level of points assigned to fields associated with relatively low bodies of knowledge. Sixty point occupations were intended to be highly skilled, based on completion of extensive training and/or work experience. By December trade or related occupations were defined as 60 point occupations, including bricklayer, floor finisher, general gardener, nursery person, signwriter, leather goods maker (etc). We believe this categorisation should be reassessed, leading to redefinition of a range of fields as 50 point occupations. The Relevance of MODL Lists to Regional Shortages A final operational point concerns the appropriacy of applying the MODL list to regional labour market planning, in a context where States and Territories have emerged as keen players in relation to skilled migration, while lacking expert labour market modelling infrastructure. South Australia, for instance, has established a State population policy designed to attract and promote skilled migration, with the aim of securing its 7.5% national share of skilled migrants (up from 4%), by 2008 totalling 2,800 skilled migrants and 600 business migrants per year (with China and India regarded as core markets). Western Australia has courted skilled migration since 2004, viewing labour market shortages as entrenched rather than cyclical, in a context where out of 87 people who come to WA, 80 leave. The government aims to lift annual labour force growth from 20,000 to 50,000 a year (including 2,500 skilled migrants), with a broad range of skills accepted based on consultation with the regions. Victoria intends to increase the uptake of State-specific and Regional Migration initiatives (through) an increased number and greater retention of migrants per year, adopting a whole of government approach to encouraging the settlement of migrants and humanitarian entrants (Commonwealth- Victoria Working Party on Migration 2004). Like other States it has developed considerable expertise in the past decade: attracting 24% of skilled migrants in (4,146 people) compared to 18% in ; forming Business Migration, Skill Migration, Overseas Qualification, and International Education Units; sponsoring around 1,000 skilled workers per year; and supporting an increasing range of settlement programs. The State simultaneously aims to remain Australia s premium international student destination. Within such dynamic contexts States affirm the need for viable information concerning labour market supply. As stated in Chapter Two, a number believe they should have a role in identifying local skill shortages because they (have) a better grasp over these circumstances than the Commonwealth authorities a view in line with contemporary developments in Canada, where the national government is moving away from occupational specificity while provincial governments become progressively more involved. DIMA March

127 By definition however the Department of Employment and Workforce Relations brief from DIMA is to research national rather than State or Territory-specific demand. According to DEWR, it must be noted that: DEWR has no designated role in relation to State or Territory skilled migration schemes to date. It cannot endorse the application of the MODL list to regional recruitment, to which its methodology does not apply. While it has a capacity to provide labour market advice to DIMA on the composition of such lists, and to advise State and Territory Departments on preferred methodologies, such an extension of its role would need to be sanctioned. Given the growing participation of States and Territories in regional skilled migration, and the reported risk of inappropriate use of the MODL, the Panel believes it is important for DEWR s brief to be extended. This should assist with reducing the unemployment risks associated with inappropriate location. We further believe it is appropriate for a limited review to be conducted of this and select other issues related to the MODL, including examination of the feasibility of including on the MODL solely those occupations where a persistent shortage would be likely to cause difficulties to firms, or impede the employment of other workers. 3.6 Conclusion This chapter argues the case for addressing select operational issues related to skilled migration. The next chapter explores the extent to which contemporary Australian policy differs from that prevailing in comparable immigrant-receiving nations, through contrastive analysis of Canadian, New Zealand and United Kingdom case studies. 122 Evaluation of the General Skilled Migration Categories

128 4 International Approaches to Skilled Migration 4.1. National Goals for Skill Migration Australia is not alone in confronting the dilemmas inherent in policy formation. Global migration is a defining phenomenon of the early twenty-first century. Migration currently embraces every category of people - both skilled and unskilled, family and refugee, legal and illegal, permanent and temporary. Short-term people movement is rising markedly, while the accessibility of one immigrant-receiving country may transform the level of demand for another. Given the dynamism of these trends, the few nations left with active immigration programs are constantly being obliged to modify their entry policies, all the time encountering:... difficulties in harnessing their immigration programs to achieve diverse and often incompatible policy goals... to utilise immigration selection procedures to ensure positive outcomes in a diverse range of policy areas: economic development, human resource development, population and foreign affairs (Stahl et al, 1993: xiv). Australia competes for skilled migrants with other western (and non-western) immigrant-receiving countries. This chapter compares contemporary policy approaches with those prevailing in Canada, New Zealand and the United Kingdom the major current alternative destinations along with the US. Based on detailed case studies prepared by Professors Daniel Hiebert (Canada), Richard Bedford (New Zealand) and John Salt (the United Kingdom) appended to this report, the analysis shows common policy trends to be occurring across all four nations, despite considerable diversity in their historical and demographic contexts. Most notably each country has: Prioritised skilled migration in the recent period; Diversified immigrant source countries and skill levels; Utilised points systems designed to improve selection objectivity while maximising employment outcomes; Increased scope for two-step migration (transition from temporary to permanent status); DIMA March

129 Strengthened regional initiatives to encourage more geographically dispersed settlement patterns, in relation to both policy input and settlement options; and Attempted to minimise abuse, through the introduction of more coherent and transparent systems. In Australia, Canada and New Zealand the monitoring of skilled migration outcomes has evolved to an unprecedented degree. This is arguably critical, in a context where governments are at once attempting to liberalise and tighten governance of skill migration - maximising freedom of movement in order to secure desired labour, while reducing the arrival of migrants likely to experience poor settlement outcomes. Shortterm and long-term programs are now the subject of constant scrutiny, with positive results in Australia viewed by government as fundamental to generating ongoing public support. Despite such similarities it is important to acknowledge from the outset strategic differences in the values underpinning skill policy formation in Australia, Canada, New Zealand and the UK. Australia In Australia, since the late 1990s, skilled migration policy aims have been highly utilitarian and expressed in economic terms: to select migrants who can quickly make a positive contribution to the economy, labour market and budget (Department of Immigration and Multicultural Affairs 1999: vii). Based on sustained research findings from the past 20 years, selection strategies have been designed to screen out at point of entry Principal Applicants at risk of deferred labour market entry, in particular those characterised by: Poor English language ability; Unrecognised credentials; Qualification in fields associated with minimal labour market demand; and Older age at time of application. English-speaking background migrants have benefited from this process, rising from 20% of total degree-qualified arrivals in to 28% in , with the UK and South Africa featuring prominently in skilled category arrivals (Hawthorne forthcoming). In , the top source countries for PAs were the UK/Ireland (22%), India (13%), China (9%) and South Africa (6%). In , as we have seen, Australia s skilled migration target was 97,500 people, compared to 33,000 less than a decade earlier, out of a total migration/humanitarian program of 153,000 people. Major source countries for applicants have been the UK (18%), India (15%), China (13%), Malaysia (6%) and Indonesia (5%), with the number of British settlers doubling in just three years, and a 30 per cent 124 Evaluation of the General Skilled Migration Categories

130 rise (in 2005) alone (with) the British now virtually the only Europeans emigrating here (Colebatch 2006: 3). It is worth noting that Australia has not to date developed population policy targets, despite decades of debate on the issue. While the ageing of the labourforce is seen as a threat to productivity, and nation-building remains important, fertility rates are comparatively high in western terms at 1.8 (MacDonald & Temple 2005). Migration quotas are thus established on an annual consultative basis, subject to being cut at times of reduced labour market demand. Canada In Canada, according to Hiebert, immigration policy by contrast is based on a complex set of social and economic objectives, in a nation where fertility rates have fallen to 1.5, and there is widespread belief that migration represents a decisive ingredient in demographic stability. Within this context nation-building is as significant in terms of skilled migration goals as economic outcomes. High migration intakes have been the norm since the late 1980s, based on annual flows equivalent to 0.7 per cent of the population, and supplemented by a further 1.2 million temporary residents (some third of whom plan to work). By 2003 the Minister for Immigration had pledged to admit over 2 million immigrants the following decade, based on a: targeted number equivalent to 1% of the population or a gross immigration of about 300,000 a year. Furthermore, this proposal has been made within the context of admitting this number annually regardless of the state of the current labour market in Canada. It is clear that this government, and the one that preceded it, have both adopted a strong pro-immigration position (Green 2003: 34). Canada s skilled migration target for was 132, ,000 people (compared to 90,000 in the early nineties), out of a total migration/humanitarian program of 220, ,000 (annual intakes as high as 300,000 also being discussed). Skilled migrants represent an increasingly important component of these flows. By 2020, Hiebert reports, it is anticipated migration will account for all of the net growth of the Canadian population and labour force, contributing to a highly diverse workforce of 7.68 million migrants plus 7.12 million Canadians from visible minority groups. The human capital model to date has dominated Canada s selection of skilled migrants - endorsed in its most recent migration review (2002), and standing in sharp contrast to Australia s intensification of screening for select employment attributes. While education level matters for Principal Applicants, field and place of qualification do not, in a context where labour market demand is seen as hard to predict and individuals can expect to have several careers over their working lives. According to Hiebert the prevailing Canadian view is that well-trained, flexible individuals who have experience in the labour force should be able to adapt to rapidly changing labour DIMA March

131 market circumstances. In consequence general rather than specific competence is sought Canadian selection criteria admitting PAs with limited host country language skills, non-recognised qualifications, and in fields of minimal labour market demand on an equal basis to those with more immediately sought after attributes. This trend is the reverse of the Australian experience over the last 15 years. Hiebert confirms Canadians strong overall support for large-scale migration. At the same time he notes rising public and government concern at the worsening economic outcomes achieved by arrivals in the past 10 years, including evidence that the migration system may be out of synch with the labour market, with Canada ignoring and therefore wasting the human capital of newcomers. While it is unclear to date the extent to which Canada s January 2006 change of government will impact on Liberal government policy, it is worth noting that the Conservative Party election platform included a commitment to pre-assess foreign credentials and experience, while work(ing) with the provinces and professional associations to ensure foreign-trained professionals meet Canadian standards while getting properly trained professionals working in Canada quickly ( 2006). A public policy forum is scheduled for Toronto in March 2006 the potential being for more immediate employment outcomes to become a policy focus. New Zealand Immigration has been regarded as an essential rather than a discretionary choice in New Zealand since the 1840s - a matter of demographic viability in the contemporary age of transnationalism where, according to Bedford, the conceptual boundaries between temporary and permanent migration have become very blurred. As noted by Vertovec, migration may no longer even be the most accurate term, given its connotations of permanency or long-stay, in a context where the movement of highly skilled persons tends to be intermittent and short term (Vertovec 2002: 2; Hugo 1999). Labour diasporas, such as those from China, India or New Zealand, are often now based on triadic relationships between: a) globally dispersed yet collectively self-identified ethnic groups, b) the territorial states and contexts where such groups reside, and c) the homeland states and contexts where they or their forebears came (Vertovec 1999: 3). Between 1955 and 2004 New Zealand s net population gain was 208,000 people out of a total 2.3 million arrivals. Sustained outflows of New Zealanders to global destinations are the norm, including to the other western immigrant-receiving countries considered in this chapter. By ,000 of New Zealand s 4.2 million population were resident in Australia, attracted to the larger economy and labour market on the other side of the Tasman. While fertility rates for Maori and Pacific Islander groups remain high, in skill terms this emigration seems certain to exacerbate New Zealand s loss of complex 126 Evaluation of the General Skilled Migration Categories

132 problem solvers those tertiary-qualified workers deemed likely to give the economy a competitive edge (MacDonald & Temple 2005). In Bedford s view Filling the skills gap in these areas (in New Zealand) will therefore rely more heavily on immigration, and possibly the international student market, at least in the short to medium term. While employers are challenged to intensify the attractions of work to keep locals, the government is attempting to secure a net gain of 10,000 immigrants per year - despite New Zealanders reported reluctance to embrace migration on a Canadian or Australian scale (eg for environmental reasons), and the lack of any national population policy. In New Zealand s migration/refugee quota was 48,815 people, the majority (29,826) selected through permanent skill categories. From February 2006 progressively stronger weighting will be placed on highly skilled applicants (particularly those with New Zealand job offers), with skilled migration quotas also raised (Immigration New Zealand 2005). The domestic policy context remains complex, involving debate as to whether immigration policy should be linked to the labour market situation or to other factors, and whether the emigration of New Zealanders should be seen as a problem or as an advantage. United Kingdom In sharp contrast to Australia, Canada and New Zealand the United Kingdom has no history of nation-building through migration The UK according to Salt has never had a planned immigration program, has never had quotas and has not set out to attract permanent migrants until very recently. Successive UK governments remained largely indifferent to labour migration ( the Cinderella of migration policy), concerned from the 1950s to address challenges related to family reunion and the integration of ethnic minorities. When the Blair government was elected in 1997 it inherited a system designed to reduce immigration to the irreducible minimum, in a context where the management of migration-entry paths was haphazard, multiple ministries were involved, and asylum seeker demand increasingly dominated public interest. In terms of labour migration UK interest lay in temporary rather than permanent worker flows. Lacking any highly integrated and linked set(s) of programs and categories, until the current period there was almost no attempt to orchestrate the administration of the main routes of entry (such as labour, family, asylum and students). Skilled workers typically arrived as temporary entrants, entitled to stay for up to 5 years. Numbers fluctuated annually, reflecting demand (eg 30,000 approvals in 1990 versus 89,173 in 2004). Though tardy this scheme was perceived to be fairly effective, with employers obliged to demonstrate need, and offer conditions compatible with those available to locals. By the late 1990s however the Blair government began reviewing its labour migration policy, in advance of the release of several reports suggesting a positive association DIMA March

133 between the presence of skilled and enterprising workers and fiscal benefits in the global economy 17. By 2000 there was rising national support for better coordinated and higher skilled intakes, despite a lack of corroborative data. In 2002 a new uncapped points-based category, the Highly Skilled Migrant Programme (HSMP), was developed to enhance domestic labour supply. By it was generating 24,000 applicants per year - allowing skilled workers entry without a domestic job offer, plus the potential to convert to permanent resident status should they succeed (two-step migration). It should be noted here that HSMP arrivals are minuscule compared to European Union (EU) flows, or other measures designed to recruit temporary workers. EU membership creates scope for unpredictable labour growth, regarding which there is (again) a lack of accurate data. By 2005 an estimated 487,000 EU/EFTA nationals were employed in the UK (compared to million foreign nationals working overall 18 ). In the context of the EU s free movement of labour, and the 10 state Eastern Enlargement of May 2004, the UK government had rejected the transition period adopted by most other countries, choosing to open its labour markets to A8 nationals in the early period, while retaining the right to close down flows should they harm the indigenous workforce. The ultimate scale of this EU migration is simply unknown. Judging the Efficacy of Skill Migration Programs: Data Availability As demonstrated above, Australia, Canada, New Zealand and the UK have diverse backgrounds and motivations in relation to skilled migration differences certain to affect national assessments of success in relation to outcomes. While labour force supplementation is central to all four, early and appropriate economic contribution of migrants has increasingly dominated policy formation in Australia, in contrast to nationbuilding in Canada, and demographic equilibrium in New Zealand. Australia and Canada have longstanding investment in both the data and personnel to monitor skilled migration policy outcomes, with expertise located in the public and academic sectors. Canada for instance monitors migration results through analysis of its five yearly Census (as does Australia). It has a longitudinal taxfile database, allowing the tracking of PAs employment outcomes by immigration category for up to 20 years (the Immigration Data Base [IMDB], established since 1980). It has invested in the Longitudinal Survey on Immigrants to Canada ([LSIC] based on Australia s Longitudinal Survey of Immigrants to Australia, with the first Canadian data collected from 2000/01). New Zealand similarly has Census data, plus a Longitudinal Immigration Survey: New Zealand (first data to become available in 5-6 years). All three countries comprehensively monitor population arrivals and departures, of relevance to both temporary and permanent resident flows. 17 The findings in these papers were contested by others, according to Salt. They were used to justify the opening up of labour migration by presenting some evidence that economic migration was a good thing million foreign nationals were resident in the UK at this time overall. 128 Evaluation of the General Skilled Migration Categories

134 Skilled migration policy in the UK, by contrast, developed in an information vacuum according to Salt (though this is now changing). There was minimal assessment of impacts on the UK, little curiosity from academics or government, plus a dearth of arrivals or departure data (including estimates of EU worker flows). Little is known of the complex interplay of language ability, skill level or labour market demand on migrants employment outcomes, quite apart from the impact of country of birth or training, or the variability of patterns over time. The UK, Salt concludes, is in the early stages of quantifying the effects of migration as a whole, let alone breaking them down according to skill categories and routes of entry a tough context for judging the efficacy of any new program Current Skill Migration Programs Compared Australia As detailed in Chapter One of this report, Australia selected 120,060 people in its migration (non-humanitarian) program 19, including 77,880 skill, 42,000 family, and 13,200 refugee/ special humanitarian entrants. High levels of temporary migration have also long prevailed. For example in ,124 long stay business entry visas were issued to skilled temporary workers (a rise of 6% from the previous year). Computing professionals 20 dominated in employer-nominated categories (17%), followed by nurses (12%), managers (11%) and accountants (3%) (Department of Immigration, Indigenous and Multicultural Affairs 2004: 67-8). Developments such as these in Australia have been facilitated by the significant streamlining of temporary migration which has occurred since According to a recent study, The rise in long term visitors with work rights in Australia reflects decisions on the part of successive Australian governments to assist employers to recruit skilled staff on a temporary-entry basis. Since 1996, employers can sponsor as many skilled persons for identified jobs as they wish, without a need to test the Australian labour market situation, or to have the sponsored person s credentials first vetted by Australian accrediting authorities (as is required of skilled migrants entering under the permanent skilled program) (Birrell et al 2005: 14). This liberalisation of temporary entry is continuing the most recent Australian measures including a strong regional employment focus. Temporary schemes provide important insight on employer preference, signalling the types of workers deemed most immediately employable. Over time, sponsoring employers in Australian have demonstrated a profound preference for ESB professionals. In the Employer Nomination Scheme for instance, which requires full-time positions to be available for at least 3 years, major countries of origin in the recent period have been the UK/Ireland (35%), India (10%), the US (7%), South Africa and Japan (5% each). Working holidaymakers 19 Minimal detail is given here given the level in other chapters. 20 Employer demand for temporary computing professionals remained high in , with 2,808 new arrivals. DIMA March

135 represent a further important source of temporary workers with lower skills sets: 104,353 Working Holiday Maker visas were granted in , with the UK (29%), Ireland (12%), Korea (17%), Japan (10%) and Germany (10%) dominating (Department of Immigration and Multicultural and Indigenous Affairs 2006). How do Australia s skilled migration initiatives compare to the permanent and temporary programs operating in competitor countries? Canada Permanent residence migration As noted earlier, Canada is committed to high level migration intakes, with skills clearly prioritised regardless of national economic cycles (Massey 1999). While the family category dominated in the early nineties, the current targeted mix involves a ratio of 60/40 in favour of economic migrants. In 2005 the government aimed at 132, ,000 economic category arrivals (skilled and business workers, along with dependents), out of a permanent migration intake set at 220, ,000. (See Table 4.1.) Migration quotas are established annually following provincial/ territory consultations, with provinces providing settlement services, and Citizenship and Immigration Canada in general governing selection and admission processes. According to Hiebert it is important to note in relation to this the growing agency of the Canadian provinces. Since 1978 the Quebec government has been entitled to select workers in addition to other immigrant groups, placing a stronger focus on provincial retention and French language skills than is the norm. Regional autonomy has further expanded in the past decade, through the development of additional permanent and temporary resident Provincial Nominee programs supported by the Federal government (a process with parallels to recent regional schemes in Australia). In 1998, for example, the British Columbia Provincial Nominee Program was established - a quota-less program aimed at encouraging the BC migration of highly skilled workers in strategic occupations supported by business sponsors, as well as entrepreneurs assessed by net worth, minimum investment, and minimum number of jobs to be created. This program mirrors a number of Australian regional initiatives. As with Australia, profound changes in migration source countries have occurred in the past four decades, with the longstanding global pattern of migration to Canada turned almost completely upside down. The proportion of new arrivals derived from Europe, the UK and the US dropped from 85% in 1966 to just 21% in 2004, the year by which 47% of incoming migrants were derived from the Asia-Pacific, 22% from Africa and the Middle East, and 9% from Latin America. Four fifths of all new migrants to Canada are currently from non-traditional source countries an issue Hiebert sees as fundamental in understanding settlement outcomes. A mere quarter undergo premigration points assessment, with just 9% and 3% respectively claiming English or French as their mother tongue (despite 60% having some host country language facility ). 130 Evaluation of the General Skilled Migration Categories

136 Simultaneously there has been increased focus on highly educated arrivals across all categories, with some 370,000 university graduates accepted by Canada between 1995 and In consequence Canada (like Australia) now includes exceptionally high proportions of overseas-born professionals in the majority of professional fields, including 51% of all IT professionals (compared to 49% in Australia), 50% of engineers (cf 48%), and 35% of doctors (cf 46%) (Hawthorne forthcoming). Engineers, followed by IT professionals and management/ commerce professionals, have dominated recent skilled PA arrivals to Canada. According to Hiebert 69% of skilled worker PAs selected by Canada now have professional backgrounds, with 82% claiming some host country language ability - far superior to the immigrant norm. The current points threshold for selection is 67 (raised from 70 to 75 in June 2002, but reduced in 2003 following public outcry 21 ). By the following source countries dominated skilled category selection: China (18%), India (11%), the Philippines (7%), Pakistan (4%) and Romania (4%). Just one English speaking background country featured among the top 10: the UK at ninth (the source that year of 4,015 people). This represented a major policy divergence from Australia, where the level of professional migration from ESB source countries remains strong, with the UK (25%), India (13%), South Africa (5%), and Malaysia (5%) all featuring in the top 5 source countries. (See Table 4.1) While a recent study found minimal differences in the potential migrants targeted by Canada and Australia (with both countries keen to secure applicants satisfying basic language and training requirements), a fundamental contrast in terms of points selection is that no individual selection factor to date is mandatory in Canada, allowing an applicant to compensate for failure against one factor by performing well against another factor (Richardson & Lester 2004: 20-21). (See Table 4.2.) Specifically, Canada has not to date: Required externally validated English and/or French language testing premigration; Mandated pre-migration credential screening for recognition purposes, including in the regulated professions (estimated to involve around 20% of Canada s economic migrants); Factored labour market demand into selection processes (beyond the provision of bonus points for a confirmed job offer); Confined points allocation to prime workforce age; and Has only recently introduced bonus points plus temporary rights to stay for former international students. 21 The introduction of harsher selection criteria is reportedly a highly contentious issue in contemporary Canada, including mandatory pre-migration language or credential screening. DIMA March

137 As previously noted Canada s skilled migration program was last reviewed in Despite modest fine-tuning - the results of which should become evident in the next few years the nation s commitment to the human capital selection model was maintained, based on the selection of migrants with a perceived capacity to adapt plus core capabilities of literacy, numeracy (etc) rather than more tightly prescribed credentials. Based on the Conservative Party s election platform, it seems possible this could be reassessed in the near future. Selection protocol Canada s selection protocol for skilled migrants remains highly decentralised, according to Hiebert, in sharp contrast to Australia s repatriated model. While the Canadian government piloted centralized processing in 2000/01, this was considered to be highcost and inefficient given the number of cases likely to require local verification. A total of 65 missions currently deal with applications, including 31 stand-alone offices that have full capacity to assess skilled worker applications, 11 regional processing centres that also have full capacity, and 23 satellite offices that do not accept applications but can be called upon to conduct interviews with applicants and/or background work in application verification (for example for a Vietnamese application processed in Singapore). In all, 80% of applications to Canada are processed abroad (skilled, family and refugee/humanitarian categories). Skilled PAs are obliged to lodge applications from their country of nationality or residence a requirement often necessitating a trip to the US from candidates who are Canada-based. While in-country applications were introduced in 2005 for select schemes (eg Provincial Nominee Programs), this initiative lapsed in the recent pre-election phase, when the former Liberal government was in caretaker mode. Canada nevertheless monitors Australia s introduction of a repatriated processing model a recent Citizenship and Immigration Canada official sent to study it, and the system open to change in the light of the recent election. Temporary migration trends Complementing the permanent migration policy described above, it is important to acknowledge the significance to Canada of short term worker flows (as for the other three countries examined). According to Hiebert some 250,000 temporary employment visas were issued in 2004, bringing to 410,000 the annual TR total. Foreign workers dominated arrivals (with 99,700 visas), followed by international students (56,600) and refugee/humanitarian claimants (47,000). 22% of all incoming temporary workers were professionals, with the major source countries the USA (17%), Mexico (13%), the UK (8%), Australia (8%) and France (7%). These sources differed significantly, it should be noted, to Canada s permanent skill migration flows (major sources for these in being China, India, the Philippines, Pakistan and Romania). 132 Evaluation of the General Skilled Migration Categories

138 New Zealand Permanent residence migration In the year to June 2005 New Zealand selected 29,826 skill category migrants (including 12,156 PAs), out of a total migration/ humanitarian target of 48,815 people. A recent amendment introduced an additional quota of 3,000 places for , with the overall target rising to 32,000 (Immigration New Zealand 2005). Apart from scale, New Zealand s governance of skilled migration differs in fundamental ways to that of Canada and Australia. Firstly New Zealand is a nation without states, where policy is generated by the Minister of Immigration and Parliament. Secondly there is no official multicultural policy, despite an emerging multicultural reality in a nation that is traditionally bicultural in focus. Thirdly there was minimal support in New Zealand until recently to assist migrants engaged in the settlement process, reflecting a bias until the mid 1980s towards mainly English speaking migrant selection. In 1986 the New Zealand government undertook a substantial migration policy review, the catalyst for accepting migrants from anywhere in the world subject to select human capital requirements. Source countries were diversified (significantly later than in either Canada or Australia). A points system was introduced within 5 years, prioritizing qualifications while permitting low English language skills, and resulting in a massive surge of North East Asian migration (with English requirements quickly raised to stem the flow ). In 1997 the New Zealand government sponsored a national population conference, addressing what Bedford describes as the dismal employment record for Asian migrants admitted under the points system to date, and examining the case for the introduction of settlement services. In 1999 the election of the current Labour government coincided with the start of a quiet revolution in immigration policy - in particular a stronger focus on economic migration (now 60% of the permanent migration target), compared to 30% for family and 10% for refugee/ humanitarian entrants. A new Skilled Migrant Category (SMC) was introduced in New Zealand in December 2003, based on a revised points system, and addressing acute skills needs. Based on permanent as well as temporary migration, the SMC was designed to facilitate transition from work or study to residence, supported by an improved settlement strategy to be progressively phased in. The scale of permanent arrivals remained small: the annual skilled quota (including for business) set at 27,000-30,000, with applicants required to achieve 100 points from September 2005 for selection eligibility from a pool which could change fortnightly - the level of points for automatic acceptance increasing to 140 from February The 100 point threshold applies to the period since September Before that more than 100 points were required. Late December 2005 the Minister announced the points required would increase to 140 for automatic acceptance (Immigration New Zealand 2005). DIMA March

139 Refined in December 2004 to enhance employability and capacity building factors, the Skilled Migrant Category is currently based on a broader than previous definition of skills (including the trades), and provides bonus points for perceived settlement capacity (eg the presence of close family members in New Zealand). Selection criteria are directly comparable to Australia s, including: Pre-migration English language screening (a minimum of IELTS Band 5.0 or equivalent, since raised to 6.5 for Principal Applicants and hence more rigorous than the level currently required for Australia 23 ); Mandatory pre-migration qualifications recognition; Bonus points for former international students with New Zealand qualifications (based like Australia on 2 years minimum study); and Additional bonus points for occupations in demand, job offers, regional settlement and other employment-relevant criteria (with rewards for job offers intensified in the recent policy announcement). International students, as in Australia, were immediately eligible to apply for migration on course completion. By definition, most were highly advantaged in the migration process - characterised by youth, advanced English language ability, fully recognised qualifications, locally relevant training, and enhanced acculturation. Most had good potential to secure bonus points, for example for New Zealand work experience and job offers. The qualified partners of students were also encouraged to work as temporary residents to accumulate the points required to qualify for residence under the skilled migrant category (See Table 4.1). Within the first year of the SMC s operation, Bedford reports, onshore applicants typically achieved 150 points compared to 120 for offshore applicants, with 31% of all selected migrants in consequence years old. As in Australia selection also factored in employer demand - 47% of skilled migrants having occupations on New Zealand s Long Term Skill Shortage List (comparable to Australia s Migration Occupations in Demand List). This list spanned 60 fields by mid-2005 (24 in health, 15 in IT, 10 in trades, and 7 in other professions), compared to an Immediate Shortage List of 108 (facilitating the arrival even of bee keepers, shepherds etc). Perhaps the most important policy trend to note for New Zealand is that the introduction of the Skilled Migrant Category coincided with a major shift in terms of country of origin. In essence New Zealand reverted to its historical norm in , with the UK (49%), South Africa (12%), China (6%), India (5%) and the US (4%) the primary migration source countries. This outcome reflected extensive marketing by 23 According to Immigration New Zealand s most recent Trends report (forthcoming), Skilled/Business Principal Applicants averaged IELTS 6.6 in 2004/05, with Skilled Migration Category applicants averaging 6.9. To the author s knowledge this is the highest such international requirement, only matched by language requirements for registration in medical or health science fields, and select university courses (eg medicine, law, education). 134 Evaluation of the General Skilled Migration Categories

140 Immigration New Zealand in the UK, Europe and the USA for skilled migrants 24, reducing the scale of recently cultivated flows from India and China. The proportion of UK skill migrants, for example, surged from 15% of the total in to 49% in , while representation from China, India and other countries dropped markedly: India from 22% to 5%, China from 11% to 6%, and other countries from 39% to 25%. In summary, Bedford writes, the nature and composition of the skilled migrants approved for residence in New Zealand has been transformed by changes to the points selection system announced in July 2003 and implemented from the beginning of 2004, resulting in a reversion to predominantly white migrants. Selection protocol In terms of selection processes, New Zealand operates a hybrid model at this stage. From July 1997 to December 2005 just over half of migration/refugee applications were decided outside the region, most notably in London (17%), Beijing and New Delhi (6% each), and Singapore (5%). Some 40% of applications were approved in New Zealand, plus 6% in the immediately surrounding Pacific region (3% each in Fiji and Samoa). By London had the lion s share of approvals (18% of all cases, rising to 24% in the first half of , with large numbers certain to be skilled). This was followed by New Zealand processing centres reflecting the importance of on-shore flows (Auckland, Henderson [in West Auckland] and Christchurch approving respectively 13%, 10% and 10% of all cases). Temporary migration trends From July 2004 to June 2005 an additional 82,497 temporary work permits were approved by New Zealand: 10,000 more than in the previous year and triple the number issued in 1997/98. 23% of these were allocated to the UK, 8% to both China and Japan, and 5% to both India and Germany. According to Bedford, temporary visas now represent an integral part of the transition to residence, facilitating two-step migration related to business, special talent, and long as well as short-term skill shortage areas. In particular, it should be noted that the two year open work permit has become a direct pathway to migration for applicants lacking an immediate job offer who might otherwise have had difficulty reaching the points threshold (a process being replicated in Australia, through the November 2005 extension of the Occupational Trainee Scheme). The work to residence requirement has recently been cut from 24 to 6 months (Immigration New Zealand 2005). Students holding graduate qualifications are also encouraged to work while engaged in long term study, a win-win option designed to boost New Zealand s labour supply as well as international education. China currently 24 Australia in 2005 similarly engaged in a series of European Expos in the UK, Netherlands and Germany, as well as one in India. Australia-based Expos targeted current international student enrolments. DIMA March

141 represents the major international student source (44% of enrolments) followed by South Korea (15%), Japan (6%) and the US (4%), with the link between international student enrolments and motivation to migration having been clear for decades (Shu & Hawthorne 1996; Khadria 2001). According to Vertovec, The movement of students should be seen as an integral part of transnational migration systems, not least because the networks they forge often lay the tracks of future skilled labour circulation (among governments there is growing awareness of this, seen in the increasing incidence of national programmes for students recruitment with a specific view towards longer-term or permanent settlement) (Vertovec 2002: 13). Boosting these temporary flows, 31,000 Working Holiday maker visas were allocated for (two-thirds of them taken up) - the UK once again dominating with a third of all arrivals, followed by Japan, Germany, Ireland and Canada. By the scheme s quota is intended to grow to 40,000 people (Immigration New Zealand forthcoming). Immigration New Zealand s Trends Report confirms the power of pre-existing links to subsequent permanent migration. An extraordinary 88% of PAs in had previously had a (NZ) work, study or visitor permit at some stage since July 1997, particularly those arriving as skilled or business migrants (Immigration New Zealand forthcoming). In relation to this Bedford notes that 90% or more skill migrants from South Korea, Japan, Germany, South Africa, the US and the UK had made prior visits, with 31% of those arriving as students or temporary workers becoming residents within 5 years. The scale of temporary flows is now double that of permanent intakes (855,000 compared to 471,800 from 1997 to 2005). Bedford concludes: it is no longer advisable to treat temporary permits as a completely separate category of migration policy. Good employment and settlement outcomes for both the migrants and the host society are critical determinants of the success of contemporary immigration policy, and the work to residence transition provides one very effective route to building the experience and capability required to achieve these outcomes. 136 Evaluation of the General Skilled Migration Categories

142 United Kingdom Temporary to permanent migration? The United Kingdom exemplifies this trend to two-step migration, though data remain unreliable and thin (in marked contrast to that generated by Australia, Canada, and to a lesser extent New Zealand). According to Salt labour migration now occurs through multiple programs including: The Work Permit Scheme: 89,173 issued in 2004 (compared to 30,000 in 1991); The Highly Skilled Migration Programme: 24,000 applications in ; Additional schemes (eg Working Holiday Makers, International Students), contributing to the balance of 1,504,000 foreign nationals resident and working in the UK by 2005; and European Union flows: the source of an estimated 487,000 workers in In principle labour arrivals to the UK are viewed as temporary rather than permanent, with residence typically awarded following successful economic performance (in contrast to flows from EU source countries which are neither planned nor controlled). In the majority of categories up to now employers rather than government have also played key roles, despite Home Office governance of the recently introduced Highly Skilled Migration Programme. (The exception has been the recruitment of overseas health workers, where the government - through the Department of Health and the Treasury - plays a major role as employer and paymaster via the National Health Service.) Off-shore and on-shore recruitment primarily occurs through the long-established Work Permit Scheme: the main mechanism for managing labour immigration, and an employer-sponsored route designed for non European Economic Area citizens. Issued for up to 5 years, work permits allow temporary arrivals to demonstrate their skills in situ, with highly sector-specific recruitment the norm, and health professional (30%), IT (16%), administrative, business, catering and educational sector recruitment dominating by First permission represents an increasingly popular variant of the scheme granted to employers for workers already resident in the UK (for example as visitors), followed by work extension and on-shore change of employment options. Within the current market this favours the selection of associate professionals and technicians (56%), professionals (22%) and managers/administrators (13%), with over a third of all visas going to health workers (36%, reflecting National Health System shortages), followed by IT workers (at 11%), and growing participation by Indian IT workers and Filipino nurses. DIMA March

143 Managed by the Home Office since 2001, the Work Permit scheme s efficiency is reportedly high, aimed at global competitiveness and applicant turnaround within days. In order to define occupational demand, a Shortage Occupation List was introduced from 1991 since governed by Sector Skills Advisory Panels charged with monitoring shortages on a quarterly basis. Six panels currently exist, spanning the health, ITCE, engineering, education, finance and hospitality sectors (despite the removal of all IT-related occupations in September 2002). The Highly Skilled Migrant Programme, as noted earlier, is the option introduced from 2002 to reward (applicants) with significant past earnings and work experience, who are deemed to have reasonable prospects of securing work or establishing a business in the UK. The program was innovative in several important ways. Firstly, it involved Britain s first-time use of a points system. Secondly, no prior job offer was required. Thirdly, permission was granted to applicants rather than to UK employers. Designed to attract individuals with exceptional personal skills and experience, entry is initially granted for a year, with a potential three year extension and ultimate conversion to permanent resident status. Commonwealth countries dominated the 24,000 applications lodged in : India (22%), the US (11%), Australia (9%), South Africa (8%) and Pakistan (8%). To date just one field has been prioritised (family medicine), with applications required to be lodged off-shore. A total of 65 points are currently required for eligibility, the prime differences with Australia s points test being: An extraordinary focus on occupational demand (with 50 points allocated for a sole professional category: general practitioner); The emphasis placed on recent level of earnings (25-50 points - the next most important criterion, along with recent work experience); The number of points allocated for achievement in an applicant s field (25-50 points); and Lack of any specified points for recognised qualifications or host country language ability. Additional UK schemes allow for on-shore labour recruitment: the process, according to Salt, which turns foreigners already living in the country into permitted foreign workers rather than bringing in labour currently living abroad. Current options include those for Working Holiday Makers, innovators, entrepreneurs and investors, plus former international students (primarily science and engineering graduates), for example through the Talent Scotland scheme 25. Salt notes that international students in the UK constitute a potentially important labour pool, given the presence of 319,000 by While little is currently known of their employment engagement or outcomes, growing government interest is evident postgraduate access to professional training facilitated 25 The Talent Scotland scheme allows overseas students graduating in Scotland privileged access to the Scottish labour market this representing the UK s only regional program. 138 Evaluation of the General Skilled Migration Categories

144 through the provision of internships with UK employers, with labour market testing no longer required (in line with Australia s recent liberalisation of the Occupational Trainee Scheme). Current policy developments: the five tier scheme The period ahead in the UK is potentially very significant. In February 2005 a five year labour migration strategy was announced in the lead-up to the UK election, in a context where migration and its control were predicted to become central issues. A key document, Selective Admission: Making Migration Work for Britain, was released in July, the prelude to six months of preliminary stakeholder input, to be followed by detailed plans in 2006 and policy implementation in Alongside liberalisation of labour entry (see below), reverse measures are to be introduced - designed to improve public confidence in the system of control, prevent those who do not meet the criteria from getting into the UK and ensure that those who are not entitled to be in the country leave. This was presumed at the time to be a vote winner. In terms of skills a new five tier scheme is proposed to replace the existing system, designed to allow the integration of a large number of routes into a consolidated program. Based on the abolition of work permits, the onus will be on potential workers to apply for entry or stay, with variable entitlements (such as family reunion) available depending on applicants labour migration tier and hence priority. Specifically, Tier 1 will represent the global competition tier, designed to secure highly skilled individuals to contribute to growth and productivity in other words the points-based Highly Skilled Migration Programme, a route to permanent residence for which a sponsor is not required. Tier 2 will be the skill shortage tier, designed to replace the on and off-shore work permit systems, allowing applicants with job offers to meet defined shortages where an overseas national is necessary, to work for 1-3 years, then potentially proceed to PR. (Innovations include that this scheme would now be points-based, with a job offer required, and possibly some form of labour market testing. Salt notes it is not yet clear whether advertising vacancies across the EEA will be expected and this is something that is under consultation.) Tier 3 will allow for the recruitment of limited numbers of lower skilled guestworkers to address shortages for defined periods of time, before leaving the UK (for example agricultural workers). Tier 4 will facilitate the entry of students an option designed, like the Australian, Canadian and New Zealand systems, to also boost export education. Tier 5 will maintain a range of additional temporary categories with an employment focus (for example visiting workers, people engaged in select development schemes, and youth mobility/cultural exchange ). DIMA March

145 Within the proposed system there would be no overall quota for migrants (especially in tiers 1 and 2). The aim, in Salt s view, would be to target the migrants who are most likely to maximise growth and productivity, with points allocated and weighted according to evidence as to which factors are most closely related to economic success (a process also intended to improve transparency). A dearth of detailed information on the five tier plan, according to Salt, has triggered ambivalent employer response - despite the government aiming to increase the number of highly productive and highly skilled workers in the UK, fill short term shortages and gaps in the labour market, and increase UK exports through enhanced productivity and innovation. Selection protocol In terms of UK selection, as in Australia, candidates would undertake preliminary selfassessment for the relevant tier, followed by lodgement of a formal application backed by appropriate evidence. The aim would be one application process rather than the existing two, in a highly dispersed system. Off-shore applications would be handled by UK overseas posts distributed worldwide, with on-shore applications by the UK-based Managed Migration Directorate (currently split on a 50:50 basis). Caseworkers would assess applications and decide on outcomes, with compliance checks undertaken by post staff as deemed appropriate. Points allocation and extensions would vary between categories, with potential scope for applicants to progress between tiers, facilitating a more integrated management system. Candidates would secure points for variable attributes, for example reaching threshold scores with a verified job offer not on the shortage list by a combination of salary, skills and/or regional need. In marked contrast to the other three countries studied, Current thinking is that salary in a job offer looks likely to be the best indicator of an individual s probable contribution to the UK economy, subject to further evidence-gathering and analysis. However salary assessment is problematic when an applicant has last worked in a very different remuneration context (eg India). Salt notes several potential problems with the proposed system, the focus of current consideration in the UK. The close integration between job, applicant and employer a positive feature of the work permit scheme - would be lost. ( Having made a job offer, the employer is moved from the equation. ). New barriers might be created for transnational employers, with the special knowledge and services provided by HR departments and immigration lawyers in facilitating inter-company transfers forfeited. The proposed global dispersal of caseworkers could create problems for training, data comparison, and coordination, given their scattering across upwards of 150 countries. There might be methodological difficulties in the accurate identification of skill shortages for Tier 2 workers, along with problems related to system coordination and data management (creating the fragmentation the Australian system has worked so hard to overcome). Overall, in Salt s view, the new system is being developed against a research-poor background. Information on how successful migrant workers have been is scarce and there are currently no plans to change this. Hence, decisions with respect to points allocations cannot be made in light of hard evidence of outcomes from past migrations. It could be necessary to review policy decisions as hard data become available. 140 Evaluation of the General Skilled Migration Categories

146 4.3. Points Testing: Areas of Difference Before concluding this international analysis, it is worth summarising key differences in the four countries utilisation of points-based assessment, recognising the relative insignificance of this to date in the UK (selection of around 24,000 people per year out of an estimated 1.5 million resident foreign workers). Australia s goals from the start have been pragmatic in relation to points allocation as far as two decades back to predict an applicant s prospects of obtaining employment and being able to support himself and his family in Australia (Department of Immigration and Ethnic Affairs 1983: 3; Parcell et al 1994). Sixty points were required in the early 1980s to pass this assessment - the greatest number (maximum 25) reserved for immediate employment prospects, with up to 10 points awardable for skills, 16 for pre-arranged employment, 8 for age, 8 for education (completed tertiary degree), and 10 for employment record (if outstanding ). By 2005 Australia s goals were similarly utilitarian the primary difference being the extent to which the government now refines points criteria by drawing on LSIA as well as Census-based research evidence (Richardson et al 2001; Birrell & Hawthorne 1999). Australia s points testing protocol is most directly comparable to New Zealand s (which often reflects Australian models). Canada s human capital model is the softest in terms of entry, but results as we shall see in more problematic employment outcomes. Major similarities and differences between the systems are summarised below, with additional detail provided in Table 2 (eg related to bonus options): It is worth noting in relation to this the extent to which all four nations have adopted two-step labour migration: a longstanding norm for the UK, the newly dominant model for Australia and New Zealand (primarily through on-shore student flows), and the basis of modest preliminary initiatives in Canada. Current bonus options built into points systems encourage this trend, including rewards for local degrees, for temporary regional study, regionally-sponsored employment, postgraduate work (for self or partner), and/or host country job offers. DIMA March

147 Overall points required for skill migration eligibility (points-tested categories) Australia: 120 points out of a possible 175. New Zealand: 140 points from February 2006 out of a possible 185 (previously 100). Canada: 67 out of a possible 100 (reduced in 2003 from 75, following public outcry). UK: 65 out of a possible 220 (reduced in 2005 from 75). Pre-migration host country language assessment Only Australia and New Zealand have mandated pre-migration English language screening for Principal Applicants to date, based on independently validated instruments such as the International English Language Testing System, or a designated equivalent (eg the Occupational English Test for health professionals 26 ; see Hawthorne 1997): Australia s current threshold for English requires PAs to achieve IELTS 5 or above across all four language skills (reading, writing, speaking and listening) - any PAs with lower scores being ineligible to proceed with skilled migration. In New Zealand the threshold score has been substantially higher since November 2002: with IELTS 6.5 required across all four tests, resulting in a current 6.9 IELTS average for approved applicants (INZ forthcoming). Unlike New Zealand Australia allocates skilled migration points for English language ability: 20 for candidates with competent English (IELTS 6) compared to 15 for vocational English (IELTS 5). 26 This test has been used by Australia (including at overseas posts) in 13 health professions since Evaluation of the General Skilled Migration Categories

148 Canada and the UK differ significantly in terms of language testing requirements, as follows: While Canada allocates 2-24 points for host country language ability (English and/or French), this is not a threshold requirement, with test exemptions and a degree of self-report permitted 27. While the UK requires applicants to rate their English on the HSMP Eligibility Assessment Form (eg Good-Vocational, Very Good-Competent ), no points are allocated for language and the significance of English as a hurdle requirement remains unclear. Pre-migration credential assessment and skill level Though all four nations allocate substantial points to level of skill, only Australia and New Zealand mandate pre-migration qualifications screening as a condition of eligibility for skilled migration. Further, In Australia, as we have seen, applicants with recognised occupation-specific training receive 60 points, compared to 50 for general professional occupations and 40 for other skilled fields. New Zealand and Canada award highest points for Masters and PhD qualifications (respectively 55 and 22), followed by Bachelor and Trade credentials (50 and 20-22). Canada is the sole country to allocate points for basic school and postschool qualifications (from 5-15 points). Australia, New Zealand and Canada have all introduced bonus points for completion of host country qualifications (minimum 2 years study 28 ): in the case of Australia 15 for a PhD, 10 for a Masters or upper Honours degree, and 5 for Bachelor, Diploma or Trade qualification levels; in the case of New Zealand and Canada respectively 10 and 5 points. The UK has the most highly differentiated system in terms of skill level: allocating 65 points to an MBA (earned from one of the world s top 50 graduate schools), 30 to a PhD, 25 to a Masters, 15 to a Bachelors degree, as well as variable rewards for Trades or Professional qualifications deemed commensurate with UK credentials. 27 Applicants from English or French speaking countries, who have been educated in those languages, must provide evidence to support the claim. Those from non English or French speaking countries are exempt from testing if they were educated in English or French (an issue which has proven problematic in terms of claims to Australia for testing exemptions). All other applicants to Canada are subject to independent language testing. 28 In Australia a 16 month two year degree with summer semester is now allowed. DIMA March

149 Relevant employment experience (including achievement in the field and earnings) Work experience is the primary variable in UK selection (scored up to 125 points), a factor also highly valued by New Zealand (its major policy divergence from Australia, to be further emphasized from 2006): The UK allocates points for graduate level experience, requiring 5-10 years for older applicants compared to 2-4 years for those aged under 28. Achievement in the chosen field is also important: attracting 25 points for exceptional achievers, compared to 15 for applicants with significant track records. Earnings level in country of origin matter immensely to the UK (deemed indicative of future productivity), with countries ranked category A to E, and high-scale earnings awarded an additional 50 points. (Country A applicants aged 28 years+, for instance, are awarded 50 points for salaries worth 250,000 per annum, reduced to 25 points for 40,000 earnings, the Country E equivalent being 50 points for 21,875 compared to 25 points for 3,500.) Canada mandates a year s full-time work in a field on the National Occupation List as a threshold criteria. It also awards up to 21 points for a maximum of 4 years work in a skilled occupation. Australia to date allocates minor points for experience: 10 for work in a 60 point occupation, 5 for work in any field, with experience waived entirely for former international students (a policy choice, as previously demonstrated, that is problematic for local employers). Occupational demand Occupational demand was found to be highly significant to all four countries analysed: Australia gives 20 points and automatically prioritises the assessment of skilled applicants with fields listed on the Migration Occupations in Demand List (with job offer), or 15 points for MODL applicants without job offers. The UK awards 65 points for applicants with MBAs from one of the top 50 world schools (virtually all in western locations), justified by a lack of high quality management (which is a) weakness in the UK economy (Home Office 2005). The sole other field prioritised is medicine, with 50 points allocated to overseas trained doctors eligible to work in general practice. New Zealand offers multiple bonus points for experience or qualifications relevant to fields in demand (including in skill shortage locations), as well as for New Zealand-based work (see Table 2). The February 2006 policy amendment strengthens this trend. Canada awards 5-10 points to candidates with temporary or permanent local job offers, local experience or arranged work. 144 Evaluation of the General Skilled Migration Categories

150 Age Australia regards age as highly significant to employment outcomes. Skilled Principal Applicants must be aged years, with 30 points awarded applicants 18-29, reducing to 15 in the age bracket. The other countries examined are less harsh on this score: New Zealand accepts PAs from years, the points allocated varying from 30 for young applicants (20-29) to 5 for those aged In Canada no age ceiling has been established - 10 points allocated to applicants years, with those 49 plus forfeiting 2 points from their overall score for each extra year. Age is least significant in the UK, with no defined ceiling or penalty, and just 5 bonus points allocated to applicants under 28 years (those migrating through the Young Person assessment protocol). Spouse skill level and sponsor relationship All four countries value spouse potential in skilled migration: allocating 5 points in the case of Australia (if spouse age, English ability, recognised qualifications and experience appear likely to facilitate work), 3-5 in Canada (dependent on education level), 10 in New Zealand (boosted by occupational shortage issues), and 10 in the UK. Points for sponsorship by relatives however vary significantly among the countries analysed. Australia is by far the most generous to date allocating 15 points for sponsorship by a close relative, and reducing the points required to 110 rather than 120 (creating a minimum 25 point bonus, even lower in select regional locations). By contrast 10 points are allocated by New Zealand and 5 by Canada for relative sponsorship, there being no skill migration bonus in the UK at all. DIMA March

151 4.4. Assessing Skill Migration Policy Outcomes As demonstrated above, Australia s skilled migration selection criteria are relatively tough in international terms, with the exception of its greater latitude on the points required by sponsored relatives. To what extent do such variations in selection criteria deliver superior labour market outcomes? New Zealand The economy in New Zealand is booming, as it is in Australia and Canada the November 2005 quarterly work survey showing an unemployment rate of just 3.4%, with employment as well as earnings steadily growing (Statistics New Zealand 2005). To date however, Bedford states, There have been few systematic efforts to assess the benefits of international migration for New Zealand s economy and society. Assessment moreover remains methodologically complicated by the need to deal with worker inflows as well as outflows (rarely in balance), as well as for potentially short periods of stay. New Zealand s limited research to date suggests popular acceptance for migrationrelated diversity - the rise of the tolerant society despite debate oscillating between invasion and brain drain. It is as if New Zealanders realise that the forces of globalisation must be embraced by necessity in order for the country to maintain a high level of income, despite its small size and peripheral location (Bedford et al 2003a; 2003b). A recent OECD study, according to Bedford, predicts positive outcomes from the current points-assessed protocol - despite some concern regarding the selection of narrowly rather than broadly applicable workforce skills, and the longterm value of the incentives being offered to migrants willing to take up jobs outside the Auckland regions. Results from New Zealand s pilot longitudinal survey suggest good employment levels to be achieved by skiled migrants within 18 months of arrival, relative to family and refugee category arrivals. After 18 months in New Zealand, 84% of Principal Applicants admitted in the skilled/ business migration stream were employed, compared with 52% for those in the family and international streams. The shares unemployed and seeking work at Wave 2 were 3% for skilled/ business migrants and 7% for those in the family/ international streams (New Zealand Immigration Survey 2004: 63). However the policy context to date has been tightly controlled: There is not the mass influx of unskilled workers that are such a dominant feature of immigration to other high income countries It should (also) be noted that New Zealand is going through a long phase of economic buoyancy with high economic growth and very low unemployment. The real test of this newfound tolerance will come as the business cycle will move into a recessionary phase, as it inevitably must in a market economy (Bedford & Poot 2005). 146 Evaluation of the General Skilled Migration Categories

152 United Kingdom Concerning the UK there is even less information - the latest version of the Highly Skilled Migration Programme just released in April 2005, and the number of migrants involved slight. As noted by Salt from the outset, the migration context is totally different the defining characteristic of the UK being it is part of an international political grouping (the European Union) where there is freedom to move between member states to seek and take up work and residence. The HSMP is to date a policy sideshow of little numerical or substantive significance, informed by comparatively poor statistics and almost no information on outcomes that would allow the government to know what works and what does not. Canada The research findings Given such limitations, comparisons in terms of skill migration outcomes are feasible to date solely in relation to Canada the subject of a major separate study by the author (Hawthorne forthcoming). As we have seen, Canada is committed to the human capital model of selection, prioritising migrants with a perceived capacity to adapt, supported by core capabilities of literacy, numeracy (etc) rather than more tightly prescribed credentials. Qualifications and experience are treated as equal, regardless of national origin. This strategy has been maintained in the face of growing evidence on the uneven work outcomes secured by migrants, their differential acceptance by employers, and regulatory body practices based on a rank ordering of migrant qualifications according to the perceived calibre of training systems (see eg Reitz 2005; Sweetman 2004; Hawthorne forthcoming). While host country language facility is critical to work outcomes, the capacity for migrants to self-report English and French level persists, allowing the continued entry of large numbers with minimal host country fluency (Ferrer et al 2004). Within this context Hiebert confirms the past decade to have coincided with deteriorating Canadian outcomes for qualified migrants, who are experiencing more difficulty finding well-paid work now than was the case in the 1970s (with) the narrative of declining fortunes for recent immigrants almost universally accepted in Canadian scholarship. The literature provides consistent evidence that the returns to human capital for immigrants ha(ve) fallen relative to the Canadian-born population, with a worsening evident in the 1991 and 1996 Censes, not much improvement to 2001 (despite buoyant economic conditions), and the incidence of poverty increasing markedly. By % of migrants in the first 5 years of settlement were categorised as poor 2.3 times the rate for the Canada-born. While there is no consensus on the cause of this downturn in aggregate fortunes, Hiebert affirms that the three most prominent DIMA March

153 explanations centre on the human capital of immigrants (relative to the Canadian-born population), institutional practices in the labour market, and the impacts of economic restructuring. Only a small proportion of recent migrants have been filtered in advance by skilled category points assessment, in a context where the scale of Canadian intakes is not aligned to the business cycle. Many professionally qualified migrants, Hiebert states, are simply not well prepared. They face growing competition moreover from highly educated Canadians - a loss of their comparative human capital advantage in a context where 28% of young Canadians possessed university qualifications in 2001 compared to 16% two decades earlier. Migrants country of origin and/or training has been shown to have significant impact on employment outcomes variably defined as a consequence of the legitimate demands of the knowledge economy, human capital differences, and/or discrimination. Those accepted from the major new Asian source countries (such as China, India, the Philippines) are at disproportionate risk of heavy discounting of non-canadian experience by employers. Language represents a critical barrier according to Hiebert the particular form of human capital that seems to matter most, with superior employment and earnings outcomes achieved by principal applicants with host country language skills, correlated further to the general level of economic development of their country. Longitudinal data: employment outcomes for skill PAs compared In relation to these overall findings it is worth comparing Australian and Canadian work outcomes for skilled Principal Applicants within the first 6 months or year of arrival in particular the proportion who have gained positions with professional or managerial status (Hawthorne forthcoming). Table 4.4 reports data for the two most important and directly comparable skill categories for each country, derived from the LSIA for Australia, and from the Immigration Database (IMDB) and LSIC for Canada: the Independent category (equivalent to Other Skilled Workers in Canada); and the Concessional Family/ Skilled Australia- Linked category (equivalent to Assisted Relatives in Canada). In 1994, according to the IMDB, 64% of Other Skilled Workers had found work in their first year in Canada, compared to 57% of Assisted Relatives. Please note that these outcomes exceeded the Australian rates - 57% of Independent and 46% of Concessional Family migrants having found work within 6 months, prior to Australia s 1999 skill migration policy reform (Department of Immigration and Multicultural Affairs 1999). Five years later however early employment outcomes in Australia had improved markedly while Canada s remained constant, despite extraordinary symmetry in the nations economic cycles (Richardson & Lester 2004). In % of Canada s Other Skilled Workers and Assisted Relatives had found work in their first year of settlement 148 Evaluation of the General Skilled Migration Categories

154 (IMDB 29 ). A year later, when 2000/01 arrivals were interviewed for Wave 1 of the Longitudinal Survey of Immigrants to Canada (based on 12,000 cases), 60% of Other Skilled Workers and 36% of Assisted Relatives were found to be employed within the first 6 months. Employment barriers related to language ability and credential recognition were widespread - 44% of skilled Principal Applicants (for example) getting their qualifications assessed post-arrival, but fewer than two thirds of these securing full acceptance (63%). By contrast skilled Principal Applicants in Australia at this time had greatly improved their outcomes - 81% of Independent and 69% of Skilled Australia-Linked migrants finding work within 6 months. Encouragingly, access to high skill professional or managerial positions was common for Independent PAs in Australia, rising from 55% to 60% for recent arrivals by 1999/ This trend did not however apply to Skilled Australia-Linked migrants: their rates of professional/managerial employment relatively low at 32%, and almost certainly reflecting the far lower entry points required by Australia (a 25 point discount ; see discussion in Chapters Two and Three). In line with the literature, the most recently available LSIC Wave 2 data (based on interviews with 9,300 migrants, 6,000 aged 25-44), confirm more positive trends to occur for skilled migrants in Canada following a significant period of settlement (Statistics Canada 2005a, 2005b. Most notably, 90% of skilled PAs had secured some kind of work months after arrival, compared to 78% of recent family and 62% of refugee arrivals; Of those finding work, 75% of skilled arrivals had done so within 6 months (compared to 70% of other employed arrivals); and 64% of these had been in work 18 months or more, compared to 16% for months and 20% for a year or less. Statistics Canada highlights additional encouraging findings for recently arrived skilled Principal Applicants in relation to native-born workers: Considering skilled worker PAs in the age group, the difference between their employment rate and the national average narrowed from 20 percentage points 26 weeks after arrival, to 12 percentage points 52 weeks after arrival, to 8 percentage points 104 weeks after arrival. Among all prime working-age persons, employment rates are highest among those who have a university degree (the status of 87% of skill worker PAs in Canada, compared to 25% of comparably aged Canadians (Statistics Canada 2005a). 29 The IMDB (Immigration Data Base) has allowed longitudinal tracking since 1980 of all arrivals who have filed a taxfile each year, by immigration category and status. Employment outcomes reported for the first year would include migrants 1-12 months resident at that time in Canada, and hence allows a rough proxy to compare with Australia s first LSIA cohort. 30 Unfortunately it was not possible to categorise the level of positions secured by employed economic PAs in Canada for LSIC Wave 1 (as advised by Citizenship and Immigration Canada). DIMA March

155 Australia s program outcomes however exceed the Canadian norm on a range of measures, with further gains evident between LSIA 2 (1999/2000) and LSIA 3 (2005). Most notably the proportion of Offshore Independent and Onshore former students employed in the first six months of arrival stood at 82-83% by 2005; the proportion of skilled PAs speaking English only or best rose from 44 to 54%; the proportion of PAs using their qualifications often in employment grew from 55% to 71%; the proportion of MODLqualified migrants employed reached 85% (compared to 83%); plus Independent and select additional skilled PAs enjoyed impressive salary gains (in the case of Independents earning on average $A1,015 per week). As demonstrated by Chapter Two, six month work patterns are highly predictive of longer term outcomes. In Australia moreover they matter in their own right: immediate employment representing an explicit Federal policy goal, reflecting a determination to select migrants who can quickly make a positive contribution to the economy, labour market and budget (Department of Immigration and Multicultural Affairs 1999: vii). 4.5 Conclusion Global competition for skilled migrants seems certain to intensify in the future, as western and select Asian nations face demographic decline. Within this context governments will seek fish in comparable pools (as stated by Hiebert) educated elites courted with similar aims, but selected by different mechanisms. Australia and New Zealand, as we have seen, have adopted tightly prescribed selection criteria in the past decade, based on pre-migration screening for age, English language ability, occupations in demand, and credential recognition. The aims are clearcut: minimal cross-subsidisation of migrants labour market adjustment, with skilled employment secured in the early period of settlement. This strategy is justified by the research findings, despite a renewed bias towards British-based systems (whether education has been gained at home or abroad). The scale of flows has not been jeopardised, with increasingly positive outcomes secured. Canada s human capital model, by contrast, maintains more liberal entry procedures at the cost of migrants delayed labour market entry, and greater risk of de-skilling (Statistics Canada 2005b; Hawthorne forthcoming). The critical issue in the period ahead will be Australia s capacity to further refine selection procedures without forfeiting the scale or quality of flows. This is certain to represent a major challenge in the looming war for skills, where tactics will be closely monitored by other immigrantreceiving countries. 150 Evaluation of the General Skilled Migration Categories

156 Table 4.1: Major Countries of Origin for Permanent and Temporary Skill Migrants Australia, Canada, the United Kingdom and New Zealand Compared Country Major Countries of Origin: Permanent Skill Categories 31 Major Countries of Origin: Temporary Skill Categories Australia Overall migrant/refugee intake ( ): Skills: 77,880 Family: 41,740 Refugee/ Humanitarian: 13,200 Total: 133,000 ( ) Main skill categories ( ): Skilled-Independent: 41,200 Skilled-Australian Sponsored: 14,500 State Regional Sponsored: 4,100 Main sources for skill category migrants: UK (25%) India (13%) China (11%) South Africa (5%) Malaysia (5%) Canada Overall migrant/refugee intake (2004): Skills: 133,746 Family: 51,500-56,800 Refugee/ Humanitarian: 30,800-33,800 Others: 5,200-6,400 Total: 220, ,000 (2004) Main skill categories (2004): Skilled workers: 112, ,500 Business immigrants: 9,500-10,500 Provincial/territorial nominees: 9,000-10,000 Live-in caregivers: 2,500-3,000 Total: 132, ,000 Main sources for skill category migrants: China (18%) India (11%) Philippines (7%) Pakistan (4%) Romania (4%) Main categories ( ): Short-Term Business Entrants (339,424) Working Holiday Makers (104,353) International students (174,787) Main sources for WHM (04-05): UK (29%) Ireland (12%) Republic of Korea (17%) Japan (10%) Germany (10%) Main sources for International Students (05): China (24%) India (8%) South Korea (7%) Hong Kong (6%) Malaysia (6%) Total temporary visas issued: Around 250,000 (2004) Main categories: Foreign workers (99,700) International students (56,600) Main sources for Foreign Workers: USA (17%) Mexico (13%) UK (8%) Australia (8%) France (7%) Main sources for International Students (2003) Other Asia & Africa (19,356) China (10,165) South & Central America (5,156) Other Africa & the Middle East (5,381) North West Europe 7,636) 31 These figures combine skill category Principal Applicants and dependents. DIMA March

157 Table 4.1 Continued: Country Major Countries of Origin: Permanent Skill Categories 32 Major Countries of Origin: Temporary Skill Categories New Zealand Overall migrant/refugee intake ( ): Skills: 29,826 Family: 13,500 Refugee: 1050 Samoan Quota: 1,482 PAC: 1,491 Total: 48,815 Main skill categories: Skilled/ business migration (27,000-30,000) Main sources for skill category migrants : UK (49%) South Africa (12%) China (6%) India (5%) USA (4%) Total temporary visas issued: 82,497 ( ) Main categories: Labour market tested work permits: 28,317 Working Holidaymakers: 21,025 International students with graduate qualifications: 77,563 Main sources (labour market tested work permit categories): UK (22%) China (12%) India (7%) USA (7%) South Africa (7%) Main sources (WHM): UK (35%) Japan (16%) Germany (11%) Ireland (9%) Canada (5%) Main sources (International Students): China (44%) South Korea (15%) Japan (6%) USA (4%) India (3%) United Kingdom Overall migrant/refugee intake: Immigration targets not established Total skill visas issued: Unknown; scope for temporary workers to convert to permanent residence Main sources for skill category migrants No comprehensive data Estimated foreign nationals resident and working: At least 1,504,000 (2005) Main categories of arrival by year: European Union workers: c487,000 (2005) Highly Skilled Migrant Programme: 24,000 applications ( , no quota) Work permits: 89,173 (2004) Main sources for HSMP skill migrants (04-05): India (22%) US (11%) Australia (9%) South Africa (8%) Pakistan (8%) 32 These figures combine skill category Principal Applicants and dependents. 152 Evaluation of the General Skilled Migration Categories

158 Table 4.2: Points Tests for Skill Migrants Australia, Canada, the United Kingdom and New Zealand Compared ( ) Australia Canada New Zealand United Kingdom Attribute July 2005 September Skill Recognised 60 (occupation-specific training) 50 (general professional occupations) 40 (other general skilled occupations) 25 (Masters or PhD 33 ) 22 (2 or more bachelor degrees or trade credential) 20 (2 year university degree or trade credential) 5-15 (lower school/ post-school qualifications) Recognised 55 (Masters or PhD 50 (Trade/ tertiary) 65 (MBA, if degree from one of the 50 world top Schools) 30 (PhD) 25 (Masters) 15 (Bachelors) TBA (Trades or professional qualifications to be assessed based on equivalency to the above UK qualifications ) Age years 30 (18-29 years) 25 (30-34 years) 20 (35-39 years) 15 (40-44 years) 10 (21-49 years) 2 points less for each year over 49 or under years 30 (20-29 years) 25 (30-39 years) 20 (40-44 years) 10 (45-49 years) 5 (50-55 years) 5 for applicants under 28 years Host country language ability Points allocated 20 (competent English, IELTS 6 average) 15 (vocational English, IELTS 5 average) Points allocated 2-24 (level of ability in English and/or French; not essential for skill migration and no obligation for external validation) No points allocated Since Nov 2002 IELTS 6.5 average a pre-requisite for skill PAs No points allocated Applicants asked to rate their English ability as Good- Vocational or Very Good-Competent in Eligibility Assessment Form, but no advice on how such information might be used (if at all) Host country qualifications 15 (doctorate) 10 (masters or honours 34 degree) 5 (degree, diploma or trade qualification 35 ) Applicants are also required to have at least 17 years equivalent full-time study. 34 Honours degree to be achieved at upper secondary level or higher, and at least 2 years total Australian accredited study. 35 Minimum of 2 years academic study in Australia; from September 2005 minimum of 16 months academic study if summer semester is included. 36 Minimum of 2 years academic study in Canada. 37 At least 2 years New Zealand study required. DIMA March

159 Table 4.2 Continued: Australia Attribute July 2005 Canada September 2003 New Zealand United Kingdom 2005 Recent work experience Achievement in the field Off-shore applicants: 10 (if experience relates to nominated 60 point occupation) 5 (if experience is in any 40, 50 or 60 point occupation) months experience essential, depending on specific skill category. On-shore applicants: Work experience waived for applicants with recent Australian qualifications. Up to 21 points for up to 4 years work experience in a skilled (though not specific) occupation. Additional threshold requirement of 1 year s full-time work experience in a field on the National Occupation List Skilled work experience 60 (>12 months) 50 (<12 months) 50 (current offer) plus Relevant work experience 30 (10 years) 25 (8 years) 20 (6 years) 15 (4 years) 10 (2 years) Graduate level job (dependent on qualification level, age of applicant and calibre of experience) (Exceptional 38 ) 15 (Significant) Recent earnings Based on earnings assessment in past 12 months in country of origin (with income differences by country controlled for by 5 categories). The example below relates to high income nations including Australia (Category A): >28 years 50 ( 250,000) 35 ( 100,000) 25 ( 40,000 <28 years 50 ( 60,000) 35 ( 40,000) 25 ( 27,000) Category E, by contrast, allocates points for income ranging from 2,350-21,875. Occupational demand 20 (if nominated occupation is on Migration Occupation in Demand List, with job offer) 15 (if occupation on MODL with no job offer) 10 (permanent or temporary job offer in Canada) 5 (minimum 1 year work experience in Canada) 5 (arranged employment in Canada) See bonus points (below); from ,000 additional skill places reserved for applicants with NZ jobs or job offers, with work to residence permits reduced from 2 years to 6 months 50 (General Practitioner only, recognised to work in the UK) 38 Exceptional achievement is defined as a tiny number of people who are right at the top of their profession. 154 Evaluation of the General Skilled Migration Categories

160 Table 4.2 Continued: Australia Attribute July 2005 Canada September New Zealand United Kingdom 2005 Regional links 5 (has lived and studied for minimum of 2 years in regional Australia 39 - See bonus points (below) - Spouse skills 5 (if spouse age, English ability, work experience, field and qualifications satisfy selection requirements) 3-5 (education level) 10 (qualification) 10 (Bachelor degree or higher) 10 (Vocational or professional qualification equal to degree) 10 (Current or previous graduate level work experience, without qualification) State/ Territory sponsorship 10 (if applicant is sponsored by an authorised State or Territory body) Select Provincial Nominee Programs in place and expanding - - Relationship 15 (if applicant is sponsored by a spouse of close relative) Bonus points 5 for one of the following: Capital investment Australian work experience Fluency in community language - 10 (qualification in growth area) 10 (qualification in skills shortage area) 5-10 (job, job offer or spouse job offer in skill shortage area or select region 40 ) 5-15 (extended work experience in skill shortage area or select region) 5-15 (2-6 years of NZ work experience) - Points required (eligibility), then selected by ranking. From 2006 automatic acceptance of applicants securing 140 points or more The definition of regional Australia includes state capitals with low populations, eg Adelaide and Hobart. 40 Defined as outside Auckland. 41 Fewer points are required for select regional migration schemes, eg 100. DIMA March

161 Table 4.3: Degree qualified arrivals from English speaking background source countries: Canada and Australia Compared by select fields Period of Arrival Degree-Qualified Canada % ESB Countries Degree-Qualified Australia % ESB Countries <1991 (all fields) Engineers Doctors Nurses IT (all fields) Engineers Doctors Nurses IT (all fields) Engineers Doctors Nurses IT 537,565 (25%) 136,280 15% 27% 25% 2% 154,160 7% (11,477) 3% 13% 5% 3% 257,714 5% (12,762) 2% 6% 4% 2% 347,815 38% (131,803) 24% 30% 56% 21% 70,702 20% (13,999) 11% 22% 38% 11% 116,986 28% (32,777) 22% 30% 43% 18% Source: L Hawthorne (forthcoming), Labour Market Outcomes for Migrant Professionals Canada and Australia Compared, Statistics Canada, Ottawa, Table 10. Table 4.4: Employment Outcomes for Canadian and Australian Skill Principal Applicants Compared 6 Months Post Arrival (Two Major Categories) Canada 1994 (a) 1999 (a) 2000/1 (b) Category Employed Other Employed Other Employed Other Other skilled workers (c) 63.7% 36.3% 64.3% 35.7% 60.0% 40.0% Assisted relatives (d) 56.8% 43.2% 63.7% 36.3% 36.0% 64.0% Total 61.5% 38.5% 64.2% 35.8% 49.9% 50.1% Australia 1993/5 (e) 1999/01 (f) Category Employed Unemployed NLF Employed Unemployed NLF Independent 57.4% 25.2% 17.4% 80.8% 7.6% 11.50% Concessional family 45.9% 28.1% 26.6% 68.9% 16.3% 14.80% Total 51.9% 51.9% 51.9% 75.8% 11.3% 13.0% Notes: a = Calculated from the IMDB database, and only includes those who lodged a tax form. Assumes that years are full tax years.assistedrelatives, Other skilled workers, Other economic, Economic. b = Calculated from the LSIC c = LCIS classification is skilled workers principal applicants d = LCIS classification is skilled workers spouse and dependents e = LSIA cohort 1 (1993/95) f = LSIA cohort 2 (1999/01) Source: L Hawthorne (forthcoming), Labour Market Outcomes for Migrant Professionals Canada and Australia Compared, Statistics Canada, Ottawa 156 Evaluation of the General Skilled Migration Categories

162 5 Options and Recommendations 5.1 Principles guiding recommendations This chapter begins with a statement of the principles guiding the policy recommendations detailed below. These principles have been implicit in much of the preceding discussion. The presumption has been that the objectives governing the 1999 review of Australia s skilled selection system remain the basis of government policy. There has been no statement of policy since that time which would indicate otherwise. However, since 1999 there have been numerous policy initiatives, some of which have had a considerable impact on the numbers and characteristics of the migrants selected under the GSM. Where these developments imply a change in the Australian Government s selection policy, it should be explicitly acknowledged. The terms of reference require the panel to judge the efficiency with which current selection policy is operating. To do this requires a statement of the principles behind this selection policy. The key policy objective driving the 1999 reforms was that Australia seeks to augment its skilled workforce via the intake of migrants with high level vocationally specific skills who can quickly find employment in their occupation. This principle remains in place and is supported by the Panel. The rationale then (and now) was that it does not make much sense to import persons with skills that can be readily provided from within the domestic workforce. On the other hand the increasingly competitive and mobile nature of the international labour market means that most developed countries now have an interest in attracting and keeping highly trained workers. This is because they tend to be in scarce supply, especially in times of economic buoyancy and can be crucial in the ability of some industries to compete in the global marketplace. It was this principle that prompted the establishment in 1999 of the Skills Occupation List (SOL) with its division into 60-, 50- and 40-point categories. The occupations included within the 60-point category covered most of the highly skilled and vocationally specific occupations in demand around the globe. Since 1999, increases in the pass mark for the GSM have meant that the great majority of those selected under the GSM have been confined to this 60-point category. What has changed since 1999 is the growth in the numbers and range of new apprenticeships whereby persons with relatively limited training (compared with that of traditional apprenticeships in fields like fitting and turning) are classified as 60-point occupations. This outcome is not consistent with the underlying policy objective. DIMA March

163 The priority given to vocationally specific high level skills in the 1999 reforms also guided the establishment of points-based selection test. This gave preference to applicants with qualifications in a 60-point occupation, who were young, had relevant work experience, possessed good English skills and whose skills were in demand in the Australian labour market. The Panel believes that these criteria remain an appropriate basis for Australia s selection system. It has, however, recommended some changes to the weighting of particular selection items in the light of its review of the functioning of each of the GSM visa categories. It has also proposed some modifications to the bonus points currently allocated within the selection system. It follows from the above policy objective that the selection system should ensure that the migrants selected under the GSM points test possess high level university or trade training applicable to particular professional and trade occupations. To this end, the reforms introduced in 1999 privileged applicants trained in Australia by granting extra points for those completing Australian credentials and since 2001 by allowing those who applied within six months of finishing their courses to apply from within Australia. For these post-2001 applicants, the occupational experience required of offshore applicants was waived. The expectation was that since these onshore applicants had been trained to Australian specifications, they would be well suited to meet the needs of Australian employers. For reasons outlined in earlier chapters, some of those selected do not meet the training standards originally expected that is of high level professional or trade skills. The recommendations below address this deficiency. A second, key operating principle shaping the 1999 reforms was that the migrants selected should be able to gain employment within their fields of training on arrival in Australia. For this to occur they needed to possess certain key threshold characteristics. These included professional or trade credentials which were accepted in the Australian job market. An alternative perspective is the human capital model, which currently shapes Canadian immigration selection policy. The assumption in this model is that it is generic skills, including education, communication and occupational experience which should determine selection. The Canadian idea is that migrants with the highest human capital are those most likely to be able to flexibly adjust to the labour market of their new country. The Panel does not support this model. It has not worked well in Canada (because it is associated with deferred labour-market entry and underutilisation of migrant skills) and it did not work well in Australia in the 1980s when it influenced Australian selection policy. The Panel s judgment is that it is crucial for the success of the GSM that those selected possess training and experience relevant to the current needs of Australian employers, if they are to secure immediate skilled employment. Migrants who cannot gain rapid entry to the labour market in their fields of training are likely to struggle to ever do so partly because their skills are soon likely to become obsolete. They may require significant retraining (including training to enter alternative fields). This is a serious matter because since 1996 the Australian Government has rarely provided financial assistance to migrants needing labour-market bridging programs, nor provided any other form of income support in the first two years of settlement. 158 Evaluation of the General Skilled Migration Categories

164 Another key threshold requirement for successful settlement is English language communication skills. Though recognized in the existing GSM selection system, the Panel has concluded that there should be further tightening of this requirement. It recommends the establishment of a higher minimum English language threshold requirement and that this standard be enforced across all the GSM visa categories, including the State Specific and Regional Sponsored visas. This measure is in line with current accreditation and practice requirements, including some professions on the Migration Occupation in Demand List (MODL). A third, more or less implicit, principle guiding the 1999 arrangements was that the selection system should privilege applicants whose skills were in short supply in Australia. The Panel agrees that, other things being equal, applicants with skills which employers need ought to be given priority. This is function of the MODL, which gives selection priority to those with occupations on this list. However, there should be a balance between the objective of filling shortage positions and of augmenting Australia s skilled workforce across a range of high level skills. Currently the onshore selection system is functioning such that the MODL designation of an occupation is dominating the selection outcomes. If the selection system functions so as to allow applicants in MODL occupations to dominate the intake (as is likely to be the case with accountants) this violates the diversity objective. It also implies an unhealthy dependence on migrants in the fields in question, perhaps to the detriment of domestic opportunity in these occupations. A more appropriate means of dealing with acute shortages in particular occupations is via employer nomination, whether on a temporary or permanent basis. The current policy of encouraging employer nomination is consistent with this principle. A fourth principle shaping the Panel s recommendations concerns the state of demand for migration to Australia. Australia is a very popular destination, with far more people keen to settle here than can possibly be accommodated in Australia s migration program. Settlement in Australia confers a considerable benefit on the migrant through access to Australia s accumulated capital stock, quality of life and economic opportunity. It is therefore reasonable that the migrants selected possess skills relevant to Australia s needs and that in some circumstances they fulfil certain performance criteria such as living for a period of years in a regional area before the final allocation of permanent residence. In recent years it has been Australian Government policy to move in this direction. There is a case for further such movement. However, the Panel has made only minor recommendations to this effect (mainly in relation to the Skilled Designated Area Sponsored visa subclass). This is because it is too early to make definitive judgements about how most of the state specific and regional visas are operating, given that most have only recently been put in place. DIMA March

165 5.2 Policy implications The greatest challenge to these principles is the operation of the skilled onshore student visa subclasses. There has been an escalation of demand for entry under these visa subclasses since it was decided in the late 1990s to grant points concessions to former overseas students who had completed their training in Australia. By there were more visas issued under the skilled onshore student visa subclass (880) than there were under the offshore skilled independent visa subclass (136). The number of visas issued in the 880 category has grown from 5,284 in to 12,978 in Two occupations dominate the visa outcomes under the 880 visa subclass. In some 40 per cent of these visas were issued to persons nominating computing professional as their occupation and 31 per cent to persons who nominated accounting. To judge by university enrolment trends, the number and share of those nominating accounting in the 880 visa subclass is likely to escalate in the next couple of years. This is because accounting is now a MODL occupation and, as a consequence, an increasing proportion of overseas students are enrolling in accounting courses. There were two concerns about this situation. One is that most 880 visa holders lack any work experience in their occupation and some lack the English language skills employers expect of professional level employees. The other is the vocational skill level of these graduates. As discussed earlier in this report, some graduates lack the vocational knowledge base needed to take on professional level employment in their field. The relatively low proportion of 880 visa holders who have found professional level positions in their fields, as reported in Chapter 2, is consistent with these concerns. Only one-third of overseas students are employed in professional jobs, six months after completion of their course. This is a much lower outcome than that for domestic students as recorded by 30 April in the year following their graduation. The onshore overseas students also report much lower average wages than do recently arrived offshore Skilled - Independent principal applicants and recent domestic graduates. The analysis of the way the current selection system is working in Chapters 1 and 3 indicated that since the pass mark was increased to 120 in May 2005, the achievement of a permanent residence visa under the 880 visa category depends heavily on gaining the 15 points allocated for a MODL occupation. Alternatively those applicants who are young (less than 30), gain 20 points for English skills (by achieving IELTS level 6), with a 60-point occupation and who gain five points for a qualification achieved after a minimum of two years study in Australia can search for an additional five points from some other factor on the selection system. This could be five bonus points for possessing a community language, for having completed six months of work experience in Australia (in any occupation listed on the SOL), for spouse education level, for the transfer of capital or for having studied in a regional setting. The Panel has sought to find alternative mechanisms for determining who is selected. This is not to argue that MODL points or bonus points should be removed from the selection grid. Rather, our judgement is that it is not appropriate that the crucial determinant of who is selected should be based on these factors. It would be far better from the point of view of the value of skilled migrants for the augmentation of 160 Evaluation of the General Skilled Migration Categories

166 Australia s skilled workforce if visa outcomes were determined by employment related factors. These include good English communication skills, the possession of valued vocational skills and Australian work experience in the nominated occupation. This is what the recommendations set out below seek to achieve. They will have the impact of: Removing immediate access to MODL points for applicants who do not have job experience in their nominated occupation. This proposal will mainly affect onshore student applicants. Truncating the range of bonus and other points available to applicants. It is proposed to delete Australian work experience from the list of bonus point factors and to make access to community language points more restricted. A more rigorously defined Australian work experience factor is included as part of the new temporary visa arrangements discussed below. Requiring a higher threshold standard of English for applicants and the allocation of minimum (15) points for English to those who can achieve 6 on the IELTS band (previously 5). To achieve the minimum 15 points applicants will have produce evidence that they achieved 6 on the IELTS band at the time of application for permanent residence or for the temporary visa detailed below. The effect of these proposals will be to reduce the numbers of applicants who will immediately achieve the 120 pass mark relative to the present arrangements. Again, the main impact will on the onshore 880 visa subclass. The offshore 136 visa subclass will be less affected because a higher percentage of successful offshore applicants currently rely on points for specific work experience to take them to 120 points. This arrangement will not be altered by the proposed reforms. Prospective applicants will have new opportunities to gain permanent residence via the proposed establishment of a temporary entry visa which allows a stay of two years in Australia with full work rights after the completion of their Australian qualification. As is presently the case, applicants will normally have to possess Australian qualifications in a 60-point occupation. The threshold entry to this new visa will be generous so as to allow a wide range of former students the opportunity to enhance their labour market readiness. They may do this while on the temporary visa in the following ways: By improving their English communication skills such that they are able to achieve level 7 on the IELTS band. The points for achieving this level will be set at 25. By undertaking a professional year of additional studies in courses accredited by the relevant accrediting authority which will provide vocationally specific training designed to help applicants meet the requirements of Australian employers. By gaining the equivalent of one year s full-time work experience working at the professional or trade level in their nominated occupation. DIMA March

167 In each case the extra points gained from achieving one or more of these steps will normally be sufficient for the student to gain the 120 points needed for a permanent residence visa (subclass 880) before the temporary visa elapses. The proposed reforms will mean that, for many overseas students, the time and financial investment needed to achieve a permanent residence outcome will increase. On the other hand, the option of a temporary work visa after the completion of an Australian qualification (for those who meet its requirements) should add to the attraction of enrolment in an Australian university. This is because it will give students the opportunity to accrue some funds before leaving Australia (should they not wish to seek permanent residence in Australia or be unable to achieve the 120 passmark under the proposed reforms). There will, however, be no extra costs for overseas students seeking an Australian qualification and who intend to leave Australia when they complete their studies. The reforms will also give a major impetus to the study of English language, since most students who can achieve IELTS level 7 (and thus gain 25 points on the English factor) will be able to gain an 880 visa without having to first take up the temporary visa option. If the proposed reforms are to achieve the intended outcome, there will have to be considerable pre-implementation work done by accrediting authorities and university and trade skill providers in the design of professional year courses. Likewise, for those taking up the work experience pathway, extensive safeguards will have to be put in place to ensure that the work experience is with genuine employers (rather than educational providers presenting themselves as employers) and to ensure that the work performed is at the professional or trade level. The Panel is aware that there are concerns about the possible impact of the proposals on the circumstances of domestic graduates in the fields in question. These concerns in part arise from the high level of concentration of overseas student graduates in computing and accounting. If thousands of overseas students who are looking for work experience join the labour market each year, this could depress the labour market in these fields for domestic aspirants. These are legitimate concerns. There is evidence, particularly in the IT labour market that overseas students are already depressing the IT entry level labour market though not the accounting market. The Panel s proposals will not make this situation any worse than it already is. Also the presence of two alternative pathways intensive study of English and the professional year mean that only a fraction of those who gain the provisional visa will pursue the work experience option. In addition, by removing the MODL factor from the onshore assessment process this will remove one of the causes for this enrolment concentration in MODL fields. There will be less incentive for students to enrol in these fields and thus more incentive to choose from a wide range of occupations. 162 Evaluation of the General Skilled Migration Categories

168 5.3 Recommended review of SOL and MODL occupations There is a need for a review of the procedures governing the classification of the occupations on the SOL into 60-, 50- and 40-point categories. Those included in the 60- point category should be limited to occupations which involve high-level vocationally specific skills. As detailed in Chapters 1 and 2, the list of 60-point occupations includes some trades which do not meet these criteria, for example, picture framing and floor finishing. It would be more appropriate if such occupations were defined as 50-point occupations. The effect of this change would be to limit the possibility of persons nominating such occupations gaining the required 120 pass mark. It would also remove them from eligibility for MODL points, since 50 and 40 point occupations are not eligible for inclusion on the MODL. The Panel proposes that there be a review of the principles determining the classification of 60-, 50- and 40-point occupations on the SOL. It proposes that, as a general principle, occupations classified in the 60-point category involve both a) high level academic or trade skills and b) vocationally specific training which is central to employment in the occupation. On this definition, traditional trade occupations like electricians and fitters and turners would remain as 60-point occupations while those with manifestly lower level trade skills would become 50-point occupations. On the issue of 60-point occupations eligible for MODL listing, the Panel proposes that such occupations should be limited to those where persistent shortages are likely to have a negative impact on the Australian economy because they limit employment in other occupations or limit the productive capacity of particular industry sectors. DIMA March

169 5.4 Recommended changes to thresholds and points Current thresholds and points The points test and current passmark required by each visa subclass to be maintained at current levels: 120 points for Skilled Independent subclasses 136, 880 and points for the Australian-Sponsored subclasses 138, 881 and 862 as well such applicants also receive the concession of 15 points for family sponsorship. 110 points for the SIR visa subclass 495 as well such applicants receive an additional 10 points for sponsorship by a state government. Applicants under the remaining subclasses, although not points tested, must all meet the thresholds as specified below unless stated otherwise. These include applicants under the Designated Area Sponsored subclasses 139, 882 and 963, the State and Territory Nominated Independent subclass 137 and the Skill Matching subclass 134. Current thresholds are that the applicant must: Be aged under 45 at time of applying; Achieve a IELTS band score of at least 5.0 for all 4 components of IELTS (apart from some applicants under the Designated Area Sponsored and Skill Matching subclasses); Nominate a skilled occupation on the SOL which fits their skills and qualifications; Have post-secondary qualifications relevant to the nominated occupation; and Meet basic work experience requirements. For those nominating 60-point occupations, the requirement is that the applicant must have been in paid employment in any skilled occupation for at least 12 out of the 18 months immediately before applying; for those nominating a 40 or 50-point occupation, this employment must be for at least 2 of the 3 years immediately before applying. Some applicants may be eligible with less under the Skill Matching and SDAS subclasses. Exemption to the basic work experience requirement is given for those who have studied in Australia for 2 years or more. 164 Evaluation of the General Skilled Migration Categories

170 No changes to thresholds and points have been recommended for: Age; Specific work experience; Regional Australia/low population growth metropolitan areas study and residence; State/Territory sponsorship (SIR visa only); Spouse skills; and Relationship (Skilled - Australian Sponsored visa categories only). English language Changes to threshold criteria The Panel recommends that the threshold level for English language level be raised to a minimum of 6 on all four components of IELTS for all GSM visas (Competent English). However, Vocational English (IELTS score of at least 5 on all four components of the test) may be acceptable in the following case: Tradespersons although a level higher than 5 may be needed in certain trades, such as those where there are public safety issues. This level will be determined through consultation with industry bodies and as a result of additional research. All onshore and offshore applicants (apart from native speakers of English) must undergo a formal test of their English language skills to be granted a permanent GSM visa or a transitional Subclass 497 visa. Justification The previous minimum standard IELTS Band 5.0 fell well below the level required for persons to fill professional level jobs in Australia. IELTS 6.0 is the minimum level necessary for such employment, although there are many occupations where a higher level of English is needed. Most professional jobs currently require extensive contact with customers, suppliers, official authorities and fellow workers thus good communication skills are basic to successful skilled employment (including in the early settlement period). However, with some exceptions, a lower threshold may be appropriate for tradespersons. The 2005 survey of recent migrants provides strong evidence that lower level English proficiency attracts a large penalty, at least initially, in the labour market. DIMA March

171 The Panel considered the case for English language concessions for migrants sponsored by relatives (visa subclasses 138 and 881, 139 and 882) and for the state-specific and regional sponsored visas (subclasses 137 and 495). However, given the importance of English for good occupational outcomes, and the evidence cited in Chapter 3 which indicates that PAs in these visa subclasses show relatively poor labour-market outcomes in the first six months, it was decided that the proposed higher threshold English standard should be applied to these visa subclasses. Changes to the points given for English language ability 25 points for an average of IELTS Band 7.0 for all four components of IELTS with a minimum of 6 on each component. (Under the existing system the maximum points for English is 20 points for those who attained IELTS Band 6.0 or above for each of the four components assessed.) 15 points for the (raised) threshold requirement of IELTS Band 6.0 on all four components of IELTS and for those tradespersons who only meet the lowered threshold of an average Band 5.5 on IELTS. Justification Because communication skills are so important in job outcomes, it is appropriate that the level of English skills should be an important determinant of skilled migration selection. IELTS Band 6.0 is considered the minimum level necessary for an applicant to adequately perform the functions expected of a professional employee in most occupations. Those tradespersons where an average of IELTS Band 5.5 is considered adequate are also allocated 15 points if they achieve this level. This is because any lower point allocation would prejudice any possibility of their achieving the 120 passmark. The allocation of 25 points for those achieving an average of IELTS Band 7.0 is because, in most professional and management settings, it is regarded by employers as desirable, and in some cases as essential (for example medicine and nursing). The allocation of these extra points will mean that most applicants who can achieve this standard will be granted a permanent GSM visa (subject to meeting threshold requirements). 166 Evaluation of the General Skilled Migration Categories

172 The basic work experience threshold The basic work requirement should be the same for all offshore applicants regardless of their nominated occupation and the points gained on the SOL. It is considered that paid employment in any skilled occupation for at least 12 months out of the last 24 months before applying is sufficient to meet this threshold. The new threshold extends the time period over which an applicant nominating a 60- point occupation can gain the required 12 months work experience from the current 18 months immediately before application to 24 months. However, for 40 and 50-point occupations, there is a reduction in the length of paid work experience from the current threshold of at least two of the three years immediately before applying to at least 12 months out of the 24 months immediately before applying. Justification This standardises criteria for all GSM visas and makes it easier for potential applicants and decision makers to understand. It matches the time periods recommended for work experience under the MODL and under the proposed new onshore overseas student pathways (discussed below). The extension of the time period over which the 12 month work experience may occur (from 18 months to 24 months) also takes into account any different work patterns of women. In practice, most offshore applicants need to score points on the specific work experience factor if they are to achieve the 120 passmark, thus there is unlikely to be a dilution of the basic work experience criteria. MODL To receive MODL points, applicants must have work experience of at least 12 months out of the last 24 months in their nominated or a closely related 60-point occupation. (Currently no minimum work experience in the nominated occupation is required.) This will apply to both offshore and onshore applicants when they apply for a permanent or SIR visa. Justification The MODL is intended to give priority to applicants who can fill positions in Australia where employers face a shortage of local applicants. The implication is that migrants chosen in such occupations will have sufficient work experience so as to be job-ready and hence contribute to easing these shortages shortly after entrance to the Australian workforce. This is unlikely to be the case where they have no such work experience. This proposal will have its main impact on persons applying for permanent residence under the onshore overseas student visa subclasses most of whom do not have job experience in their nominated occupation. DIMA March

173 Bonus points Currently applicants are able to receive 5 points for any one of the three factors of Australian work experience, capital investment or fluency in a community language. The recommended changes are: remove access to the five bonus points on the basis of Australian work experience remove access to community language provided on the basis of a qualification gained from a university where instruction was in one of the listed languages. access to bonus points for community language for applicants accredited at the Paraprofessional Translator and/or Interpreter (formerly level 2) standard by NAATI. This represents a reduction in the standard required which is currently Translator and/or Interpreter (formerly Level 3). It is recommended that the following is unchanged: access to points for capital investment Justification The Australian work experience factor is to be replaced by a specific Australian work experience factor which will entitle an applicant to 10 points after 12 months skilled work experience in Australia. This is described below in more detail. Currently the six month Australian work experience points can be gained by employment in any skilled occupation listed on the SOL. If applicants are to gain employment in their nominated occupation, they need work experience in their nominated or closely related occupation. The existing access to bonus points for community language unfairly advantages some birthplace groups whose first degree is in their own language (like most PRC applicants) over those who studied in English (as is the case with most Indian applicants). It has perverse effects in giving preference to migrants whose English may not be sufficient to enable them to practise the skill for which they have been selected. This recommendation will ensure that all persons with a good command of their community language can access the community language bonus points since all will have to be tested by NAATI. However, the standard required has been reduced to the Paraprofessional level (formerly Level 2). Testing by NAATI will ensure that the community language skills held by applicants are at the minimum level of competence for translating and/or interpreting non-specialised information. By this means the selection system will continue to allocate points for community language, but on an equal footing since no group of applicants will be disadvantaged in access to this factor. 168 Evaluation of the General Skilled Migration Categories

174 5.5 Australian qualifications Currently, in order to meet the two year study requirement, applicants must, in the 6 months immediately before the date of making their application complete either: a degree, diploma or trade qualification, other than in English language proficiency, as a result of at least 2 years of full time study at an Australian educational institution whilst they are present in Australia; or more than 1 degree, diploma or trade qualification, other than in English language proficiency, as a result of a total period of 2 years full time study at an Australian educational institution whilst they are present in Australia. Each course of study must be completed at the Australian educational institution where it was commenced. The Panel recommends that the qualification in the nominated occupation must be of at least two years duration, either via two formal study years or a combination of study and practical experience in the field in question. This will eliminate the present provision that persons can hold two (or more) Australian qualifications in unrelated fields in order to meet the two year Australian study requirement. Under the current system, a qualification of short duration is regarded as sufficient to meet the skill level for some nominated occupations assigned 60 points on the SOL. This recommendation will mainly affect persons holding trade qualifications in fields where the period of training is less than two years. For such persons, it is recommended that the two year requirement consist of a training program relevant to the nominated occupation plus practical experience in the nominated or closely related occupation. Justification An increasing number of applicants are doing short duration trade training programs on top of other unrelated qualifications which do not add to their job readiness in the nominated occupation, or meet standard criteria for quality industrial experience. This recommendation will not have any impact on persons trained in the traditional metal, electrical and building trades since these usually require a combination of study and onthe-job training over four years. Its impact will mainly be on fields like cooking, pastry cooking and hairdressing. DIMA March

175 5.6 New pathways to permanent residence for onshore overseas students For some former overseas students the availability of the higher points (25) for English will make it easier to achieve the 120 point passmark. Those who can achieve the passmark through this mechanism or any other combinations of points will, as now, receive permanent residence under subclasses 880 and 881. For such persons, work experience is much less likely to be needed in gaining entry to professional/trade level employment. However, the proposed changes listed above will make it more difficult for some to achieve the 120 point passmark. These changes include the increased threshold English levels, the removal of bonus points for Australian work experience, the removal of access to MODL points for those with no work experience in the nominated occupation, and the requirement of practical experience in their nominated occupations for applicants where the duration of the formal study component of the relevant qualification is less than two years (usually tradespersons). The following new pathways will provide these applicants with an additional set of options which could lead to permanent residence. Applicants who cannot achieve 120 points immediately upon completion of their Australian qualification will be permitted to apply for a transitional temporary visa which will replace the existing the Graduate Skilled visa (subclass 497). This new visa will provide for temporary residence in Australia, with full work rights, for either 18 or 24 months (to be determined by DIMA) from the time of visa grant. In the main, applicants for the visa must have a 60-point occupation. But some with 50- point occupations may also apply. Applicants who nominate a 50-point occupation must either gain 15 points for a PhD (completed at an Australian educational institution after a period of at least two academic years full-time while physically present in Australia) or 10 points for their Australian qualifications. In the latter case, the 10 points must be gained by completion of a Masters or by a Bachelors degree with Honours of at least upper 2 nd class level at an Australian educational institution while physically present in Australia. Prior to completing the Masters or Honours degree, the applicants must have been awarded an Australian bachelor degree as a result of at least one year full-time study in Australia. The total period of full-time study in Australia has to have been at least three academic years while physically present in Australia. This is to ensure that those completing a one year Honours or masters degree have studied in Australia for at least two years while doing their undergraduate degree. In addition, the applicant must have completed the formal two-year Australian qualification (at university, TAFE or private provider including any required practical experience) relevant to their nominated occupation, attain the IELTS threshold of Band 170 Evaluation of the General Skilled Migration Categories

176 6.0, except for those in the trades (should this be acceptable to industry) where a minimum of Vocational English (IELTS score of at least 5 on all four components of the test) may be required, and be less than 45 years of age. Subclass 497 visa holders may apply for permanent residence at any time during the duration of the visa. To succeed they will have to achieve additional points through one or more of the following mechanisms. English language Achieve an average score of Band 7.0 on IELTS, with a minimum score of Band 6.0 on all 4 components of the IELTS examination. This will give an additional 10 points, over the 15 points for the threshold level of Band 6.0 on IELTS. Work experience Obtain the equivalent of 12 months full-time paid work experience in Australia in their nominated or a closely related occupation in the time period granted by the 497 visa. Evidence of earnings (appropriate to the skill level at point of entry for the profession/trade) will have to be provided. The employer must be a legitimate enterprise with an ABN and an established employment record and good previous immigration-related employment history. The administrative arrangements for determining the equivalent of 12 months full-time paid work experience are still to be evaluated. They could include the establishment of a work diary where overseas students who complete periods of work experience in their nominated occupation record this work along with the details and signature of the employer. Ten points will be allocated for those completing this period of relevant work experience. In addition, if the nominated occupation is on the MODL, the applicant will be eligible for MODL points. Applicants with trade qualifications are likely to take this pathway. Professional year For higher education graduates, complete a year of relevant professional training in a postgraduate program additional to the undergraduate or masters level course currently required for accreditation in 60-point occupations. This postgraduate or professional year of study will include curriculum content that has been approved by the relevant accrediting authority. This content will comprise technical knowledge and practical onthe-job experience considered by the accrediting authority, employers and industry bodies to facilitate employment in Australia at the professional level. For example, in DIMA March

177 accounting, it may include courses which the professional accounting authorities regard as essential for full professional status in the discipline. In ICT it could include instruction in programming languages which are in demand by Australian employers. A period of work experience would probably be included in the professional year, depending on advice from industry bodies and accrediting authorities. If the year is completed satisfactorily (and meets the requirements of the relevant accrediting authority set in close consultation with industry bodies and employers), the applicant will receive ten points. Justification Evidence on the employment outcomes of overseas students who have been granted permanent residence indicates that many have difficulty finding professional level employment. The opportunity given to overseas students to improve their level of English, and/or their technical knowledge and/or professional- or trade-level work experience should significantly contribute to their job prospects and to their value to Australian employers. Universities and other providers of English language training and professional year studies are likely to experience a major expansion in the demand for their services in relation to these opportunities. 172 Evaluation of the General Skilled Migration Categories

178 5.7 State-specific and regional-sponsored visas under the GSM umbrella The designated areas determining eligibility for the Skilled Designated Area Sponsored (SDAS) visa subclasses 139, 882 and 863 to be redefined such that they are the same as those for the Skilled Independent Regional subclass 495. These designated areas include all of Australia except Sydney, Newcastle, Wollongong, NSW Central Coast, Perth, Canberra, Melbourne, Brisbane and the Gold Coast. Justification Persons sponsored by relatives in the SDAS visa subclasses currently receive concessions in two ways: no points test to pass and a lower English language threshold criterion. More than half of those visaed are being sponsored by relatives living in Melbourne. Given that the underlying reason for providing points concessions is to attract persons to locations where the Government is anxious to promote settlement (notably regional locations) there does not seem to be any rationale for Melbourne to continue as a designated area in the SDAS visa subclass. The threshold English language requirement for State-Specific and Regional visas to be raised from IELTS Band 5.0 to 6.0. Justification English communication skills are crucial to the settlement and employment prospects for State-Specific and Regional visa holders where there are fewer opportunities for formal English courses. The survey of recent migrants showed that people on SDAS visas did quite poorly in the labour market. It is very likely that one important reason for this is their lower level of English proficiency. DIMA March

179 Appendices: Papers from Overseas contributors 174 Evaluation of the General Skilled Migration Categories

180 A1 Skilled Immigration in Canada: Context, Patterns, and Outcomes Daniel Hiebert University of British Columbia A1.1 Introduction and context Canada is identified both domestically and internationally with immigration. Along with only a handful of other countries, Canada has a long history of active programs encouraging immigration and facilitating settlement. In recent years, gross permanent immigration to Canada has hovered around 0.7 per cent of the national population annually, a very high ratio by international standards. Currently over five and a half million Canadians, out of a total population that is approaching 32 million, were born abroad. There are also, in round numbers, half a million temporary residents living in Canada at present. For obvious reasons, immigration is a perennial issue of political discussion in Canada, and is seen in most parts of the country as a core element of the Canadian national identity. The Canadian media produces extensive coverage of issues related to immigration and there are two broad themes running through this public discourse. On the one hand, with a national Total Fertility Rate that has fallen to approximately 1.5, there is a sense that immigration is a decisive ingredient in demographic stability. In particular, immigration is routinely portrayed as essential in filling anticipated labour market shortages as the Baby Boom generation ages and begins to retire, and for the long-term maintenance of social programs, including the pension system and health care. Given the pervasiveness of these messages, it is perhaps not surprising that Canadians overwhelmingly see immigration in positive terms, especially when compared with the residents of other countries (Hiebert, 2003; IPSOS, 2004). The second theme runs counter to the first, and highlights the precarious economic circumstances of many recent immigrants. Typically, someone who is performing work far below their capability is interviewed to make this point forcefully, such as a cab driver with an engineering or medical background. Such an occurrence suggests an immigration system that is out of synch with the labour market, and that Canada is ignoring and therefore wasting the human capital of newcomers. Comparisons are drawn with the post-war period, up to the 1970s, when immigrants acquired jobs relatively quickly and gained upward economic mobility over time. In this report I explore the general economic outcomes of Canadian immigration, concentrating on those who enter Canada as points-assessed Skilled Workers. I begin with a brief description of the points selection system in the broader context of Canadian immigration policy. After a summary of current immigration patterns, I examine the state of Canadian literature on the economic situation of immigrants, DIMA March

181 which tends to support the view of declining fortunes. Following that, I analyze a special tabulation of longitudinal immigration data. Where possible, I compare the economic integration of Skilled Workers with those who arrive in Canada through other categories of the immigration system. Also, where possible, I compare the employment earnings of Skilled Workers, all immigrants, and the total Canadian population (including those born in Canada). I conclude by returning to the prevailing discourses in the Canadian public arena, of immigration as necessary vs. immigration as problematic, and point out that the situation is more complex than either of these polarized views would suggest. A1.2 Canadian immigration policy Jurisdiction over immigration is, arguably, more complex in Canada than in any other industrialized country. Constitutionally, jurisdiction is shared between the federal and provincial governments. For many years, the federal government assumed total responsibility for selection and admission while provinces played a large role in providing settlement services, especially health care and education. Following the Cullen-Couture Agreement of 1978, however, the province of Québec gained more responsibility, which was codified as an independent points system to assess Skilled Workers. Since then, prospective immigrants have the option of applying to Canada, or directly to Québec (differences in the assessment systems are clearly explained in official websites, and a summary is provided below). Québec also has the right to select certain other categories of immigrants as well, though all admissions are processed by the federal government (including Skilled Workers). In the 1990s the federal government began to sign agreements with other provinces. These have enabled Provincial Nominee Programs (PNPs), which are now in place for most provinces and territories (see Inset 1). As the title implies, employers or, in some cases, prospective immigrants can apply directly to provinces, which have set independent criteria for admission. In all cases, admission is processed by the federal government. Provinces, through PNPs, have been particularly interested in attracting Skilled Workers and Business Class immigrants. PNPs have also been used, often, to facilitate the permanent admission of individuals who are in Canada on a temporary visa (such as students who have completed programs in areas with high labour market demand, or temporary skilled workers). Under the federal system, in contrast, it is generally difficult to switch from temporary to permanent status while the individual is in Canada (though there are some exceptions). Note that landed immigrants, regardless of their means of entry, have full mobility rights in Canada. A newcomer who arrived through the Québec system or a PNP, therefore, does not have to settle in that province. The recent attempt to encourage a more geographically dispersed pattern of immigrant settlement provides a good illustration of the complexities of jurisdiction in Canada. Québec, for example, has prioritized the admission of applicants who will settle outside metropolitan Montréal, and other provincial governments have incorporated various types of bonuses for non-metropolitan locations in their PNPs. Meanwhile, the federal government is independently adjusting visa policies for temporary residents and also certain practices for admission to permanent residence in order to disperse settlement. 176 Evaluation of the General Skilled Migration Categories

182 Further, the federal immigration bureaucracy, while headquartered in Ottawa, has a set of regional offices across the country, which implement national policies and also engage with provincial governments. The programs of the two levels of government generally operate in similar directions, but there is always the potential that they will be out of synch or emphasize different goals. The overall level of immigration to Canada is established by the federal government, after consulting with provinces and territories, and presented to Parliament each year as a set of targets for the short-term future. For most of the post-war period, targets have been shaped in accordance with the business cycle. This longstanding policy was abandoned in the mid-1980s in favour of a more consistent policy framework. Since then, targets have remained in the general vicinity of 200, ,000 immigrants per year, though actual landings fell substantially in the wake of the Asian economic crisis that began in the late 1990s. For the purposes of this report, it is critical to note that targets were maintained at this level even during the deep recession of the early 1990s, which represented a distinct departure from the previous half century of operational decisions. Also, note that the annual federal targets incorporate the plans of Québec and the PNPs of the other provincial governments. Targets are set separately for each admission class (see Inset 2). Broadly speaking, Canada distinguishes between economic and humanitarian immigration. On the economic side, the major categories are Skilled Workers and Business Class Immigrants (smaller categories will not be discussed in this report). In each of these a single individual applies for admission but may be accompanied by a spouse and/or dependents. From the government s point of view, the spouses and dependents who accompany the Principal Applicant are recorded as economic immigrants, even though they have not been assessed under the points system themselves. The humanitarian side of Canadian immigration is composed of sponsored family members and refugees. It is worth noting that a spouse (or dependent) who accompanies a Principal Applicant to the Skilled Worker program at the time of landing or shortly thereafter is classified as an economic immigrant, while the same person, if sponsored by the PA at a later date, would be recorded as a family class immigrant and their admission would be seen as humanitarian rather than economic. In other words, there is inevitably some messiness in this apparently straightforward system of classification. Principal Applicants to the economic class are assessed using the points system directly for Skilled Workers, and under a modified points system for Business immigrants. The points system is designed to ensure that immigrants will be able to make an economic contribution to Canada quickly. For the purposes of this report, it would be unwise to think of the points system as singular or static. As already noted, the province of Québec has the jurisdiction to set its own standards for points assessment. Also, the last thorough revision of admissions policy occurred in 2002, with the passage of IRPA. However, although applications began to be processed under the new rules that year, it took some time for individuals granted entry into Canada to formally land (the right to land in Canada must be exercised within one year). Therefore, most immigrants who landed in Canada in 2002 were admitted under the old system, and even in 2003 there would have been a mix of individuals who were granted the right to land under the old DIMA March

183 and new systems. This finally would have changed in 2004, with landings that year fully reflecting the post-irpa policy regime. Unfortunately, there are no data available yet for either the transition years of 2002 and 2003 or, obviously, Inevitably, then, this report can only speak to outcomes related to the pre-2002 policy situation. Given that data on outcomes provided in this report reflect pre-irpa policy, the old points system, as well as the new one and the independent system used by Québec, are outlined in Inset 3. The points system was fundamentally revised in light of IRPA. Prevailing wisdom suggests that it is difficult for governments to micro-manage the labour force required in this era of the new, or knowledge-based, economy. There is also a widespread belief that individuals can expect to have several careers over their working lives, and that they need to have core capabilities of literacy, numeracy, and so on. In other words, specific competence, in the long run, may be less important that general competence. The previous priority granted to specific occupations has, in the new points system, given way to the principle of attracting well-trained, flexible individuals to Canada, who have experience in the labour force those who will be able to adapt to rapidly changing labour market circumstances. The current threshold of points for admission as a Skilled Worker is 67. Briefly, there are three categories of Business immigrants. The Self-employed program is the most restrictive and pertains primarily to athletes, cultural performers and artists, and farmers. The Entrepreneur Class has been created to facilitate the admission of individuals intending to establish businesses in Canada. In simplified form, applicants must have owned and operated a successful business, have a minimum net worth of at least C$300,000, and a credible plan for establishing a firm in Canada that will employ at least one person beyond the entrepreneur. Entrepreneur Class immigrants have three years to fulfill their obligation to establish a business, and must furnish proof of doing so to maintain their status as permanent residents. Investor Class applicants are required to have a higher net worth of C$800,000 and make a minimum investment of C$400,000, which is placed with the Receiver General of Canada. In addition to these requirements, all Business Class immigrants must achieve a minimum score of 35 on the points assessment test. 178 Evaluation of the General Skilled Migration Categories

184 A1.3 Contemporary immigration patterns When Canada resumed its active immigration program after WW2, it re-established the cultural bias of earlier eras, though with some modifications. The immigration bureaucracy maintained a list of preferred and non-preferred source countries, but the absolute exclusion of immigrants from many non-european countries was abolished. Within this regime, the vast majority of newcomers were from Europe or the United States. Critical changes in the 1960s led to the adoption of the points assessment system and the end of European preference. Over the next 20 years or so, the longstanding global pattern of migration to Canada was turned almost completely upside down. The combined proportion of immigrants admitted from Europe (including the UK) and the USA fell from 85 per cent in 1966, to 50 per cent in 1975, 30 per cent in 1985, 22 per cent in 1995, and was just over 21 per cent in 2004 (CIC, Facts and Figures, various years). In 2004, 47 per cent of immigrants landing in Canada came from the Asia-Pacific region, 22 per cent from Africa and the Middle East, and 9 per cent from Latin America (CIC, 2005b). I will revisit this point later, but the fact that nearly fourfifths of recent immigrants have arrived from non-traditional source countries is fundamental in understanding settlement outcomes. In terms of the size of Canada s immigration program, as noted, for most of the period since WW2 admissions policy has reflected economic trends. This was certainly the case in the recession of the early 1980s, when numbers were cut significantly, with the low point just under 85,000 reached in The ratio of Economic Class immigrants was quite low at this time, in part because of a policy introduced in 1982 that required applicants to have a formal job offer in Canada (CIC, 1998). At this time the federal government (the Progressive Conservative Party was in power) decided to increase admissions and to maintain them at a much higher level regardless of economic circumstances. This decision was accompanied by a greater emphasis on economic immigration, as it was thought that a higher ratio of Skilled Workers and Business Class immigrants would provide an economic stimulus (Green and Green, 1999; Hiebert, 2006; Li 2003a; Figures A.3.1 and A.3.2). The requirement for a job offer was lifted in A much higher number of Economic Class applicants were admitted over the next few years, with the ratio of this group rising from 30 to 50 per cent of all immigrants between 1985 and Thereafter, the number of Economic Class immigrants hovered in the 90,000 per year range until Meanwhile, the number of Family Class admissions rose substantially over the same period, in fact overtaking the Economic Class in The declining relative significance of economic immigration led to a reconsideration of priorities at that time, and a decision was made to revise the targeted mix of economic/humanitarian immigration to a ratio of 60/40 (this was done under a Liberal government). The new balance was reached by 1997 and has been more or less maintained since that time. Also, the points system was revised to place a higher premium on tertiary education (CIC, 1998). DIMA March

185 Figure A1.1: Landed Immigrants, by Class, , , , , ,000 Refugees Economic Family 50, Source: CIC, 2005b Figure A1.2: Landed Immigrants, by Class (%), Family Economic Refugee Source: CIC, 2005b 180 Evaluation of the General Skilled Migration Categories

186 Table A1.1: Permanent Residents Landed in Canada, by Class, Total 212, , , , , , , , , ,824 Economic immigrants 106, , ,351 97, , , , , , ,746 Skilled workers - Principal applicants 34,553 42,151 44,969 35,958 41,548 52,126 58,907 52,970 45,378 47,889 Skilled workers - Spouses and dependants 47,182 55,764 60,679 45,310 50,957 66,473 78,324 69,757 59,850 65,553 Entrepreneurs - Principal applicants 2,991 3,208 2,805 1,770 1,668 1,658 1,609 1, Entrepreneurs - Spouses and dependants 8,438 8,703 7,599 4,848 4,486 4,529 4,482 3,302 2,199 1,806 Self-employed - Principal applicants 952 1,392 1, Self-employed - Spouses and dependants 1,902 2,984 2,669 1,802 1,766 1,732 1,451 1, Investors - Principal applicants 1,338 1,607 1,522 1,225 1,138 1,390 1,767 1, ,671 Investors - Spouses and dependants 3,822 4,569 4,073 3,309 3,127 3,561 4,572 3,401 2,723 4,426 Provincial/territorial nominees (inc Sp&dep) ,252 1,275 2,127 4,418 6,248 Live-in caregivers - Principal applicants 3,905 2,924 1,831 1,976 1,959 1,760 1,874 1,521 2,230 2,496 Live-in caregivers - Spouses and dependants 1,552 1, ,302 1, ,074 1,796 Family class 77,386 68,359 59,979 50,898 55,277 60,614 66,794 62,299 65,124 62,246 Spouses and partners 30,914 32,099 30,136 28,323 32,831 35,295 37,762 32,767 38,747 43,985 Fiancé(e)s 4,629 3,906 3,077 1,918 1,734 1,521 1,640 1, Sons and daughters 6,402 5,455 4,556 4,013 3,986 3,951 3,933 3,646 3,619 3,037 Parents and grandparents 33,137 24,625 20,220 14,202 14,487 17,769 21,340 22,228 19,384 12,732 Others 2,304 2,274 1,990 2,442 2,239 2,078 2,119 2,205 2,438 2,279 Refugees 28,087 28,478 24,308 22,842 24,397 30,092 27,919 25,120 25,984 32,686 Government-assisted refugees 8,201 7,869 7,711 7,432 7,444 10,671 8,697 7,505 7,505 7,411 Privately sponsored refugees 3,546 3,189 2,742 2,267 2,348 2,933 3,576 3,047 3,253 3,116 Refugees landed in Canada 12,811 13,462 10,634 10,181 11,796 12,993 11,897 10,547 11,267 15,901 Refugee dependants (landed in Can) 3,529 3,958 3,221 2,962 2,809 3,495 3,749 4,021 3,959 6,258 Other 761 3,865 3,400 2,547 1, ,761 9,196 7,146 Source: CIC, 2005b Table A1.2: Permanent Residents Landed in Canada, Selected Classes, Total number 212, , , , , , , , , ,824 Economic immigrants 106, , ,351 97, , , , , , ,746 Skilled workers - Principal applicants 34,553 42,151 44,969 35,958 41,548 52,126 58,907 52,970 45,378 47,889 Business Classes - Principal applicants 5,281 6,207 5,585 3,818 3,639 3,843 4,083 3,047 2,199 2,708 Skilled workers - Spouses and dependants 47,182 55,764 60,679 45,310 50,957 66,473 78,324 69,757 59,850 65,553 Business Classes - Spouses and dependants 14,162 16,256 14,341 9,959 9,379 9,822 10,505 7,974 5,901 7,056 Provincial/territorial nominees (inc Sp&dep) ,252 1,275 2,127 4,418 6,248 Family Class 77,386 68,359 59,979 50,898 55,277 60,614 66,794 62,299 65,124 62,246 Refugees 28,087 28,478 24,308 22,842 24,397 30,092 27,919 25,120 25,984 32,686 Other 761 3,865 3,400 2,547 1, ,761 9,196 7,146 Percentages Economic immigrants Skilled workers - Principal applicants Business Classes - Principal applicants Skilled workers - Spouses and dependants Business Classes - Spouses and dependants Provincial/territorial nominees (inc Sp&dep) Family Class Refugees Other Source: CIC, 2005b DIMA March

187 Of course, the Economic Class is itself a mixture of Principal Applicants and Spouses and Dependants. The detailed composition of the Economic Class over the past 10 years is provided in Table A1.1, and the significance of Principal Applicants relative to the entire immigration system is provided in Table A1.2. Over the 10 year period, with 2.18 million admitted, the combined percentage of Skilled Worker (20.9) and Business Class (1.9) immigrants, who were assessed according to the points system either directly or in modified form was In other words, for every points-assessed immigrant landing in Canada, there are more than three who do not go through this rigorous level of screening. Even so, immigrants admitted to Canada, in general, arrive with considerable human capital. Given the profile of source regions of Canadian immigrants seen earlier, it should come as no surprise that only 9.3 and 2.9 per cent of immigrants landing in Canada in 2004 declared English and French, respectively, as their mother tongue. Despite these varied origins, though, a high proportion of immigrants are able to communicate in one of the two official languages of Canada. In recent years, around 60 per cent of all immigrants (63 per cent in 2004) are considered to have official language facility. Note that applicants assessed within the points system are required either to take a language test administered by a third party or to supply documentation of any English or French training they have taken. This figure is therefore much higher for those admitted as Principal Applicants in the Economic Class, 82.4 per cent in 2004, and lower for other categories: 49.4 per cent for the spouses and dependents of these PAs, 60.6 per cent for sponsored family members, and 61.0 per cent for refugees (the latter ratio was somewhat higher in 2004 than in other recent years, where it has hovered around 55 per cent; all figures are from CIC, 2005b). Apart from English and French, the top five language groups in 2004 in terms of mother tongue were: Mandarin (13.3 per cent); Arabic (8.1); Spanish (6.1); Punjabi (5.6); and Tagalog (5.3). 42 The educational attainment of Canadian immigrants is quite impressive (Figure A1.3). Over the period, 1.69 million immigrants 15 year or older were admitted to Canada. At the highest level of generalization, 45 per cent held a high school diploma or less, 16 per cent had received some level of tertiary training, and 40 per cent held a completed university degree (CIC, 2005b). Put another way, immigration contributed, in gross terms, nearly 370,000 university graduates to Canadian society over these years. To put this into perspective, 166,000 individuals received a Bachelor or higher degree at all of the Canadian universities, combined, in the year 2000 (Allen and Vaillancourt, 2004), while, in the same year, immigration added another 77,500 university graduates to the Canadian population. The significance of immigration is even higher at the top end of tertiary education. The number of immigrants admitted in 2000 with a completed PhD, 3,200, almost matched the number produced in Canada, 4,200. As would be expected, the level of education attainment of Principal Applicants to the Economic Class is much higher than that of immigrants arriving through other programs. 42 While applicants must provide proof of language competence, the figures given here are derived from landing forms rather than applications. They are based on self-reported knowledge of language. 182 Evaluation of the General Skilled Migration Categories

188 Figure A1.3: Landed Immigrants with Completed University Degree (%), by Class, All immigrants Economic - PAs Economic - S&D Family Refugees Source: CIC, 2005b The human capital of immigrants admitted to Canada is perhaps most evident in their occupational skill level, which is classified into five broad categories by Statistics Canada. For those immigrants were at least 15 years old and who had labour market experience before moving to Canada, 9.4 per cent had managerial experience, 58.1 per cent were professionals, 21.3 per cent were considered to have intermediate or clerical skill levels, and only 1 per cent were seen as having elemental skills. Among Skilled Worker Principal Applicants, the ratio of professionals was even higher, at 68.6 per cent (figures are calculated from CIC, 2005b). All of the statistics reported in this section are national in scope and therefore include those immigrants who were selected through the Québec system or within a Provincial Nomination Program of another province. Fine-grained information on PNP admissions is not yet widely available, and would have to be assembled from disparate sources, but the immigration ministry of Québec provides useful summary statistics on immigrants landing there. In 2003 Québec received just under 40,000 immigrants (the planned provincial target was between 40,000 and 43,700). Of these, 60 per cent were admitted in the economic class (11,600 were Principal Applicants and there were 12,200 spouses or dependants). On the humanitarian side, 24 per cent were sponsored family members and 16 per cent were refugees. Approximately 26,500 of these immigrants were approved by the province of Québec according to its selection system, which accounted for 12 per cent of all the immigrants admitted to Canada that year. The government of Québec is particularly interested in three aspects of immigration: ensuring that immigration contributes to the French language of the province; dispersed settlement outside metropolitan Montréal; and the retention of immigrants who settle DIMA March

189 in the province. Success in these areas was mixed. In keeping with the recent past, in 2003 half of the immigrants landing in the province had facility in French (at the target level set by the government). Some 83 per cent of the immigrants who had arrived in the province in 2002 were still living there in January 2004 (also meeting the target). However, the 4,600 who settled outside Montréal did not come close to meeting the target of 8,500 for that year (all figures in this paragraph are drawn from MRCI, 2004). Although this report is dedicated to examining the policies and outcomes of permanent immigration, it is worth pausing for a moment to consider the increasingly important role of temporary migration in Canada. In 2004, nearly 250,000 individuals were granted temporary visas by the Canadian government, and the total stock of this population in the country was around 410,000. The three largest categories of temporary visas in 2004 were: foreign workers (99,700); foreign students (56,600); and refugee/humanitarian (47,000). Considerably more than half of the foreign workers (61 per cent) were male, and the vast majority were categorized as initial entries to Canada (87 per cent) rather than seasonal re-entries. The top five countries of origin of these workers were: The USA (17.2 per cent); Mexico (12.5); the UK (8.1); Australia (7.9) and France (7.1). Significantly, Canada draws its temporary workers from a different set of international networks than its permanent immigrants. The major factors at work in attracting this particular set of temporary workers to Canada appear to be proximity and language. Temporary workers with a widely varied set of skills are admitted. Broadly speaking, 4 per cent were classified as qualified for managerial positions, 22 per cent as professionals, 12 per cent as skilled and technical workers, 32 per cent as having intermediate or clerical skills, and 1 per cent as unskilled (with 30 per cent unclassified). Note, also, that of the 18,300 individuals in 2004 who were granted leave to remain in Canada while making an asylum claim, just over half received a work authorization. In fact, of the 99,300 refugee claimants residing in Canada, at various stages of the determination process, 85,600 have a work authorization. I am only aware of one available systematic study on the labour market activities of refugee claimants prior to the outcome of their determination process. According to Schellenberg (2001), when they first arrive refugee claimants rely on social assistance for the bulk of their income, but turn increasingly to employment earnings over time. Therefore, the stock of claimants at any given time in Canada represents a substantial potential workforce. A1.4 The economic fortunes of immigrants in Canada For all the popular discussion related to the demographic situation in Canada, and the frequent links drawn by media commentators between immigration and demographic stability, the academic literature on the impact of immigration on Canada s population is rather thin. There is probably a good reason for this relative absence. Demographers in Canada, as elsewhere (e.g., Australia; see McDonald, 2002), have concluded that the story is quite simple: immigration would have to be very large to have a significant impact on the age structure of the Canadian population (e.g., Beaujot, 2003). Given persistent low fertility, the current rate of immigration is insufficient to maintain the current age structure of the population and even, in the long run, its size. In the short 184 Evaluation of the General Skilled Migration Categories

190 and medium terms, however, immigration will contribute an increasing share of population growth. In fact, by around 2020, immigration will account for all of the net growth of the Canadian population and labour force. This will mean, inevitably, that immigrants and members of visible minority groups will account for an increasing share of the Canadian population. A recent report published by Statistics Canada provides several possible scenarios of population growth from the base of 5.66 million immigrants and 4.04 million visible minority persons recorded in the 2001 census (Bélanger and Malenfant, 2005). The particular scenario that I found most realistic forecasts that by 2017 (Canada s 150th year as a nation state) these numbers will rise to 7.68 and 7.12 million, respectively. In contrast to the modest literature on demography, there are a substantial number of studies on the economic fortunes of immigrants and visible minorities in Canada. The theme of much of this research is that immigrants are experiencing more difficulty finding well-paid work now than was the case in the 1970s. The first studies to identify this issue emerged out of figures reported in the 1986 census, especially after researchers were able to access the public use microdata and conduct econometric analyses. They found that, when a variety of relevant factors are taken into account, the returns to human capital for immigrants had fallen relative to the Canadian-born population (e.g., the edited collection by DeVoretz, 1995). These concerns deepened after the release of the 1991 and 1996 census results (Kazemipur and Halli, 1999; Smith and Jackson, 2002), but were tempered by the fact that both of these surveys coincided with weak economic conditions. The 2001 census was highly anticipated, since it was conducted at a more favourable moment from an economic viewpoint. However, the broad picture that emerged from the 2001 census is that the circumstances of immigrants did not deteriorate much further, but did not appreciably improve either (Frenette and Morissette, 2003; Chui and Zeitsma, 2003). The most widely publicised statistic, so far, has been the fact that degree of poverty among recent immigrants increased markedly between the 1981 and 2001 censuses. Immigrants who arrived in the five years preceding the 1981 census had a poverty rate 43 of 24.6 per cent, which was 1.44 times that of the Canadian-born population. The equivalent figure for the 1991 census ( arrivals) was 31.3 per cent, and it was 35.8 per cent in 2001, or 2.29 times the rate for the Canadian-born (Picot and Hou, 2003). 44 Significantly, a larger proportion of the immigrants experiencing economic marginalization in 2001 were congregated in neighbourhoods that share other aspects of deprivation than was the case in 1991 (Ley and Smith, 2000; Smith, 2004). The narrative of declining fortunes for recent immigrants has been almost universally accepted in Canadian scholarship (I will discuss exceptions below). Researchers have 43 Actually, the statistic in question is not a direct measure of poverty. Statistics Canada has defined a low income cut-off that roughly approximates a measure of relative poverty. The important point is that the definition of this statistic was constant over the period in question. 44 It is worth noting that the poverty rate of the Canadian-born declined in this 20 year period. While the economic situation of new immigrants had deteriorated, it appears that immigration did not have a negative impact on the economic situation of the Canadian-born. As these were years of high immigration, it is conceivable that immigration was partly responsible for the improved fortunes of non-immigrants (Hiebert, 2006). DIMA March

191 devoted considerable energy to investigating the causes of this decline. Clearly, much of this discussion bears directly on policies of selection and settlement. Four broad frameworks of analysis have emerged, though the first three are particularly prominent. The first perspective on this issue focuses on the human capital of immigrants, and there are two general approaches. One set of researchers emphasizes the fact that a relatively small proportion of immigrants admitted to Canada is actually assessed through the points system, as noted earlier, and that this ratio fell in the 1980s. It is assumed that those who are admitted outside the points system are, typically, not well prepared for the Canadian labour market (Coulson and DeVoretz, 1993; Bloom et al., 1995). This problem was exacerbated, the logic goes, by the decision to maintain a relatively high level of immigration during the recession of the early 1990s. A large number of immigrants entered Canada at a time of relatively high unemployment and, in common with Canadian youth seeking their first job, had great difficulty securing work (Aydemir, 2005). The policy implications that follow from this view are to raise the ratio of assessed immigrants (which has been done, to a degree) and to restore the link between immigration levels and the business cycle (which has not been done). A variant of the human capital approach adds a crucial insight. Actually, immigrants in general including all classes are more educated than the Canadian-born population. However, while this gap was substantial in the 1970s, it has narrowed over time. There was a major expansion of the Canadian tertiary education system that began in the 1960s and, since then, the level of educational attainment in Canada has grown steadily (Hiebert, 2004; Reitz, 2001a; Reitz, 2001b). In 1981, 9.8 per cent of the Canadian population 15 years old or more had completed a university degree, diploma or certificate, and the corresponding figure for those aged was 15.6 per cent. In 2001, the overall proportion had grown to 17.9 per cent, and it was 28.0 per cent for the age group (Statistics Canada, Table 97F0017XCB ). Immigrants arriving now, therefore, encounter a different degree of labour market competition than their predecessors. While their absolute level of human capital has been increasing, their relative educational advantage in the labour force has declined. While the first explanation for declining fortunes concentrates on the extent to which immigrants are prepared to enter the Canadian labour market, the second emphasises the readiness of the labour market to accommodate immigrants. Analysts exploring this framework highlight the fact that Canada s immigration system has been transformed, from admitting mainly Europeans and Americans, to people from other parts of the world. In the new era, the vast majority of immigrants are visible minorities. There are, again, two approaches within this general perspective. One is quantitative and uses statistical techniques to compare the participation rate, earnings, self-employment rate, and self-employment earnings of similarly qualified immigrants and Canadian-born individuals (or of people of European descent vs. visible minorities), with controls in place for gender, age, industrial sector, and other relevant factors (Li, 2000a; Li, 2000b; Pendakur and Pendakur, 1998; Pendakur and Pendakur, 2004). Gaps in earnings, once the effects of mitigating variables have been neutralized, are interpreted as evidence of discrimination against immigrants, or visible minorities, or both. The following passage from one of the key papers in this genre provides a sense of both the 186 Evaluation of the General Skilled Migration Categories

192 logic embedded in this research as well as the magnitude of the earnings penalty associated with immigrant and minority groups: Conditional on observable individual characteristics, Canadian-born visible-minority and Aboriginal men earn much less than Canadian-born white men, facing earnings differentials of 8.2 per cent and 12.5 per cent, respectively. Further, immigrant visible minority men face an earnings gap of 15.8 per cent. In contrast to what we see for men, Canadian-born visible-minority women do not appear to suffer an earnings penalty in comparison with Canadian-born white women. Aboriginal women and immigrant visibleminority women, however, in comparison with Canadian-born white women, face earnings gaps of 6.8 per cent and 9.1 per cent, respectively. (Pendakur and Pendakur, 1998: p. 543) Researchers operating within the discrimination framework have also tried, in largely non-quantitative ways, to identify the specific practices in the labour market that penalize immigrants and minorities. The most widely discussed of these is related to the disjuncture in Canada between the institutions that regulate immigration and the labour market. These are, for all intents and purposes, separate and independent institutions. While governments have regulatory authority over immigration, a variety of professional associations or bodies have jurisdiction over professional credentials (Basran and Zong, 1998; Li, 2001a; Reitz, 2001b; Reitz, 2003; Reitz, 2004). A familiar sequence of events can therefore occur. A prospective applicant, for example, can read the CIC website and learn that he or she would receive 22 points for A three-year diploma, trade certificate or apprenticeship and at least 15 years of full-time or fulltime equivalent study. Proof of the diploma would be required during the assessment process. However, after landing in Canada, the relevant professional association might not recognize the diploma or allow the person to practice in the particular field. Reitz (2003) argues that there are particularly high stakes involved in this process. When professional credentials are not acknowledged, the individual typically is not able to settle for work one or two steps below the appropriate position. For example, a neurosurgeon with rejected credentials will not be able to become a general practitioner or a nurse, since these positions require a different set of credentials. In other words, there are often no intermediate steps between the either/or situation of credential recognition. To be fair, CIC is very open about this issue and includes an unequivocal statement on its website, and in pamphlets, that it cannot guarantee that applicants credentials will be recognized in the labour market. Also, the post-irpa points system is much less focused on particular credentials than the system used to be. And, moreover, there are a number of plans both nationally and provincially to improve credentialization. But the fact that the very credentials that enable admission might mean nothing after an immigrant arrives in Canada causes, in many cases, great disappointment. The problem of credential recognition is compounded by a related issue: employers are reluctant to hire prospective workers who do not yet have Canadian experience (Bauder and Cameron, 2002). Experience gained prior to immigration to Canada, especially in DIMA March

193 countries outside the USA or Europe, is heavily discounted by Canadian employers (Aydemir and Skuterud, 2004). Researchers and other analysts differ profoundly in the ways they interpret the twin problems of credentialization and the Catch-22 requirement for Canadian experience before obtaining a job. Some see these as symptomatic of underlying racism i.e., organizations and employers construct reasons to disenfranchise visible minorities and newcomers from work that would be appropriate for their skills. Others believe that these problems stem from the self-regulation of the labour market i.e., institutions like professional associations, and employers, place a premium on credentials obtained in English/French countries, and on prior experience of the Canadian labour market for rational, instrumental reasons: workers with these background characteristics are more productive. In essence, the latter interpretation is a variant of the human capital perspective. Although it has proven extremely difficult to verify and measure the extent of labour market discrimination in Canada, many are convinced that it is extensive, and use the statistical studies noted earlier to bolster their claims. From this perspective, the appropriate policy response is not so much directed at immigrant selection, but at the interventions that would ensure a labour market that would be more welcoming to immigrants and minorities. The recently announced national Action Plan Against Racism which anticipates coordinated effort between the ministries of justice, heritage/ multiculturalism, immigration, and human resources is a step in this direction. The third major framework of analysis for immigrants contemporary problems highlights the fundamental economic changes of the last few decades. Immigrants who arrived in the 1960s and 70s encountered a high demand for labour generally, but especially for three types of jobs: professionals and managers at the high end of the emerging service economy; blue-collar jobs in construction, manufacturing, and resource extraction; and poorly-paid jobs mainly in low-order services. Canada, at that time, with a limited system of tertiary education, had poor a poor capacity to train professional and managerial workers domestically. Skilled workers arriving through the new points system were well suited to take up jobs in universities, medicine, engineering, etc (Pendakur, 2000). Those without these high-level skills found flourishing resource, manufacturing, and construction industries that had, mainly, unionized workforces and decent remuneration (at least for men). Moreover, ethnic concentrations emerged in these sectors, and new immigrants were often hired without knowing an official language. True, immigrants also gravitated to low-level service jobs in the 1960s and 70s, but the availability of well-paid blue-collar jobs was central to their economic wellbeing. But the nature of labour market demand has changed as we have moved towards a knowledge-based economy. Educational expectations have been raised, credentials are more important, and above all, jobs that are associated with communication demand complete fluency (Preston and Giles, 1997; Boyd, 1999). Employers also favour only a small range of accents, those that are considered to instil confidence in the listener 188 Evaluation of the General Skilled Migration Categories

194 (Scassa, 1994; Creese and Kambere, 2003). Meanwhile, the demand for low-level service jobs has grown, in restaurants, personal services, retail, the hotel industry, cleaning services, health care, and so on. With the credentialization issue impeding entry into the professions and other attractive jobs, and an eroding base of well-paid blue-collar jobs, immigrants have become more concentrated into low-level service jobs. In fact, they have become the key entrepreneurial forces in many service industries, leading to ethnic niche economies and, in many cases, hyper-competition, low profits, and low wages (Hiebert and Pendakur, 2003; Hiebert, 1999; Hiebert, 2004). A fourth framework of analysis is embryonic in the Canadian literature. It is possible that the changing nature of the welfare state is a contributing factor in the declining economic situation of immigrants (e.g., see Reitz, 1998; Reitz, 2001b). Certainly government expenditures in general in Canada have fallen relative to GDP, and the scope and/or generousity of a number of social programs has been reduced. Social welfare rates, for example, have not kept pace with the rising cost of housing and, in real terms, are lower now than they were 20 or 30 years ago. Immigrants, particularly those who arrived as refugees, would likely feel the impact of these changes, whether directly or indirectly (Hiebert, 2006). It is especially hard to know whether the general fiscal retrenchment of government has impacted settlement services for immigrants. Given the jurisdictional complexity of these services, and lack of data, it is difficult to track the availability and utilization of language training, orientation programmes, posttrauma counselling, etc. Were these services better in the 1970s? Without a base of research on this issue, we don t know. It is interesting to note, though, that the breadth and depth of these services varies between provinces and even municipalities within provinces. Policy analysts and other researchers have begun to document one aspect of the relationship between immigration and the welfare state: the use of social assistance and, more generally, the impact of immigration on the macro-economic balance of government revenues and expenditures. Again, this is an intricate and inexact exercise. As in other countries, the Canadian tax system is far-reaching and complex; so too are government expenditures. A major study of tax data suggests that immigrants are more likely to rely upon social assistance (welfare) than their Canadian-born counterparts in the first 15 years after landing (CIC, 1998). As might be expected, those who were admitted to Canada as Skilled Workers depended much less on social assistance than family immigrants and refugees. A study that examines a wider range of social services based on intricate family income and expenditure data reveals a different picture, however. Based on the 1989 to 1997 period, and given several constraints in the data, Canadian-born heads of households contributed, on average, C$87,300 more in taxes than they received, over their lifetime. The figure for foreign-born heads of households was lower, but not exceptionally so, at C$73,440 (DeVoretz and Pivnenko, 2004: Table 3). Moreover, the difference was not the result of a greater reliance upon social services by immigrants, but due to their lower incomes and therefore lower contributions in the form of taxes. Summarizing this section, there is widespread agreement by researchers and government analysts alike that the economic integration process occurred rapidly for DIMA March

195 the cohorts of immigrants who arrived in the 1960s and 70s, and that the situation has deteriorated since then. The poverty rate for immigrants arriving in the 1990s is especially worrying. However, there is no consensus on the cause of this downturn in aggregate fortunes. The three most prominent explanations centre on the human capital of immigrants (relative to the Canadian-born population), institutional practices in the labour market, and the impacts of economic restructuring. A small number of researchers have also begun to explore the relationship between the configuration of the welfare state and the economic integration of immigrants. For the purposes of this report, it is probably most expedient to conclude that all of these factors have been involved but that it is not possible to credibly assign relative weights to each. A1.5 New data resources: towards a more nuanced perspective on immigrant fortunes Data resources With two exceptions, all of the studies discussed so far have used the census as their empirical base. The Canadian census is taken on a 5-year cycle and includes an extensive set of variables for a 20 per cent sample of the population. Place of birth and year of official landing are both included, so immigrants are clearly identifiable in the census. Of course a wide range of other variables are included, such as language competence, education, employment, age, gender, family structure, and income from various sources, so researchers can study many facets of the immigrant experience. While the census is the most comprehensive source of information, a vital ingredient is missing for research on integration: respondents are not asked their class of admission into Canada. Therefore the census is an excellent resource for understanding the macro impact of immigration in Canada but is not well tuned for tracking the impact of selection policies. There are other information resources available in Canada, notably administrative databases generated by government departments. The Landed Immigrant Data System (LIDS) is a compilation of landing records from 1980 to the present (with a time lag of approximately 3 years before the data are available to researchers in the form of a compiled file of records). LIDS provides detailed information about the background of immigrants at the moment when they officially arrive, including class of entry. However, there is no information in this database about individuals after they arrive. Citizenship and Immigration, together with Statistics Canada, manage two other data bases that are derived from LIDS which are arguably the most relevant resources for the study of integration. The Longitudinal Immigration Database (IMDB) links the landing information stored in LIDS with the subsequent tax records filed by immigrants after their arrival. While the scope of the IMDB is definitely not as comprehensive as the census, it does include detailed information on class of entry, demographic characteristics, income (from various sources), and geographical location, and is therefore highly applicable to the evaluation of policy decisions, especially those that 190 Evaluation of the General Skilled Migration Categories

196 are class-specific. The other significant limitation of the IMDB is that all of the information within it about the human capital of individuals (education, language ability, work experience) is derived from their landing form; there is no way of knowing whether immigrants have added to their human capital after landing. Also, a recent decision by Statistics Canada has limited the length of time data can be collected on an individual in the IMDB to 16 years. The Longitudinal Administrative Databank (LAD) is a 20 per cent sample of all individuals who submit tax statements in Canada. Unlike the IMDB, it also includes information about families as well as individuals. Perhaps the most attractive aspect of the LAD, though, is the fact that it enables comparison between immigrants (but with the same limitations as the IMDB) and the Canadian-born. However, while this resource holds much promise, it has only recently been introduced and there is no available body of research derived from it yet. Finally, there have been two longitudinal surveys of immigrants in Canada. The first took place nearly 30 years ago and results from it are now too dated to be of much relevance (Justus and MacDonald, 2003). It is worth noting, though, that the 1970s study was instrumental in supporting the concept of income assimilation, whereby immigrants gradually gain (and then surpass) the same level of income as the Canadianborn. More recently, and with the Australian example in mind, the Canadian government launched the Longitudinal Survey of Immigrants to Canada (LSIC), which will be a single-panel sample of the cohort of immigrants that landed in Canada between October 2000 and September The 12,000 or so included in the sample have been interviewed 6 months and 24 months after their arrival, and will be interviewed again 4 years after their arrival and, possibly, at a later time as well. So far, only the results of the first wave, 6 months after arrival, have been released, with the second wave results anticipated in mid-october, The LSIC will be an ideal resource for research on integration, but the base of results from just the first wave is insufficient for a thorough study at this time. Also, unlike the IMDB and LAD, LSIC has quite a small sample size, which limits statistical study. All of these data sources share a common problem that is particularly relevant for this report: there is a mismatch between the availability of data and the most recent shift in Canadian admissions policies with respect to skilled labour, which occurred in In the remainder of this section, I will summarize the most relevant findings from the first wave of LSIC and the research that has been conducted using the IMDB. As we will see, the latter work particularly suggests some important modifications to the widespread view of declining fortunes discussed in the previous section. DIMA March

197 LSIC Data from the first release of LSIC has only recently been made available and there are a number of academic studies in progress but, to my knowledge, nothing published thus far. For this report, I rely upon information presented in a preliminary statement by Statistics Canada outlining the findings of LSIC (Chui, 2003), and the newly-published benchmark summary of results (Statistics Canada, 2005). Note that preliminary results have already been incorporated into a comparative analysis of the Australian and Canadian longitudinal surveys (Richardson and Lester, 2004). All of the material that follows in this section refers to the situation of immigrants who were at least 15 years old, approximately 6 months after landing in Canada. A high ratio of new immigrants stated their intention to find work in Canada: 85 per cent for all adult newcomers, and 94 per cent for those between the ages of 25 and 44. By the end of their first half year, 70 per cent of the survey respondents were in the labour force: 44 per cent had found a job (79 per cent of these were full time), while 26 per cent were looking for work. Thirty per cent had not attempted to enter the labour force. While the 70 per cent labour market participation rate compares favourably with the population average, of course the 26 per cent unemployment rate for these newcomers was very high, more than 3 times that of the total Canadian population. As might be expected, the participation rate was higher for young immigrants and, especially, for those who were admitted as Principal Applicants to the Skilled Worker class. Of the latter group, 60 per cent had a job at the time of the survey while another 34 per cent were looking for work (Statistics Canada, 2005). At the other end of the spectrum, those who landed as refugees had a participation rate of 44 per cent, with 21 per cent having obtained employment and the remainder looking for work. Aside from landing class, facility in an official language was a key determinant of early success in the labour market: 48 per cent of those with these language skills had found work, compared with 28 per cent who could not carry a conversation in English or French. So, too, was education 50 per cent of those with a university education had found work, as opposed to 40 per cent for those with a high school diploma, and only 24 per cent for those without high school (Chiu, 2003). Finally, there was much variation in employment patterns related to country of origin. Immigrants from the USA, Oceania, and the Philippines all had unemployment rates around 16 per cent. Those from European and Latin American countries were in the middle, at around 30 per cent. The highest rates of unemployment were associated with immigrants from Africa (53 per cent on average) and from Iran, South Korea and Morocco (all above 50 per cent) (Statistics Canada, 2005). For those who had found work, three-quarters held one job, 20 per cent were employed at two jobs, and 5 per cent at three or more. Employment income accounted for just under three-quarters of immigrant family income, on average. The contribution of employment income to total family income varied from 89 per cent for family-class immigrants (who would have joined families already settled in Canada), through 74 per cent for Skilled Worker Principal Applicants, down to 28 per cent for Refugees (who 192 Evaluation of the General Skilled Migration Categories

198 receive government assistance in their first year). 45 Of course, many recent immigrant families survive by spending the savings they brought to Canada. The average amount of savings upon arrival was C$38,600 per family, with just under C$18,000 remaining after 6 months. Note that the relatively small number of Business immigrants who brought extensive savings with them have a major impact on these numbers. For those who arrived as Skilled Worker PAs, the average saving upon arrival was C$31,000 with $14,300 remaining after 6 months (Statistics Canada, 2005). Seventy per cent of newcomers indicated that they had encountered a problem when trying to find employment, a far higher figure than in the other fields surveyed (23 per cent for the health care system, 38 per cent for housing, and 40 per cent for the education system). The two key problems identified earlier in this report lack of Canadian experience and credentialization were cited as the two most important obstacles (by 26 and 24 per cent of respondents). The other important barriers were language problems (22 per cent), lack of available jobs (9 per cent), and lack of social support networks (5 per cent). For Skilled Worker Principal Applicants, the three most significant barriers were credentialization (28 per cent), lack of Canadian experience (28 per cent), and inability to communicate in an official language (13 per cent) (Statistics Canada, 2005). It is interesting to note that in the relatively brief amount of time in Canada so far, a much higher proportion of immigrants have sought help from family members or friends when looking for work than through formal channels such as educational institutions or immigrant serving agencies. Of those surveyed, 76 per cent came to Canada with credentials acquired elsewhere. Within 6 months of landing, just under 40 per cent of these individuals had had their credentials assessed. For 26 per cent, this verification had been done by an educational institution, an employer, or a professional body. For the remaining 13 per cent, this verification had been done either outside Canada or by an immigration officer. At least some in the latter group would not yet have had these credentials validated in the labour market itself (Chiu, 2003). Of those who had undertaken an assessment of their credentials, just over half (56 per cent) were fully validated and 19 per cent were partially validated. For Skilled Worker PAs, the corresponding figures were 63 and 17 per cent (Statistics Canada, 2005). These early difficulties entering the labour market help explain two other findings in the survey. Of those who were able to find work relatively quickly (within 6 months), only 40 per cent were able to do so in the same field as their pre-migration employment. Also, 67 per cent of the survey respondents plan to take additional education or training in Canada. In fact, 45 per cent had already pursued some form of training, particularly language courses. In sum, these LSIC results provide a picture of the experience of a single cohort of immigrants very early in their settlement process. As is so often the case, they can be interpreted positively or negatively. On the negative side, Canadian results are 45 Note that only Government Assisted Refugees are included in LSIC. Those accepted through an asylum claim were not surveyed, as they had been in Canada for some time before their official landing date. DIMA March

199 certainly less favourable than those seen in the parallel survey in Australia (Richardson and Lester, 2004), and most newcomers still face the important hurdles of credentialization and obtaining their first job. On the positive side, there is evidence that the selection system is working reasonably well, in that the early experience of Principal Applicants in the Economic Class is much better than average. Also, respondents indicated high levels of overall satisfaction with their experience in Canada thus far (over 70 per cent indicated that they were either very satisfied or satisfied. Also, among those who had found work, 75 per cent expressed satisfaction with their job (Statistics Canada, 2005). IMDB A variety of studies using the IMDB have been conducted by analysts at Citizenship and Immigration Canada, and a small number have been published by academics. I will only provide a light summary of these reports and articles here, before turning to explore some recent IMDB data in detail. The structure of the IMDB is described in Langlois and Dougherty (1997) and Abbott (2003). The IMDB has fostered two types of analysis. First, there are a number of time series studies that survey the labour market experience of immigrants at fixed intervals after their arrival. In this way, the situation of recent arrivals can be compared with earlier cohorts in an effort to understand the changing dynamics of settlement. Secondly, there are cross-sectional studies that examine the situation of immigrants that are in the database in a given tax year. IMDB-based research corroborates a number of the worrying findings associated with the census-based studies discussed earlier. In particular, there is no question that initial earnings (defined as the first complete year in Canada after landing) by immigrants of all classes have fallen considerably since the early 1980s (CIC, 1998; Li, 2003b). Worse, this decline has been most pronounced for immigrants arriving with higher levels of education (CIC, 1999). As Worswick and Green (2002) note: returns to foreign experience in all education groups have gone from being significant and positive for the entry cohort to insignificant and even, at times, negative for the 1990s entry cohorts (also see Waslander, 2003). Certain groups of immigrants have been particularly affected by this trend. Wang and Lo (2003) use the IMDB to show that, while the level of human capital of Chinese-origin immigrants has been rising significantly, their levels of employment and earnings have been deteriorating (also see Li, 2003b). This has occurred in conjunction with a shift from Hong Kong to Taiwan and PR China as the primary sources of Chinese-origin immigrants to Canada. Wang and Lo estimate that it will take at least 20 years for Chinese-origin immigrants to reach income parity with the general Canadian population. The twin problems of finding appropriate work and blocked mobility are leading many immigrants to selfemployment, according to Li (2001b; 2001c). The ratio of immigrants reporting selfemployment earnings rises over time since landing, and is highest for men and those who are better educated. However, economic returns associated with small-scale 194 Evaluation of the General Skilled Migration Categories

200 entrepreneurship are small and, in fact, immigrant earnings from self-employment are actually lower than those from regular employment, especially when controls for human capital are added to the analysis. Finally, David Ley (2003) has used the IMDB to assess the economic contributions of Business Class immigrants and concludes that either the data under-represents their incomes, or that their incomes are much lower than would be expected given their pre-migration success. He also notes that the number of Business Class immigrants who are in the IMDB is surprisingly small given the number admitted in the period he surveys, and suggests that this may mean that many have returned to their countries of origin. As noted, the analyses in the previous paragraph lend credence to the view that immigrants are not faring especially well in Canada. However, this is not the whole story. First, as Worswick and Green (2002) have pointed out, in the 1990s the labour market appears to have punished all new entrants, whether immigrant or Canadian born (though the impact has been more pronounced for immigrants). They calculate that 40 per cent of the decline in returns to the human capital of immigrants can be explained from the more general structural changes that have taken place. Moreover, they argue that a further 20 per cent of the decline can be attributed to: a shift in the source country composition of the inflow away from countries from which we expect it would be easy to transfer human capital. In other words, the transformation of Canadian immigration, from a mainly European and American base to a global base, is important here. The credentials and pre-migration experience of immigrants from non-western countries was probably always discounted, but this problem has become magnified as the ratio of these groups within the total immigrant population has increased. Secondly, there is a wide gap between the economic participation and of Principal Applicants, especially Skilled Workers who were subject to the full points assessment process, and all of the other classes of admission. Research conducted on the labour market participation and earnings of recent immigrants shows, conclusively, that Principal Applicants of the Skilled Workers category obtain jobs, and achieve incomes that are equivalent to the average of all Canadians, very quickly. For those arriving in the early 1990s, even during the wrenching recession of that period, the catch-up time for Skilled Worker PAs (to the average level of earnings of all Canadians, with both men and women included) was just three years (CIC, 1998; Hiebert, 2002). Those who arrived as spouses or dependents, or as refugees, experienced much more difficulty and concomitantly longer catch-up periods. In this sense, the selection system is fulfilling its mandate, though, as seen in the case of Ley s research, the situation for the Business Class subgroup of economic immigrants is less clear. Li (2003) adds an interesting twist to these findings by showing that immigrants admitted in other classes achieved similar economic success to Skilled Worker PAs, when they arrive with high levels of human capital (i.e., sufficient to pass the points threshold). DIMA March

201 Finally, thirdly, while returns to foreign experience and education have declined in the past two decades, returns to Canadian experience have increased (Worswick and Green, 2002; Li, 2003b). This point is clearly visible in a series of charts that have been generously made available by the Research and Evaluation branch of Citizenship and Immigration Canada (Figures A1.4 to A1.7), which uses the most recent IMDB files available at this time. 46 Figure A1.4 shows that employment earnings for male immigrants, in all classes, in the first year after entry declined in real terms between the early 1980s and Again, recall that the average level of education of immigrants rose substantially over these years (but so did the average for the Canadianborn workforce). Male immigrants arriving in 1982 reached parity with the average earnings of all males in the Canadian labour force in 1994, 12 years after landing. None of the subsequent cohorts of males have achieved this economic outcome yet. However, note the steep earnings increments for recent immigrants in the first few years after their arrival, indicating a high rate of return for Canadian experience. The story is broadly similar for women (Figure A1.5), though the improvement in returns for recently arrived cohorts is not as dramatic as it has been for men. 46 Regrettably, the most recent IMDB file available at the time this report is being written is Data for both 2002 and 2003 are expected to be released by Statistics Canada in the near future. 196 Evaluation of the General Skilled Migration Categories

202 Figure A1.4: Employment Earnings for All Male Immigrants, 15-64yrs by Landing Year Cohort ($2001) Tax Year Entry All Canadians Male Source: Special tabulation of the IMDB (by CIC) Figure A1.5: Employment Earnings for All Female Immigrants, 15-64yrs by Landing Year Cohort ($2001) Tax Year Entry All Canadians Female Source: Special tabulation of the IMDB (by CIC) DIMA March

203 Figure A1.6: Employment Earnings for Male SPAs, 15-64yrs by Landing Year Cohort ($2001) Tax Year Entry All Canadians Male Source: Special tabulation of the IMDB (by CIC) Figure A1.7: Employment Earnings for Female SPAs, 15-64yrs by Landing Year Cohort ($2001) Tax Year Entry All Canadians Female Source: Special tabulation of the IMDB (by CIC) 198 Evaluation of the General Skilled Migration Categories

204 A much more positive situation is revealed in Figures A1.6 and A1.7, which depict the level of earnings of Skilled Worker PAs. Starting with men, incomes at entry have declined significantly, from parity with all employees (male and female combined) in the mid 1980s (when Skilled Worker PAs were required to have a job offer, and relatively few were admitted to Canada) to roughly half of the average level of earnings in 2001 (and only about one-third the level of average male incomes in the same year). The cohort that arrived in the punishing economic circumstances of 1991 reached parity with average male earnings 7 years later. More recent arrivals have done so more quickly, in 3 years for those landing in 1997 and 1998 for example (also see Ruddick, 2003). The situation for women Skilled Worker PAs, when compared with average female earnings in Canada, is even more impressive. For recent cohorts, parity has been achieved in one or two years. In the outpouring of research that has followed the release of each census in Canada, the special circumstances of Skilled Worker Principal Applicants are largely invisible. Since they comprise only about one-fifth of total admissions, they have only a limited impact on the total picture of economic integration. Hence the success of this group is not registered in these studies. A1.6 Immigrant economic integration In 2001: A cross-sectional perspective Thus far, I have mainly summarized research that emphasizes the longitudinal capacity of the IMDB, that is, time-series analysis. In this part of the report, I summarize a special tabulation of the IMDB that compiles the information of all 1.7 million immigrants landing between 1986 and 2001 who filed a tax return for This cross-sectional approach has the distinct disadvantage of ignoring cohort effects, which we know are important. However, it has the advantage of simplicity. Also, at any given point in time, a society is actually comprised of a stock of people who have arrived in many cohorts; in that sense the question how are immigrants doing? is perhaps even more important than how do immigrants who have been here 5 years compare with those who arrived in the 1970s after they had been here 5 years?. There are three key statistics to remember throughout this section: in the 2001 tax year the average employment earnings claimed by all Canadians over 15 years old was $32,676, which was comprised of an average level of earnings of $39,871 for men and $24,879 for women (figures supplied by Citizenship and Immigration Canada, based on information from Revenue Canada). For the most part I treat all immigrants landing in the period together, but it is worth noting that it is made up of at least three cohorts, those arriving in the relatively robust economy of the late 1980s, the recession of the early 1990s, and the fairly prosperous years of the late 1990s and into the new decade. Put another way, these can be thought of, respectively, as settled immigrants (10 years or more in Canada), those at an intermediate stage, and newcomers (less than 5 years in Canada). As noted in the previous section, time-series data shows that individuals in the second 47 I gratefully acknowledge the Multiculturalism and Immigration Services Branch, in the Ministry of Attorney General, Province of British Columbia, for access to these data. DIMA March

205 cohort have not been able to achieve the same level of upward economic mobility as those who came before or since. However, the 2001 cross-section suggests a somewhat more positive picture. While it is true that even the settled cohort ( ) has not yet achieved parity with national earnings, once again we see that the situation for points-selected immigrants is far better. Both cohorts of Skilled Worker PAs arriving in the late 1980s and early 1990s had exceeded the average earnings of Canadians by 2001 (in fact, this was already true of the female cohort who had arrived between 1996 and 2001) (Table A1.3). Unfortunately, it is difficult to compare total income statistics in the IMDB with figures for the whole Canadian population, so Table A1.4 cannot be compared with any reference group. Note that the population counts in Table A1.4 are much larger than those in Table A1.3 because it includes all of the immigrants who submitted a tax form in 2001, while Table A1.3 only includes those who submitted a tax form that included earnings income. Again, Table A1.4 reveals that Principal Applicants in the Skilled Workers program are achieving impressive economic mobility. Table A1.3: Average employment earnings, by landing cohort (86-01 landings), Canada Total Male Female # Avg. # Avg. # Avg. All immigrants ,065 29, ,560 34, ,505 23, ,200 25, ,540 29, ,660 20, ,795 21, ,945 25, ,850 15,784 Total 1,228,060 24, ,045 29, ,015 19,509 Skilled Worker PA ,240 44,845 34,330 49,120 14,910 35, ,050 42,558 41,710 47,701 20,340 32, ,625 31, ,570 33,532 37,055 25,143 Total 262,915 36, ,610 39,440 72,305 29, Evaluation of the General Skilled Migration Categories

206 Table A1.4: Average total income, by landing cohort (86-01 landings), Canada Total Male Female # Avg. # Avg. # Avg. All immigrants ,570 25, ,540 30, ,030 20, ,275 21, ,385 26, ,890 17, ,210 17, ,875 21, ,335 12,213 Total 1,686,055 20, ,800 25, ,255 15,922 Skilled Worker PA ,925 40,266 43,320 44,014 18,605 31, ,680 38,210 51,430 42,790 25,250 28, ,540 26, ,400 28,861 48,140 21,390 Total 331,145 32, ,150 34,601 91,995 25,499 Two important indicators of the human capital of individuals admitted under the major categories of the Canadian immigration system are shown in Tables A1.5 and A1.6, which also provide an indication of the earnings and income dynamics of the different classes. I have used the proportion with a completed university degree as a measure of the relative educational attainment of each category. The next column in the tables show the proportion of each group that is able to communicate in one or both of Canada s official languages (based on self-assessment). The first and entirely predictable point is that the average educational attainment and familiarity with English and French varies a great deal between classes, with Skilled Workers distinctly better prepared for the Canadian labour market than members of all other groups. Earnings and overall income figures are, accordingly, highest for this group. Table A1.5: General characteristics of the Canadian immigrant population, by class, 2001 (landing years: ): Employment earnings, 2001 tax year Total Univ. deg. Off. Lang. Female Total Male Female number % % % Av. $ Av. $ Av. $ Total 1,228, ,723 29,269 19,509 Skilled Worker PA 262, ,600 39,441 29,110 Business PA 16, ,524 22,230 16,518 SW Spouse&Dep 198, ,769 22,141 18,436 Bus Spouse&Dep 41, ,315 18,193 14,978 Family 408, ,645 25,983 17,555 Refugee 177, ,319 25,513 17,143 DIMA March

207 Table A1.6: General characteristics of the Canadian immigrant population, by class, 2001 (landing years: ): Total income, 2001 tax year Total Univ. deg. Off. Lang. Female Total Male Female number % % % Av. $ Av. $ Av. $ Total 1,686, ,777 25,429 15,922 Skilled Worker PA 331, ,073 34,600 25,501 Business PA 41, ,822 15,242 12,083 SW Spouse&Dep 267, ,535 19,952 14,867 Bus Spouse&Dep 75, ,965 13,994 10,854 Family 563, ,132 22,998 14,168 Refugee 248, ,424 23,040 14,293 Secondly, apart from Skilled Worker PAs, the other classes fall into two general categories. For men, the next most successful groups, in terms of employment earnings and total income, are individuals sponsored by family members, and refugees. Business Class PAs, and the spouses and dependents of all economic immigrants, are earning the least of all groups. The same general structure is evident for women, with one exception: the spouses and dependents of Skilled Worker PAs earn approximately the same incomes as Refugees and Family Class immigrants. The situation of business immigrants is beyond the scope of this report, but it is worth noting that researchers analyzing this group tend to be skeptical about its reported taxable income (e.g., Ley 2003). Business immigrants have a high propensity to be self-employed and the IMDB traces only their net self-employment earnings. Arguably, the economic activity that they generate might be better revealed by gross self-employment earnings. Also, of course, it is in the interest of the taxpayer to minimize reported net self-employment income. Statistics Canada and CIC are investigating better methods of monitoring the economic engagement and success of this group. The same indicators of human capital are used in Tables A1.7 and A1.8, but attention is shifted to source region (based on country of last permanent residence). There is a great deal of variation in the human capital attributes of immigrants landing in Canada from different regions of the world, especially when we look at the total immigrant population (Table A1.7). Those who are assessed through the points system are much more likely to be university educated and speak an official language, so the degree of variation based on source countries is less in Table A1.8. Two findings are particularly worth highlighting. First, there is substantial variation in the earnings of immigrants from different source regions that approximately coincides with the general level of economic development around the world. That is, in rough terms, immigrants from more developed regions tend to earn more through employment in Canada. For men, therefore, individuals from the USA, Europe, and the Other category (which is dominated by Australia and New Zealand) had the highest earnings, and the same top 202 Evaluation of the General Skilled Migration Categories

208 rankings (with one switch) are maintained when we focus exclusively on Skilled Worker PAs. The patterns are similar for women. But there are also some exceptions. In Table A1.7, men who immigrated from Africa do not fit this general logic. However, this result is likely influenced by a relatively high number of White South African immigrants (there is no variable for ethnicity or race in the IMDB so I cannot verify this point). The earnings of Southeast Asian women are also well above average, and not much lower than those of women immigrants from either Europe or the Other category. This is likely related to the relatively high level of human capital associated with women immigrating from the Philippines to Canada, many of them through the Live-in Caregiver Program. 48 That is, these patterns reflect the complex intersection of immigration class and region of origin. In particular, for example, South Asia has the highest ratio of Family Class immigrants, and the largest share of Business Class immigrants has come from Eastern Asia. Table A1.7 General characteristics of the Canadian immigrant population, by source region, 2001 (landing years: ), Employment earnings Total number Univ. deg. (%) Off. Lang. (%) Female (%) Total Avg.$ Male Avg.$ Female Avg.$ Total 1,228, ,719 29,265 19,506 USA 24, ,400 43,933 27,937 Latin America 162, ,193 26,996 19,311 Europe 272, ,834 36,636 22,047 Africa 91, ,190 29,631 18,852 WA Middle East 105, ,681 26,373 17,172 South Asia 203, ,078 25,249 15,246 East Asia 189, ,389 26,076 18,392 Southeast Asia 165, ,945 27,225 21,172 Other 13, ,094 36,598 22,461 r univ/tot$ =.304 r offlang/tot$ = Note that a Live-in Caregiver is admitted to Canada on a temporary visa and has the right to apply for permanent residence after two years in Canada. The individual would be recorded in the IMDB at the time of landing (i.e., when they take up their permanent residence), which would, in most cases, be at least three years after they arrived in Canada. DIMA March

209 Focusing directly on Skilled Worker PAs (Table A1.8), both men and women from Africa have achieved above-average earnings, as well as men from Latin America. In contrast, immigrants from all of the regions of Asia have below-average earnings. In part, these outcomes are related to the human capital of individuals, which I explore below in more detail. They also illustrate the larger problem identified by Reitz, however: the Canadian labour market accepts the human capital of immigrants from industrialized countries (which are mainly in Europe or populated by people of European descent) more readily that from other parts of the world. These data could be interpreted as evidence of labour market discrimination, as seen earlier in census-based research. Having said that, the earnings of Skilled Worker PAs from South Asia, which is the lowest ranked source region on Table A1.8, still compare relatively favourably with overall Canadian averages: $32,997 vs. $39,871 for men and $26,329 vs. $24,879 for women. Also, while I have not reported the statistics on any of these tables, it is worth noting that the earnings of the and cohorts of Skilled Worker PAs from South Asia are well above the average Canadian figures. Secondly, Tables A1.7 and A1.8 suggest that the impacts of the two forms of human capital included in this analysis are not equal. In fact, while it is not exactly a rigorous statistical test (given the lack of appropriate controls), it is interesting to note the relatively low correlation between educational attainment measured by university completion and employment earnings. The correlation coefficient for Table 7 is a modest.304 and, for Table 8, it is even lower at.140. This latter figure is quite striking, and tells us that there is little correspondence between the presence of university graduates in a regional group of Skilled Worker PA immigrants, and its earnings once in Canada, though it is important to remember that no other variables are controlled. Conversely, there is a much higher correlation between language facility and earnings, in both tables. Recall that language in the IMDB is measured only at the time of landing and there is no means in this data set to know if immigrants learned or improved English or French after landing. Thus, language capability in the initial settlement phase appears to be critical. Table A1.8: General characteristics of Skilled Worker, PAs, by source region, 2001 (landing years: ), Employment earnings Total number Univ. deg. (%) Off. Lang. (%) Female (%) Total Avg.$ Male Avg.$ Female Avg.$ Total 262, ,590 39,434 29,097 USA 4, ,082 65,673 46,515 Latin America 17, ,183 40,684 27,700 Europe 72, ,012 47,306 31,056 Africa 20, ,273 43,066 31,094 WA Middle East 25, ,149 35,946 27,466 South Asia 34, ,244 31,977 26,329 East Asia 60, ,582 33,476 26,776 Southeast Asia 24, ,685 36,661 28,296 Other 2, ,071 53,187 38,161 r univ/tot$ =.140 r offlang/tot$ = Evaluation of the General Skilled Migration Categories

210 The importance of language is even more clearly illustrated by the series of charts provided in Figures A1.8 through A Figures A1.8 and A1.10 show that, for all admission classes, earnings rise quite steeply in correspondence with educational attainment. However, for all but one class, this pattern only really arises for those who arrived with the ability to converse in an official language. Without the language, immigrants are far less able to capitalize on their educational background. In fact, in a number of specific cases, earnings are flat regardless of educational attainment. This point is corroborated by the data in Table A1.9, where I have computed a simple index that reports the added amount earned by university graduates compared with high school graduates, for men and women separately, and for each major landing class. For those with capability in English or French at landing, added education translates directly into earnings. This relationship is far more mixed for those who arrive without an official language. For a number of admission categories, university graduate earn the same or even less than high school graduates. This is true for both men and women. The only exceptions to this pattern are the Other category, which is very small, and Refugees. In another paper, I have argued that state support for Government Assisted Refugees, which provides them a living allowance equivalent to welfare, for one year, enables them to acquire language skills before entering the labour market (Hiebert, 2002). 49 Note that, in all of these charts, when a bar is not capped, it means that the income level is higher than the highest demarcation on the y axis. DIMA March

211 Figure A1.8: Average employment earnings, Canada, males Skilled workers (PAs) Business classes (PAs) 40,000 40,000 35,000 35,000 30,000 30,000 25,000 20,000 15,000 Off lang No off la 25,000 20,000 15,000 Off lang No off la 10,000 10,000 5,000 5,000 0 < High sch High sch Some tert Trade dip Univ deg 0 < High sch High sch Some tert Trade dip Univ deg Family class Refugees 40,000 40,000 35,000 35,000 30,000 30,000 25,000 20,000 15,000 Off lang No off la 25,000 20,000 15,000 Off lang No off la 10,000 10,000 5,000 5,000 0 < High sch High sch Some tert Trade dip Univ deg 0 < High sch High sch Some tert Trade dip Univ deg Figure A1.9: Average employment earnings by landing cohort, Skilled Worker PA, males Total ,000 60,000 50,000 50,000 40,000 30,000 20,000 Off lang No off la 40,000 30,000 20,000 Off lang No off la 10,000 10,000 0 < High sch High sch Some tert Trade dip Univ deg 0 < High sch High sch Some tert Trade dip Univ deg ,000 60,000 50,000 50,000 40,000 30,000 20,000 Off lang No off la 40,000 30,000 20,000 Off lang No off la 10,000 10,000 0 < High sch High sch Some tert Trade dip Univ deg 0 < High sch High sch Some tert Trade dip Univ deg 206 Evaluation of the General Skilled Migration Categories

212 Figure A1.10: Average employment earnings, Canada, females Skilled workers (PAs) Business classes (PAs) 40,000 40,000 35,000 35,000 30,000 30,000 25,000 20,000 15,000 Off lang No off la 25,000 20,000 15,000 Off lang No off la 10,000 10,000 5,000 5,000 0 < High sch High sch Some tert Trade dip Univ deg 0 < High sch High sch Some tert Trade dip Univ deg Family class Refugees 40,000 40,000 35,000 35,000 30,000 30,000 25,000 20,000 15,000 Off lang No off la 25,000 20,000 15,000 Off lang No off la 10,000 10,000 5,000 5,000 0 < High sch High sch Some tert Trade dip Univ deg 0 < High sch High sch Some tert Trade dip Univ deg Figure A1.11: Average employment earnings by landing cohort, Skilled Worker PA, females Total ,000 40,000 35,000 35,000 30,000 30,000 25,000 20,000 15,000 Off lang No off la 25,000 20,000 15,000 Off lang No off la 10,000 10,000 5,000 5,000 0 < High sch High sch Some tert Trade dip Univ deg 0 < High sch High sch Some tert Trade dip Univ deg ,000 40,000 35,000 35,000 30,000 30,000 25,000 20,000 15,000 Off lang No off la 25,000 20,000 15,000 Off lang No off la 10,000 10,000 5,000 5,000 0 < High sch High sch Some tert Trade dip Univ deg 0 < High sch High sch Some tert Trade dip Univ deg DIMA March

213 Figures A1.9 and A1.11, which highlight the Skilled Worker PA class in greater detail, add an important nuance to this point. Men and women in the most recent cohort who do not speak English or French earn approximately the same amount regardless of their level of educational attainment. But those who arrived under the same circumstances in earlier cohorts have realized some earnings benefit from their education (though it is much lower than the benefit received by those who already had language skills at the time they officially landed in Canada). This suggests that earlier cohorts have been able to upgrade their linguistic capabilities and that this addition to their human capital is acknowledged in the labour market. Finally, Figures A1.12 and A1.13 show that the earnings patterns established in the labour market have consequences beyond it. That is, there are systematic variations in the total incomes reported by immigrants that largely mirror those we have seen in terms of earnings. In other words, other forms of income such as social assistance do not neutralize the differentials that arise in the labour market. Marginalization in the workplace has large consequences. Table A1.9: Index of employment income for university degree vs. high school education, 2001, Canada (by language knowledge at landing) Skilled Worker PA Business PA SW Spouse & Dep Bus Spouse & Dep Family Refugee Other Males off. lang. no off. lang Females off. lang. no off. lang Evaluation of the General Skilled Migration Categories

214 Figure A1.12: Average total income, Canada, males Skilled workers (PAs) Business classes (PAs) 40,000 40,000 35,000 35,000 30,000 30,000 25,000 20,000 15,000 Off lang No off la 25,000 20,000 15,000 Off lang No off la 10,000 10,000 5,000 5,000 0 < High sch High sch Some tert Trade dip Univ deg 0 < High sch High sch Some tert Trade dip Univ deg Family class Refugees 40,000 40,000 35,000 35,000 30,000 30,000 25,000 20,000 15,000 Off lang No off la 25,000 20,000 15,000 Off lang No off la 10,000 10,000 5,000 5,000 0 < High sch High sch Some tert Trade dip Univ deg 0 < High sch High sch Some tert Trade dip Univ deg Figure A1.13: Average total income, Canada, females Skilled workers (PAs) Business classes (PAs) 40,000 40,000 35,000 35,000 30,000 30,000 25,000 20,000 15,000 Off lang No off la 25,000 20,000 15,000 Off lang No off la 10,000 10,000 5,000 5,000 0 < High sch High sch Some tert Trade dip Univ deg 0 < High sch High sch Some tert Trade dip Univ deg Family class Refugees 40,000 40,000 35,000 35,000 30,000 30,000 25,000 20,000 15,000 Off lang No off la 25,000 20,000 15,000 Off lang No off la 10,000 10,000 5,000 5,000 0 < High sch High sch Some tert Trade dip Univ deg 0 < High sch High sch Some tert Trade dip Univ deg DIMA March

215 A1.7 Conclusion Earlier in this report I outlined two pervasive discourses in immigration in Canada, as fundamentally necessary vs. deeply flawed. I have not really engaged with the first of these but sought to investigate the second in some detail, through surveying relevant academic and policy documents and a set of administrative data the IMDB that is particularly relevant for this purpose. There is certainly cause for concern. Immigration, seen as a whole, especially in the census, is yielding a population of newcomers that is facing formidable obstacles to full participation in the Canadian economy. While tens of thousands succeed and find appropriate jobs, the aggregate picture is one of falling initial wages and relative household incomes for recent cohorts. But IMDB data challenge any attempt to portray these as universal tendencies. The class that is at he heart of the economic side of immigration policy, Skilled Worker Principal Applicants, which is subject to the points system, is achieving earnings parity with average Canadian incomes quickly, in about two years for women and less than five for men. While stories of wasted human capital abound, it would be hard to interpret this as a failing system though improvement in credentialization would undoubtedly lead to even better results. A balanced portrayal of Canadian immigration, one that charts a course between the polemics, would have to acknowledge four basic, related points. First, no matter how much energy is expended in perfecting the points assessment system, it only pertains to somewhere between one in four and one in five immigrants, at least in a direct sense. Most immigrants will be admitted to Canada outside points assessment. No doubt this will also be true after whatever changes we will see in the near future are implemented. Secondly, Canadian immigration policy has been, and will continue to be, based on an intricate and dynamic combination of social and economic objectives. This report, which targets the economic side and, within that, has concentrated on the Skilled Worker category, must be seen as partial in scope. While it is important to subject immigration to economic analysis, such an approach can never capture the whole picture. Third, the particular form of human capital that appears to matter most, for all admission categories except Refugees, is language facility. Fourth, the anomaly here, that Refugees who arrive without English or French do not suffer longterm penalties in the labour market, speaks to the importance of settlement services in shaping economic integration. Selection is of course highly significant in shaping outcomes, but the settlement context is also vital. *** While this report was being composed, the media has informed the Canadian public that CIC Minister Joe Volpe is set to introduce dramatic changes to immigration policy. Reports suggest that he has already made one presentation to his Cabinet colleagues and will make another in October (Toronto Star, 2005; Clark, 2005). He is said to be determined to follow through on a promise that was initially made by the Liberal Party 12 years ago, in its Red Book, published during the 1993 election campaign, to raise gross immigration to 1 per cent of the national population annually. He is apparently 210 Evaluation of the General Skilled Migration Categories

216 ready to introduce a plan to raise targets incrementally over the next 5 years in order to achieve this level, increasing the number admitted to Canada from 218,000 per year over the past decade to at least 300,000 (equivalent to a 38 per cent rise). While this has not yet been discussed in the media, such a major shift in policy would require a enormous investment in both processing capacity and the settlement services system. In any case, Clark (2005), a reporter for the Globe and Mail, states that the new system will continue to prioritize highly educated applicants, but that the admission of skilled tradespersons will be facilitated. Volpe is said to believe that provincial and possibly municipal governments, as well as businesses, should play a large role in selection, especially for the skilled trades group. Also, greater emphasis will likely be placed (as in the Australian case) in retaining international students who complete their degrees in Canada. Monumental changes are therefore quite possible. If Minister Volpe s proposals are accepted and operationalized, this report will quickly become outdated. It already addresses, by necessity, the outcomes of policies that antedate the most recent assessment regime. It is possible that it will soon be two steps away from current policy. Significantly, there has been insufficient time to evaluate the efficacy of the transformation inaugurated in Moreover, the final results of LSIC, which was designed to inform policy, will be released long after the policies that brought that cohort of immigrants have been revised. The rapidity of policy developments reflects, above all, I think, the importance of immigration to Canada as a nation state. Immigration is constantly in the news, and there is a kind of permanent restlessness about improving both selection systems and settlement outcomes. Policies therefore sometimes evolve faster than their impact can be fully appreciated. DIMA March

217 INSET 1: The British Columbia Provincial Nominee Program The first official agreement between the federal government and the province of British Columbia was signed in The agreement outlined the BC government s jurisdiction in selecting certain classes of immigrants. This role was codified in 2001 with the establishment of BC s Provincial Nominee Program (PNP). The following year the federal government passed the Immigration and Refugee Protection Act (IRPA), which was the first major revision of legislation in over 20 years. IRPA formally acknowledged the role of provincial governments in PNPs and situated this form of selection within the broad category of economic immigration. More recently, the specific agreement between Canada and BC was renewed in 2004, and the PNP is defined in detail in Annex C of the Agreement for Canada BC Cooperation on Immigration ( The BC PNP has two major components. First, it is designed to encourage the immigration of skilled workers in strategic occupations to the province. The goal of this program is summarized succinctly in the relevant website as: The program is aimed at high skilled occupations, where the potential for gains to the economy are substantial and where it is expected that there will be a transfer of skills to the BC workforce. ( The BC government maintains a list of sectors in which there is a high demand for skilled labour (e.g., aerospace; IT). Within these sectors, employers may apply on behalf of individuals they intend to hire. That is, individuals do not apply to the PNP directly, but businesses do. Note that it is possible for an employer to apply to the PNP for a worker who already has a job and who is in Canada on a temporary work visa. Also, employers are able to apply on behalf of international students who are studying at publicly-funded post-secondary educational institutions in BC, provided they are prepared to offer them a job upon graduation. Within the program, there are special provisions for small and medium sized businesses and also for employers located outside Metropolitan Vancouver. In other words, there are specific economic development initiatives built into the PNP that go beyond the general goal of facilitating the permanent immigration of skilled workers. When an application arrives, it is assessed according to these criteria: the employer; the BC labour market; the standards of the industry; the position; the remuneration offered; the long term prospects for employment; the individual's ability to settle in the province; the suitability of the individual in relation to their skills and experience and those required for the position; the individual's immigration status in Canada; and, whether a significant economic benefit is created for BC. ( Given the above, the assessment process is labour intensive and the number admitted in this program is relatively small. However, depending on provincial priorities and processing 212 capacity, the number could rise, since there is Evaluation no specific of limit the General provided Skilled in Migration Categories

218 the 2004 agreement. Despite the high level of scrutiny of applications, processing time is rapid, typically within one month. The recruitment of entrepreneurs constitutes the second major component of the BC PNP. In this case, individuals apply directly to the program and are considered if they meet the following minimum criteria: successful business experience; minimum net worth of C$2 million; minimum investment of C$800,000; applicant must have a minimum one-half equity; business plan; business to create a minimum of 5 new jobs; [and] applicant to have a direct management role. ( There is also a special provision for applicants who intend to establish their firms outside Metropolitan Vancouver. In that case, the criteria of net worth, minimum investment, and minimum number of jobs are all significantly reduced. Regardless of the category of the PNP, once the BC government approves an application, it nominates the individual to Citizenship and Immigration Canada. CIC is the final authority on admission and in particular requires that all nominated individuals be screened for health and security/criminality. However, the Canada-BC agreement stipulates that CIC will prioritize provincial nominations and will process them quickly. DIMA March

219 INSET 2 Immigration Levels for 2005 Target Ranges ECONOMIC CLASS Skilled workers 112, ,500 Business immigrants 9,500-10,500 Provincial/territorial nominees 8,000-10,000 Live-in caregivers 2,500-3,000 Total Economic Class (including dependants) 132, ,000 FAMILY CLASS Spouses, partners and children 46,000-50,000 Parents and grandparents 5,500-6,800 Total Family Class 51,500-56,800 PROTECTED PERSONS Government-assisted refugees 7,300-7,500 Privately sponsored refugees 3,000-4,000 Protected persons recognized as such in Canada 16,500-17,500 Dependants abroad of protected persons landed in Canada 4,000-4,800 Total Protected Persons 30,800-33,800 OTHERS Humanitarian and compassionate grounds 5,100-6,200 Permit holders Total Others 5,200-6,400 TOTAL PERMANENT RESIDENTS 220, ,000 Source: CIC 2005b Immigration Levels from 2000 to Annual Immigration Plans and Landings ECONOMIC CLASS Planned Landed Planned Landed Planned Landed Planned Landed 116, , , , , , , , , , , ,000 FAMILY CLASS 57,000-61,000 60,426 57,000-61,000 66,647 56,000-62,000 65,277 59,000-64,500 PROTECTED 22,100-29,966 22,100-27,899 23,000-25,111 28,100 - PERSONS 29,300 29,300 30,400 32,500 OTHER 4,000 3,244 4,000 2, Total 200, ,000 Source: CIC, 2005a 226, , , , , ,000 1, , , ,000 68,863 25,981 5, , Evaluation of the General Skilled Migration Categories

220 Inset 3: Canadian point systems compared Canada Point System Pre-2002 Max Canada Point System Post Max Quebec Current Point System Max Education No high school 0 No high school 0 No high school 0 High school - Basic 5 High school - Basic 5 High School - Basic 3 High school - University entrance and 12 yrs full time study Post-secondary 1 year or trades I-year diploma or apprenticeship and 13 yrs full time study Post-secondary 2 years certificate Bachelor's degree - University 15 1-year Bachelor's degree 15 Post-secondary 3 years 7 Masters 16 2-year diploma or apprenticeship 20 Uni undergrad I yr 7 PhD Two years or more Bachelor's degree Uni undergrad 2 yrs 7 2 or more Bachelor's degrees 22 Uni undergrad 3 yrs 8 3-year Diploma, trade certificate 22 Uni undergrad 4+ 9 Master's degree 25 Masters 11 PhD 25 PhD Specialized education 2 nd Specialization 1 year 2 2 years 2 4 Privileged Training University Other 2 4 Education and Training No training 1 (On the job training Some on the job training 2 in addition to formal Job requires high school 5 education) Training beyond high school level 7 Job requires technical diploma and/or full apprenticeship 15 Job requires Bachelor's degree 17 Job requires graduate degree Experience 1 year 2 1 year 15 6 months 1 Additional years (each) 2 2 years months 2 3 years months years 4 2 years + 6 months 5 Must be within last 10 years 3 years 6 And in non-restricted occupation 3 years + 6 months 7 And in a skilled occupation 4 years 8 4 years + 6 months years and more Occupational Factor Applicant matches labour market Arranged Employment Either: Job offer is confirmed 15 Designated occupation Working in Canada on temp. Professsion in demand visa, with permanent job offer Full-time job offer, with EMP (?) 10 credentials recognized Demographic Factor Specific rules defined by Minister Age 21 to 44 years old to 49 years old to For each year < 21 or > 44-2 For each year <21 or > to Knowledge of English First official language French Oral comprehension to and French High proficiency : read, write, 9 4 French Oral expression to Moderate proficiency 6 2 French Written comprehension 0 16 Basic proficiency 3 9 (To a maximum of 2 points) 1 Studies in French Second official language High school education in French 2 High proficiency : read, write, speak 6 2 Post secondatry education in French 2 2 Moderate proficiency 4 2 English Oral comprehension to Basic proficiency 2 6 (To a maximum of 2 points) 1 24 English Oral expression to 6 DIMA March

221 Inset 3: Continued Canada Point System Pre-2002 Max Canada Point System Post Max Quebec Current Point System Max Personal Suitability (Based on interview) 10 Adaptability Spouse or common-law partner's to Personal qualities to level of education Previous study in Canada 5 Motivation to 2 Previous work in Canada 5 Knowledge of Quebec to 2 Arranged employment 5 Relatives in Canada 5 Previous stays in Quebec Study - 1 semester 4 Study - 2 semesters or more 6 Work - 3 months 4 Work - 6 months or more 6 Internship agreement 3 months + 5 Internship agreement 6 months + 6 Other kind of stay 2 weeks to 3 months 1 Other kind of stay 3 months Relations with a Quebec resident: F, M, B, Sis, Son, D, Commonlaw spouse 3 Grand-parents 2 10 Other relative or friend 1 3 Characteristics of Education spouse or common-law Secondary 2 Post-secondary 1 year 3 University 3 years 4 2 Specialization or privileged training 1 5 Professional experience 6 months 1 1 year and more 2 2 Age 20 to to French language Oral comprehension to Oral expression to Written comprehension 0 8 Children travelling with Children's age candidates 0 to 12 ea 13 to 17 ea 8 Capacity to be I month financially 0 autonomous 3 months 1 1 TOTAL POSSIBLE Applicant without a spouse 106 TOTAL POSSIBLE Apllicant with a spouse 123 ACKNOWLEDGEMENTS I wish to acknowledge the help of Elizabeth Ruddick, Colleen-Marie Dempsey, and Colleen Calvert from CIC, and Deb Zehr from the British Columbia government, for both access to the valuable data at the core of this report and also their help in understanding it. Any errors of fact are my responsibility. Also, the interpretation that I have made of the data is mine alone and is independent from the views of the Canadian and British Columbia governments. 216 Evaluation of the General Skilled Migration Categories

222 A2 Skilled Migration in and out of New Zealand: Immigrants, Workers, Students and Emigrants Richard Bedford University of Waikato A2.1 The brief for this paper At the outset, it is useful to recall the terms of reference for this briefing paper for the Symposium on the Evaluation of General Skilled Migration. Contributors have been asked to provide: Discussion of the policies in their own countries regarding skilled migration. This would include analysis of the role that skilled migration is seen to play in the economic, social and demographic context of their home country. Description of the way in which skilled migrants are chosen in their countries. This would include: - types of skilled visas and selection criteria - terms and conditions of skilled visas - how the selection process is managed by the appropriate agency/s (e.g. how applications are received and processed) - any available analysis of the economic social and demographic benefits of skilled migration. Short description of the way in which skilled migrants are chosen in Australia. Comparison of the strengths and weaknesses of the skilled migration selection processes of the home country and Australia. Analysis and conclusions regarding the strengths and weaknesses of the Australian approach to selecting skilled migrants. A2.2 A point of departure This paper accepts, as its initial premise, Graeme Hugo s (1999) argument that a new paradigm of international migration is needed if we wish to address effectively the patterns and processes of cross-border population movement in the late 20th and early 21st centuries. In a detailed examination of population flows into and out of Australia, DIMA March

223 Hugo suggested that there are qualitative as well as quantitative differences in recent international migration flows, as well as in the academic and policy discourses about these flows, from the patterns of movement and the debates that prevailed through much of the 20th century. Until recently there has been a tendency to differentiate quite sharply between permanent or settlement migration (usually termed emigration in source countries and immigration in destination countries) on the one hand, and temporary migration of workers ( labour migration or, sometimes, labour circulation ) on the other. In the contemporary setting, the conceptual boundaries between permanent and temporary migration have become very blurred, both as a result of the behaviour of movers, as well as through the actions of policy makers. From the late 1990s in Australia, Canada, New Zealand, the United Kingdom and the United States, there has been an important shift in emphasis in immigration policy to allow people at their destinations to seek approval for a different type of visa/permit status while onshore, rather than requiring them to return to their countries of origin before making application. New Zealand has allowed people here temporarily and lawfully to change to permanent status from the mid-1960s, but there was little encouragement through explicit policy settings for such changes in residence status. Recently, opening up opportunities to negotiate such changes as part of the regular process of holidaying, studying, or working in a country has resulted in new approaches to seeking skilled people who can be encouraged to take up residence and become ongoing members of the labour force in the host country. A prevailing stereotype of immigrants in the five countries mentioned above is people who have been granted approval for residence. Yet the numbers approved for residence tend to be matched if not greatly exceeded (at least in New Zealand s case) by people entering the country for 12 months or more for work or for study (or for both). The latter are usually not treated as immigrants by policy makers; they are temporary residents. To a member of the public walking through down town Sydney, Melbourne, Toronto, Vancouver, Auckland, London, Los Angeles or New York, it is impossible to tell precisely who is an immigrant and who is a temporary resident; if the people they observe are from different cultural or ethnic backgrounds to the majority populations, there is often a tendency to assume they are immigrants. The rapid growth in numbers of people who look different in recent years contributes to a public perception of extensive immigration and, at times, some strong criticism of the magnitude of the official migration programme that is linked to residence approvals. It makes much more sense, therefore, on the street as well as in the context of the changing policy settings referred to earlier, to acknowledge that immigration includes the temporary workers and the students who are studying for several years in their host countries. The latter sojourners are often indistinguishable from immigrants in terms of their impacts on demand for retail and professional services, as well as access to public utilities (including transport) and accommodation requirements. New Zealand s current skilled migration policy extends across residence approvals, temporary work visas/permits, and student visas/permits. There is a skilled migrant category in residence policy; one that was reviewed extensively in 2003 and a 218 Evaluation of the General Skilled Migration Categories

224 substantially revised policy came into operation from January There are several specific work-to-residence visas: the talent visa, the long-term skills shortage list, the long-term business visa, as well as a skilled migrant component to the temporary work visas/permits the labour market tested work permits. A recent change to the open work permit for recent graduates migration policy allows partners of students in areas of absolute skill shortage to apply for a work permit. These are the direct components of contemporary skilled migration policy in New Zealand. Perhaps more important than the specific temporary visa categories that prioritise labour market skills in demand, are the provisions for accumulating points required to quality for residence under the skilled migrant category through temporary work in New Zealand. Employment experience in the host country makes a very positive contribution to the transition to residence. Indeed, as will be shown below, a two year open work permit is an integral part of one of the pathways to residence approval in New Zealand a pathway for applicants who do not have a firm job offer on application and whose scores on some of the other settlement criteria are not as strong as they might become after some time working in the country. Temporary visas/permits cannot be separated from the residence approval process; they are now an integral part of the transition to residence. An holistic approach, that incorporates the flows for residence, temporary work and study, must be adopted in New Zealand at least, if one wishes to capture both the policies regarding skilled migration, as well as the types of visas and permits for people with skills that are having an impact on the economy, society, demography and environments of the host countries. A2.3 The approach There are three parts to the substantive content of this paper. The first contains an overview review of four contextual factors that are relevant for understanding the current immigration policy settings. These are: the nature of the contemporary nation state with its unitary political structure, its bi-cultural heritage and its multicultural population; the reality of a country of emigration as well as one of the traditional countries of immigration, and the role of immigrants in replacing New Zealanders who move overseas, especially across the Tasman to Australia; the browning of New Zealand s labour force as the population ages, and the role of a short-lived baby blip in the structural transformation of this labour force over the next two decades; the revolution in immigration policy since the 1986 review that provided the framework for a new Immigration Act (1987), the introduction of a points-based migrant selection system (1991), and a very belated and slowly evolving DIMA March

225 emphasis on settlement and labour market outcomes for both the migrants and the host society from the mid-1990s. The discussion of these factors will be brief; they have all been examined in the recent literature on international migration in New Zealand that is comprehensively documented in Trlin, Spoonley and Watts (2005). In the second section attention is focused on the current skilled migration programme, with particular reference to developments and approvals for residence, work and study between June 2004 and July Reference is made here to some recent trends in particular categories of skilled migrants, drawing on Immigration New Zealand s Management Information System (MIS) 50. I gratefully acknowledge here the access provided to unpublished information for the purposes of preparing this report. There is a brief discussion of the labour market and settlement outcomes that can be associated with skilled migration. However, the primary data base for evaluating outcomes the Longitudinal Immigration Survey: New Zealand (LisNZ) will not be available for another 5 or 6 years the first wave of interviews of migrants who have been in the country for around 6 months is currently in progress. The third section addresses the extent to which New Zealand s skilled migration programme is similar to and different from the Australian one as described in the literature provided by DIMIA. There are many similarities and this is not surprising; New Zealand s immigration policy makers monitor closely policy developments in Australia and Canada especially. Australia s immigration policy analysts also keep a close eye on how New Zealand s policy settings are evolving, especially given a concern in Australia that New Zealand can be used as a back door for entry of people who do not meet Australia s immigration selection criteria. There are also some important differences as well, especially with regard to the extent to which labour market demand is used regularly to fine-tune all aspects of skilled migration into New Zealand. To someone working on immigration in New Zealand, skilled migration to Australia appears to be more regulated and micro-managed in the interests of clear economic outcomes that have some immediate benefit for the host society. New Zealand retains some labour market-related categories of temporary migration that are not within the current Australian stable of categories, such as the Pacific Access Category, as much for sociopolitical as for economic reasons. 50 There have been some changes in the way the immigration function is referred to in New Zealand. Until July 2004 this function was undertaken within the Department of Labour (DoL) by its New Zealand Immigration Service (NZIS) business unit. Since then immigration has been part of the responsibilities of the Workforce Group within the Department of Labour. Within New Zealand a single Department of Labour brand is used, while offshore the Immigration New Zealand (INZ) brand is used. In this paper the INZ label is the most appropriate one to use, given its overseas focus. 220 Evaluation of the General Skilled Migration Categories

226 A2.4 The national context Unlike Australia, Canada and the USA, and with some important differences from the UK, New Zealand has a single level of government. There are no State/Provincial governments in New Zealand that have the authority to make policy in areas such as immigration. New Zealand s local authorities (Regional and District Councils) are charged with a range of responsibilities relating to the well-being of their communities, but they are all subject to the same sets of national policies and laws. There is only one immigration policy in New Zealand, and the debates about policy tend to be conducted at a national, rather than a sub-national level. This does not mean that there are not local/regional concerns about immigration and its role in development, but the policy debate remains very much a national one. There is limited consultation with local authorities and special interest groups when policy is being reviewed. The determination of immigration policy remains the responsibility of the Minister of Immigration and the Executive under an Immigration Act that provides a legal and administrative framework without specifying admission policies. While there is no requirement under law for there to be consultation over immigration policy with Maori, the indigenous people of New Zealand, the major policy documents and the information provided to prospective new settlers, all make reference to the Treaty of Waitangi (1840) that established the relationship between the tangata whenua (people of the land) and the new settlers. The preamble to the Treaty is sometimes referred to as New Zealand s first immigration policy (Walker, 1995). There is much more explicit acknowledgement of a foundational bi-cultural heritage in New Zealand (indigenous people/others) than there is in Australia, Canada and the United States, and this does impact on the discourses about immigration. However, despite attempts at times to issue separate official documents (passports, driving licences, for example) in the name of the Maori partner to the Treaty, there is one law and one immigration policy that applies to all groups in New Zealand. New Zealand does not have an official policy of multiculturalism, such as those in Australia and Canada. Multiculturalism, in the form of diverse cultural groups retaining their distinctive cultural heritages but accepting that others have different heritages that must be tolerated and respected, is recognized as a reality in contemporary New Zealand society, but the official discourse is couched in terms of a bicultural heritage, not a multicultural one. It is useful to keep this in mind when comparing the immigration policy contexts for countries like Australia, Canada and New Zealand; it perhaps helps explain why New Zealand has been so slow to adopt a specific policy for dealing with settlement of migrants in the host country. The tendency until quite recently has been to assume that all immigrants, no matter where they are from, will be able to adjust to their new homeland without specific support from the state. The bicultural focus of much of the policy debate over the past 30 years in particular has diverted attention from the emerging multicultural reality, especially since the major review of immigration policy in 1986 when the traditional source country preference for immigrants was abandoned. DIMA March

227 Another important contextual difference between Australia, Canada, the UK and the USA is that immigration policy, especially since the 1990s, has been developed in the knowledge that immigrants from overseas are essentially replacing New Zealanders who are leaving to live and work offshore (Bedford and Ho, 2005). The extent to which immigration has been essentially a process of replacement migration is summed up very simply in the table below where the people entering and leaving New Zealand for 12 months or more ( permanent and long-term (PLT) migrants) are aggregated for a 50 year period (Table A2.1). Table A2.1: PLT migration: a 50 year summary ( ) PLT arrivals PLT departures Net migration New Zealand citizens 839,700 1,538, ,600 Citizens other countries 1,485, , ,600 Total 2,324,700 2,116, ,000 The net loss of almost 700,000 New Zealand citizens over the 50 years is more than matched by the 906,600 citizens of other countries who stayed in New Zealand. The overall net gain of 208,000 from more than 2.3 million PLT arrivals is a very small direct contribution to population growth over a period when New Zealand s population increased by more than 1.4 million. This is not the place for an extended discussion of international migration in the context of population growth (see Pool and Bedford, 1997); it is sufficient to note here that New Zealand is clearly both a country of emigration as well as a country of immigration. The emigration of New Zealand citizens, as well as the re-migration of a significant number of citizens of other countries, is a critical dimension of the country s international migration system that has been given much greater recognition by government in recent years. Tapping the skills of New Zealand s diaspora became an explicit focus of policy of the Minister of Immigration in 2004 as part of the Labour Government s drive to increase the human capital required to further its Growth and Innovation Framework. A sizeable part of this overseas talent pool is in Australia where over 400,000 New Zealand citizens now reside. New Zealand and Australian citizens have retained reciprocal rights to live and work in the other country, and this has resulted in a very significant flow of New Zealanders into the larger economy and labour market on the other side of the Tasman. There is considerable circulation of New Zealanders from bases in New Zealand and Australia across the Tasman and, in general, this is viewed positively in both countries. The free movement to Australia is restricted to New Zealand citizens. Australian policy gives no preference to New Zealand permanent residents as far as temporary or permanent entry is concerned; they are subject to Australia s immigration requirements for people traveling on the passports of the 222 Evaluation of the General Skilled Migration Categories

228 respective countries. In the case of flows from Australia to New Zealand, however, New Zealand admits, as permanent residents, both Australian citizens and the holders of Australian Resident Return Visas. Notwithstanding the restrictions governing entry of permanent residents who do not hold New Zealand passports, Australian officials became increasingly concerned during the 1990s about the numbers of immigrants who were moving across the Tasman to Australia soon after gaining New Zealand citizenship (Birrell and Rapson, 2001; Bedford et al. 2003a). Until June April 2005 migrants could qualify for a New Zealand passport after 3 years of residence, as in Australia. This changed in 2005 following amendments to the Citizenship Act and a minimum of 5 years of residence in New Zealand is now required before a passport can be issued. In common with Australia, Canada, the UK and the USA, the labour force age groups are undergoing significant structural change as the population ages. There are also some major changes in ethnic composition as a result of both differential fertility as well as international migration. In New Zealand there are two dimensions to the demographic changes in the labour force that have relevance for skilled migration policy. The first is that labour force entrants from the Maori and Pacific Island populations in New Zealand will become more important as a proportion of the total labour force entrant population over the next two decades. This is because of the different fertility schedules that have prevailed in the Maori, Pacific and pakeha (white, or European) populations over the past three decades. Maori and Pacific peoples have lower tertiary education participation rates than are found in the pakeha population, although these differentials have been narrowing in recent years. The net effect of these progressive changes in the ethnic composition of New Zealand s younger labour force will be to exacerbate the falling numbers of complex problem solvers that McDonald and Temple (2005) stress are so important for retaining a competitive edge in the economy in the context of an ageing population. Maori and Pacific students at tertiary institutions have not been gravitating to those programmes that produce graduates for the jobs requiring the skills McDonald and Temple associate with complex problem solving in a knowledge economy. Filling the skills gaps in these areas will therefore rely more heavily on immigration, and possibly the international student market, at least in the short to medium term. The other demographic development that has relevance for New Zealand s skilled migration in the near future, is the progress through the age structure of a short-lived, but distinctive baby blip a cohort of births between 1989 and 2004 that is significantly larger than the cohort that preceded it, and larger than the ones that follow. This particular wave in New Zealand s highly irregular age-sex transformation will reach the labour force entrant age groups around 2010 (Pool, 1999, 2005). Assuming it is a cohort that has had a high level of tertiary participation, it will be a well-skilled young population that has opportunities for employment locally as well as overseas. Given the well-established history of young New Zealanders seeking some overseas experience (OE) of work, it is likely many of them will move offshore. A challenge for New Zealand s employers will be to make work conditions at home attractive enough to encourage them to stay, thus retaining skills in the country, rather than donating them mainly to the Australian and the UK workforces. Emigration of DIMA March

229 New Zealand s skilled labour is a critical component of the setting for policy relating to skilled migration into the country, and will become even more important as the younger domestic labour force shrinks absolutely with on-going structural transformation in the population. Notwithstanding the much better appreciation that the New Zealand public and policy community have of the country s quite complex demographic development over recent decades, and the projected changes for the next years, there is not the drive to grow the population through immigration that is found in contemporary political discourse in Canada especially, and to a lesser extent in Australia. There are groups, especially with business interests, who view New Zealand s current population of 4.2 million as being far too low, but the more general consensus is that New Zealand does not need a much larger population if lifestyle is to be one of its most attractive features as a migrant destination. There is no official New Zealand population policy, although the Labour Government has placed considerable emphasis on sustainable development within a defined demographic context (Ministry of Economic Development et al., 2004). The expectation is that New Zealand s population will grow to a maximum of around 5 million people during the 21st century; indeed it will begin to decline absolutely from around depending on the scenario for net migration gains. Immigration policy in recent years has been framed, therefore, in a context of endeavouring to achieve an average medium term net gain of around 10,000 people per annum to the population. An annual net migration target of 10,000 was only an explicit policy setting between 1998 and 2001, but it remains frequently mentioned favoured outcome from international migration in the public and political discourses. This is quite an ambitious target when one considers that the average net gain to the population over 50 years from the PLT migration shown in Table A2.1 was only 4,160 per annum. However, during the 1990s, a decade when there were much more significant net migration gains to New Zealand s population than in earlier decades (Figure A2.1), the average annual net gain did reach 10,000 over the decade. High net gains prevailed through the first few years of the new century, and the latest Statistics New Zealand national population projections use an annual net gain of 10,000 as the basis for their medium variant projections through to This is the first time such a high net gain has been used in the medium variant ; between 1971 and 2004 an annual net gain of 5,000 was associated with the SNZ s medium variant. 224 Evaluation of the General Skilled Migration Categories

230 Figure A2.1: The last 30 years of the 20th century were very dynamic ones in terms of net migration gains and losses (Figure A2.1). Some of this volatility can be explained by changes in immigration policy, but the most significant underlying drivers of the alternating peaks and troughs in net gains are linked to globalization and the nature of business cycles in New Zealand and Australia (Bedford et al., 2002; Bedford, 2005; Bedford and Poot, 2005). DIMA March

231 A2.5 Developments in immigration policy, The key developments that have particular relevance for contemporary immigration policy were initiated in 1986 when a major review international migration to and from New Zealand led to the abandonment of the traditional source country preference (20 years after Canada and almost 15 years after Australia) are: 1986: The Review of Immigration Policy, August 1986 that allowed for immigration from anywhere in the world, subject to applicants meeting certain language, employment and settlement criteria, as well as some more generous provisions for family reunification under a centre of gravity principle. There was also an extension of visa-waiver privileges to a number of Asian countries, as well as a very short-lived experiment with visa-waiver with some Pacific countries (see Burke (1986) and Bedford et al. (1987) for details of the policy review, Bedford (1994) and Bedford and Lidgard (1998) for reviews of Pacific migration and New Zealand s visa-waiver system, and Trlin (1992) for an examination of the impact of the policy changes on migration between 1986 and 1990). In 1987 a new Immigration Act was passed to provide a more effective and relevant legal and operational framework for the policy introduced in : The introduction of a points selection system, modeled on the Australian and Canadian ones, which prioritized qualifications and had a relatively low threshold for English language competency. New Zealand s international migration system was transformed very quickly by massive increases in immigration from countries in northeast Asia, and in October 1995 the English language requirements were raised in order to improve settlement outcomes (see Trlin (1997) for an assessment of the early points system, and Bedford and Lidgard (1997) for a review of the changes in migration patterns in the late 1980 and early 1990s). 1997: The first Government-sponsored national population conference, with a focus on the role of immigration in the transformation of New Zealand s society, where the dismal employment record for Asian migrants admitted under the points system, as revealed in the 1996 Census of Population and Dwellings, generated considerable discussion and concern (see Pool and Bedford (1997) for the substantive paper on population change and migration; Bedford and Ho (1998) on the significant outcomes of the population conference, and Ho et al. (1997, 1998 and 1999) for a review of the employment experiences of recent Chinese and Korean immigrants). One outcome of the Conference was the development of better information sources on services that could assist migrants to adjust to life and work in New Zealand. 1999: Election of the Labour Government and the beginnings of a quiet revolution in immigration policy associated with the introduction of the New Zealand Immigration Programme (NZIP) with its more obvious and deliberate focus on economic migrants (60 per cent of the target for residence approvals), rather than the social categories of family reunion (30%) and international assistance (10 per cent). Also the beginning of a much stronger 226 Evaluation of the General Skilled Migration Categories

232 focus on skilled migration, partly as a result of the net losses of New Zealanders in the late 1990s (another cycle of brain drain ), mainly to Australia, and partly to foster the Government s Growth and Innovation Framework (see Bedford et al. 2003c for some comments on international migration at the time of the recent New Zealand elections). The Labour Party s Minister of Immigration between (Hon. Lianne Dalziel) took a close interest in the development of policy in this area and there were major changes in the mix of migrants in the residence, temporary work and student streams (see Bedford (2004) and Bedford et al. (2005a and b) for reviews of this very important transition period in the development of New Zealand s contemporary immigration policy). 2003: A new skilled migrant category (SMC) was announced in July 2003 and introduced in December of that year along with a different process for making applications for residence under a substantially revised points system. This new approach also included further changes to policy to facilitate transition to residence via temporary work permits, including people on study visas/permits. An official, government-sponsored migrant resettlement strategy was also approved by Cabinet late in 2003 and launched in 2004 (DoL, 2004a). A major review of New Zealand s citizenship law commenced in 2004, along with moves to regulate the activities of immigration consultants. In 2005 work began on a new Immigration Bill and a major review of the New Zealand Immigration Programme. These recent developments are examined in the next section of the paper. A2.6 Contemporary skilled migration policy Immigration New Zealand (INZ, the new overseas brand name for the former New Zealand Immigration Service which is located within the Workforce Division of the Department of Labour), introduces its latest annual report on trends in approvals for residence, temporary work and study in the following way: New Zealand benefits from the temporary and permanent entry of citizens from other countries as visitors, skilled workers, international students and migrants. Over the past year there has been a strong focus on meeting New Zealand s acute skills needs. Immigration has enabled skilled migrants, both temporary and permanent, to participate in New Zealand s workforce, reducing skill shortages and benefiting New Zealand s workplaces with their skills and knowledge (DoL, 2005a). These opening sentences express clearly the view within the Labour Government that meeting demand for skills in a very tight labour market is the most urgent immigration policy priority, and that the most efficient and effective way of achieving this requires a mix of migration for residence as well as temporary entry for work and study. Since the Department of Labour began producing these reports in 2000, increasing attention has been directed at the different flows that contribute to skilled migration, and at the transition to residence from temporary work and study (see, for example, DoL, 2004b). DIMA March

233 In this section, attention is focused on the three key elements of contemporary skilled migration policy. The first is the skilled/business stream within the New Zealand Immigration Programme (NZIP) for permanent residence. This is followed by a brief discussion of policy relating to labour market tested work permits a particular group of temporary permits that have been specifically designed to meet skill shortages where no New Zealanders are available. The third element is the policy introduced in 2002 to facilitate the transition from work to residence, which is becoming an increasingly important avenue for employers as well as temporary residents to explore as a route to meeting labour market demand. There are other components of both the NZIP (the family sponsorship stream, and the international/humanitarian stream) as well as provisions for temporary entry, but these do not address specifically the skilled migrant focus that is the brief for this report. A full assessment of New Zealand s immigration policy, and its outcomes in terms of approvals for residence, temporary work and study, can be found in The Department of Labour s Migration Trends Reports that are available at These are the key source of readily accessible and readable information on New Zealand s immigration policy and visa/permit/residence approvals. Skilled/business migration The current skilled/business migrant categories, that are contributing residence approvals to the Government s annual target of 27,000 (+3,000) for this stream, are defined briefly below, followed by a summary of the numbers of principal applicants (applications) and total number of people approved (people) for residence in this stream. This information is drawn from the Migration Trends Report, 2004/05 (DoL, 2005a). Skilled Migrant (from 17 December 2003 until 31 December 2005): Applicants must meet a minimum threshold of 100 points to register an expression of interest into a pool. Expressions of interest are selected from the pool based on a selection point that can currently change fortnightly. After initial verification, selected applicants are invited to apply through the Skilled Migrant Category (SMC). Late in 2004 the Labour Government approved an increase in the minimum points required from 100 to 140. The new points threshold applies from 1 February General Skills (closed 1 July 2003): Applicants were required to meet a minimum level of points earned through a combination of their qualifications, work experience, offer of skilled employment in New Zealand, age (no older than 55 years), and settlement factors. Interim General Skills (closed 12 November 2003): Replaced the General Skills Category (GSC) from 2 July 2003 until its closure of 12 November Policy requirements were the same as they were under the GSC with the exception that applicants were required to have a skilled job offer in New Zealand. 228 Evaluation of the General Skilled Migration Categories

234 Entrepreneur: Established for people who can demonstrate they have successfully set up and operated a business in New Zealand. This is a category that allows for a transition to residence from the Long Term Business Visa (LTBV) which is a three year permit for people aiming to set up a business in New Zealand. They qualify for residence under the Entrepreneur policy after three years of operation in New Zealand. Investor (from 4 July 2005): Applicants must first submit an expression of interest, after which they may be invited to apply for residence. The minimum amount of investment is NZ$2 million, and these funds are held by the New Zealand Government for 5 years. Applicants may withdraw up to $1 million after two years to invest in a business that will benefit New Zealand. Applicants must be no older than 54 years and have at least 5 years business experience. Conditions apply to the first 5 years post-residence. Investor (closed 13 June): Based on the principal applicant meeting a minimum level of points, earned through a combination of money they have available for investment (minimum of NZ$1 million), age and business experience. Employer of relocating business: Established for key people in a business relocating to New Zealand who do not qualify for residence under any other residence category. There is a two year employment period before the residence permit is endorsed. Work to residence: This category provides a pathway to residence for holders of permits granted under three specific work policies: Talent (Accredited Employers), Talent (Arts, Culture and Sport), Long Term Skill Shortage List occupations (LTSSL, formerly the Priority Occupation List). These are discussed later in the section on work to residence; they are mentioned here because reference to approvals for residence under these policies is contained in the statistics for the skilled/business stream. During the year ended June 2005, the following applications and people were approved for residence through the skilled/business stream: Table A2.2 Skilled Visa Applications Category Applications People Skilled migrant 10,054 23,854 General Skills/Interim GSC 878 2,089 Talent (Accredited Employer) Long Term Skill Shortage List Talent Arts and Culture 5 7 Talent Sports 9 15 Sub-Total Skilled Categories 11,088 26,325 Entrepreneur 661 2,132 Investor (pre-june 2005) 404 1,361 Employees of businesses 3 8 Sub-Total Business Categories 1,068 2,132 Total Skilled/Business 12,156 29,826 DIMA March

235 As noted above, the target for residence approvals in this stream was 27,000 (+3,000), or 60 per cent of the total target for the NZIP (48,000 +5,000) for 2004/05. The number of people approved for entry was 29,826, which is within the target range, and they comprised 61 per cent of the 48,815 residence approvals for the year. The number of principal applicants approved under the skilled/business stream was 12, per cent of the 29,826 people approved. It is important to appreciate that the majority of people approved in this stream are secondary applicants spouses/partners and children of the principal applicant. They are not necessarily direct contributors to the labour market or to business activity, as might be assumed by the label of skilled/business for the stream. The skilled migrant category (SMC) is currently by far the most important contributor of skilled migrants through the NZPI. It accounted for 91 per cent of the 11,088 principal applicants seeking residence approved for skilled migration between July 2004 and June A major reason for this dominance can be found in a general instruction issued by the Department of Labour in September 2004 to prioritise SMC applications over other skilled residence categories, in order to increase the number of skilled migrants available to meet the changing needs of the labour market. In December 2004 several changes were made to the points allocation system to enhance selected employability and capacity building factors (especially a recognition of a wider range of trade qualifications, and a broader definition of skilled employment) as well as the applicant s ability to settle in and contribute to New Zealand s society and economy (the key change here was additional points for having close family in New Zealand). These factors are over and above the health, character and English language requirements for all people approved for residence (see for further details). The key employability and capacity building factors taken into account in the current points system, and the percentages of skilled migrants approved in 2004/05 who gained points on these factors, are summarized below. Applicants need to meet a minimum threshold of 100 points to submit an expression of interest (EOI) into the pool of potential applicants for residence under the SMC. EOIs are ranked from the highest to the lowest points and those that meet the selection point are selected from the pool and are assessed for suitability to be invited to apply for residence. Selection points are determined fortnightly. After the SMC opened early in 2004, selection points were initially set at a high level, but reduced gradually to 100 points by September The 100 points threshold was held through to the end of 2005 when it was announced that it would increase to 140 from February 2006 given the number of EOIs entering the pool. 230 Evaluation of the General Skilled Migration Categories

236 Table A2.3 Points test for Skilled PAs Category Points % Skilled employment Skilled employment 12 months or more Skilled employment under 12 months Offer of skilled employment No employment 0 13 Bonus points for employment or offer of employment Identified future growth area 5 11 Identified cluster area 5 1 In an area of absolute skill shortage In a region outside Auckland Partner employment or offer of employment 10 6 Relevant work experience 2 years years years years years Bonus points for New Zealand work experience 2 years years years 15 0 Additional bonus points for work experience Identified future growth area or cluster (2-5 years) 5 3 Identified growth area or cluster (6 years or more) 10 4 Area of absolute skills shortage (2-5 years) 10 8 Area of absolute skills shortage (6 years or more) Qualifications (all must be recognised in NZ) Basic qualification (trades and tertiary) Postgraduate qualification (Masters/PhD) Bonus points for recognized qualifications NZ qualification (and at least 2 years study in NZ) Qualification in an identified future growth area 5 7 Qualification in an identified cluster area 5 1 Qualification in an area of absolute skills shortage Partner qualifications Close family support in New Zealand 10 2 Age (20-55 years) DIMA March

237 With regard to the points received by applicants submitting EOIs during 2004/05, INZ notes: On average, principal applicants submitting an EOI onshore claimed a higher number of points than those residing offshore (150 compared to 120). This reflects the higher proportion of onshore applicants claiming points for a skilled job or job offer compared with those residing offshore. Principal applicants with a job or offer claimed, on average, 155 points. For those with neither a job or an offer the average was 115 points (DoL, 2005a) They went on to report that in total 22,117 EOIs, covering 54,458 people (principal plus secondary applicants) were selected from the pool during the year. Of these, 16,505 principal applicants (representing 40,043) people received an invitation to make formal applications for residence under the SMC. This invitation remains open for 4 months. The great majority (87 per cent) of the SMC principal applicants approved, who did follow up their invitations, were awarded points for a job or an offer of skilled employment in New Zealand in 2004/05. Just over two-thirds of these gained points for current employment (they made their applications on-shore), while a further 19 per cent had an offer of skilled employment. Only 13 per cent of those approved had neither a job nor a job offer at the time of approval. They were likely to need to proceed through a work to residence transition before being finally confirmed for residence. Almost two-thirds (65 per cent) of the principal applicants gained bonus points for having a job or a job offer outside the Auckland region, or for employment in an area of absolute skills shortage. Most approved applicants (80 per cent) gained points for work experience, with 25 per cent getting these points for work in areas of absolute skill shortage. A further 29 per cent had qualifications relevant for a specific skill shortage area. In the case of points for a recognized New Zealand qualification, 10 per cent of approved applicants were awarded these, with 88 per cent being aged years (57 per cent from China). Most of these people are likely to be students who have sought work at the end of their training in order to build up the points required for residence approval under the SMC. Just under half (49 per cent) of the people approved for residence under the SMC during the 2004/05 year were UK citizens. EOIs from UK citizens that meet the points thresholds and other criteria for invitations have dominated the pool throughout the year. Approvals for residence for citizens of South Africa accounted for a further 12 per cent of the SMC total, followed by China (6 per cent), India (5 per cent) and the USA (4 per cent). The new selection system, coupled with extensive marketing by INZ in the UK, Europe and the USA for skilled migrants, has contributed to a significant shift in the mix of skilled migrants approved for residence. This can be seen clearly in the summary below, which compares the total numbers of citizens from these five countries approved for residence in general skills category (GSC) between July 2000 and June 2003, with the numbers approved in the SMC between July 2004 and June Evaluation of the General Skilled Migration Categories

238 Table A2.4 Country of Citizenship of Skilled PAs Country of citizenship No. % No. % United Kingdom 12, , South Africa 9, , China 9, , India 17, , USA 1, Other countries 31, , Total 81, , The new points system and associated thresholds and application procedures has resulted in a very significant reduction in the number of approvals for residence of skilled migrants from China and India, especially, as well as the other countries not listed separately above. Sources of predominantly white migrants, and especially the UK which has long been the traditional source of immigrants for New Zealand, have become more prominent. Of the five countries listed above, only South Africa had similar shares of the total residence approvals in the GSC and the SMC during the years shown. The age and gender characteristics of the residence approvals for the SMC in 2004/05 revealed that 31 per cent of the principal applicants claimed the maximum points for age (30 points for being between 20 and 29 years), and 65 per cent were male. Of the 23,854 people approved (including secondary applicants), 30 per cent were under 20 years of age, 19 per cent years, 31 per cent years, and 19 per cent 40 years and over. The sex ratio was pretty balanced with 104 males per 100 females. There was no bias towards female immigration in the skilled migrant category, notwithstanding the recent rhetoric in the New Zealand and Australian media about a man drought in the age groups years (Callister, Bedford and Didham, 2005). In summary, the nature and composition of the skilled migrants approved for residence in New Zealand has been transformed by changes to the points selection system announced in July 2003 and implemented from the beginning of The current system has one similarity with the Australian skilled migration programme in that it is deliberately focused on meeting real demand in the labour market. However, like all programmes targeted to immediate needs it has one potential weakness: it can be several months before the selected migrants living overseas actually arrive in the country to work. Only those selected onshore are likely to be in work that is linked to skill shortages, and they are already filling a gap rather than being a potential new member of the labour force. In 2004/05 79 per cent of the SMC approvals were for principal applicants already in New Zealand. DIMA March

239 INZ point out in the Migration Trends Report, 2004/05 that 47 per cent of the principal applicants approved with a job offer had a main occupation on the Long Term Skill Shortage List (LTSSL), and 14 per cent had a main occupation on the Immediate Skill Shortage List (ISSL). Overall, almost two thirds of those approved with job offers had occupations in skill shortage areas. The skilled labour needs of businesses in 2005 need to be filled in 2005, not in 2006 or 2007, and in order to meet this immediate demand a range of temporary work permit categories have been developed to complement and, over time, to augment through transfers from work to residence, the skilled residential migration programme. These temporary categories are now outlined briefly. Temporary skilled migration and work to residence policies The aim of temporary work policy, as expressed by INZ, is to contribute to building New Zealand s capability base by facilitating access by New Zealand employers and industry to global skills and knowledge, while complementing the Government s education and employment policies. Work permits, which have been a feature of New Zealand s immigration policy for many years, allow employers to recruit temporary workers from overseas to meet particular or seasonal work shortages that cannot be met from within New Zealand, while protecting employment opportunities for New Zealand citizens and residents. During the year ended June 2005, 82,497 principal applicants were issued with temporary work permits up by almost 10,000 on the preceding year (73,597) and over three times the number issued in 1997/98 (26,336). Almost a quarter (23 per cent) of all of the work permits went to UK citizens, with citizens of China and Japan each accounting for 8 per cent, followed by the USA (6 per cent), India and Germany (5 per cent each). Some of these permits are open in the sense that they do not require a labour market text to establish whether there is a New Zealander available to take up the job. Some of the main categories of visa or permit, including those relating to students, that have implications for the provision of skilled workers in New Zealand are: People on working holiday schemes reciprocal arrangements with 23 countries for young people, usually aged 18-30, to travel and work for up to 12 months (24 months in the case of UK citizens). A total of 31,000 places were available under this scheme in 2004/05, and 21,025 of these were taken up by working holiday makers during the year. The biggest groups were from the UK (7,375), Japan (3,270), Germany (2,288), Ireland (1,891) and Canada (1,132). The scheme is being extended to other countries in 2005/06, and enlarged to 40,000 in 2006/07. The overall gender balance across working holiday schemes was slightly in favour of females (54 per cent), with 40 per cent of those approved aged between 20 and 25 years. Students who have completed a graduate qualification (for up to two years) or who are undertaking long-term study (e.g. for a PhD) are allowed to work parttime. In 2004/05 a total of 77,563 people were approved for student visas or 234 Evaluation of the General Skilled Migration Categories

240 permits, which are required for any course exceeding 3 months in duration. China remains the major source of overseas students, accounting for 44 per cent of the principal applicants granted student visas/permits in that year, followed by the Republic of Korea (South Korea 15 per cent), Japan (6 per cent), the USA (4 per cent) and the UK, India, Germany, Thailand and Malaysia (each on 3 per cent). A number of changes to student work policy were introduced in July 2005 to make New Zealand a more competitive destination for international students, including: enabling students taking courses that would gain points under the SMC to build up work experience and thus extra points; allowing those taking courses for 12 months or more to work full-time through their summer teahing recesses; and enabling partners of students studying in areas of absolute skill shortage, and partners of all postgraduate students, to apply for an open work permit valid for the duration of the student s course of study. Labour market tested work permits, such as long-term business executives, Japanese interpreters, machinery installers/services, medical and dental personnel, the long term skill shortage list occupations, and the talent visas (accredited employers). In 2004/05 28,317 principal applicants were granted labour market tested work permits, with the biggest groups coming from the UK (22 per cent), China (12 per cent), India, USA and South Africa (7 per cent each), South Korea (6 per cent) and Japan (5 per cent). There has been a significant growth in these permits since the late 1990s when there were around 11,200 issued (1997/98; 1998/99) each year. The UK has always been the major source of principal applicants approved for these permits. Some of the specific categories are discussed further below. Work to residence policy facilitates the entry of people with skills in demand and provides them with a pathway from temporary to permanent residence via a work permit for two years as long as they have an offer of on-going employment. Since the work to residence policy came into effect in 2002, 3,530 people have been granted a work permit under either the talent visa or LTSSL policies, but only a small number of them have completed the two years of work in New Zealand that qualifies them to transition to residence. As at 30 June 2005, 916 principal applicants, who were in one of the approved work to residence schemes between 2002 and 2005, had been granted residence approval, and 70 per cent of these were in the SMC. As at 1 July 2005, the Long Term Skills Shortage List (LTSSL) included 60 occupations, of which 24 were in the health area, 15 in information and computer technology, 10 in a range of trades, and 7 in a range of professions. Details of the qualifications required for these occupations, including New Zealand certification where relevant, are listed along with the regions where there are shortages in the specific skill areas. The Immediate Skills Shortage List (ISST) at 4 July 2005 included 108 specific occupations, identified by NZSCO number, along with the qualifications and work experience required, and the regions where there are vacancies. A surprisingly wide range of occupations are listed, including some that one would not usually associate with skills shortages in New Zealand such as shearers, shepherds, farm managers (all types of farms), bee keepers, land managers, heavy vehicle drivers, florists, chefs, builders and jockeys! DIMA March

241 A talent visa scheme was introduced in 2002 as part of the work to residence policy. There are two categories of talent visa: one that enables accredited employers to seek skilled labour offshore directly when it has been established that no suitable New Zealanders are available to take up the jobs they have vacant, and the other than enables people with talents in the arts, culture and sport to obtain work in New Zealand, and to build up credit that can be used to assist them gain approval for residence under the SMC. To qualify for a Talent Visa (Accredited Employer) an applicant needs to have an offer of employment in New Zealand for at least 24 months with an accredited employer and a minimum base salary of NZ$45,000 per annum. Alternatively, an applicant deemed to have exceptional talent in a declared field of art, culture and sport can be sponsored by a New Zealand organization of national repute in the declared field. In 2004/05 1,182 principal applicants gained talent visas via the accredited employer route, while 54 were issued with work permits under the talent policy for the arts, culture and sport. Over half (54 per cent) of these talent-related work permits were issued to UK citizens, with South African applicants gaining 9 per cent, followed by the USA (4 per cent), Canada and Germany (3 per cent each). Permits for work, study and visits/holidays are offering increasing numbers of temporary residents in New Zealand the opportunity to consider the option of gaining approval for long-term residence, and a route to citizenship. A powerful indicator of the strong link between temporary and permanent migration is provided when INZ point out that: Eighty-eight per cent of all principal applicants approved for residence in 2004/05 had previously held a work, study or visitor permit at some stage since July Principal applicants approved through the skilled/business stream were more likely than principal applicants approved through the other two residence schemes [family sponsorship and international/humanitarian] to have held a temporary permit prior to residence (92 per cent). Of this 92 per cent, most (80 per cent) had previously held a work permit. (BZIS, 2005a) The nationalities with the highest incidence of prior visits, work or study before applying for residence were South Korea (99 per cent), Japan (98 per cent), Germany (97 per cent), South Africa (96 per cent), the USA (95 per cent) and the UK (90 per cent). Almost half of the 15,174 principal applicants approved for residence in 2004/05, who had held a permit before applying for residence, had been issued with a labour market tested work permit. A further 30 per cent had been issued to immigrant partners or spouses of New Zealand residents and citizens. 236 Evaluation of the General Skilled Migration Categories

242 The transition from work/study to residence Through analysis of the movements in and out of New Zealand of principal applicants for work and study visas and permits between July 1997 and June 2005, INZ have established that around 31 per cent of principal applicants gaining temporary work or study permits had been approved for residence within 5 years of being issued a temporary permit. Overall, 37 per cent of people issued with work permits in 1997/98 had become permanent residents by June 2005, compared with 21 per cent of those issued with permits to study in New Zealand in that year. The move to residence seems to be most common in the year after the work/study permit was issued, and the proportions making this transition in the first and subsequent years after permit issue seem to be increasing over time, especially since the introduction of the new points system and SMC. During the eight years since 1997, just under 855,500 principal applicants gained temporary work and study visas, including many of the 471,800 people approved for residence through the NZIP. By June 2005, 172,000 (20 per cent) of applicants for temporary work and study had gained approval for residence. Clearly, transfers from work and study are becoming a very important route to residence in New Zealand, and it is no longer advisable to treat temporary permits as a completely separate category of migration policy. Good employment and settlement outcomes for both the migrants and the host society are critical determinants of the success of contemporary immigration policy, and the work to residence transition provides one very effective route to building the experience and capability required to achieve these outcomes. A2.7 Assessing the economic, social and demographic benefits of international migration There have been few systematic attempts to assess the benefits of international migration for New Zealand s economy and society. Probably the most celebrated studies to date are those by Poot et al. (1988) who modelled the medium to long-term impacts of immigration and emigration for the New Zealand economy, with particular reference to the very significant trans-tasman flows; Winkelmann and Winkelmann (1998) who have done one of the few analyses of the integration into the labour market of migrants from different sources, seeking to establish whether there is any convergence in labour market participation and incomes on the basis of census data for the period 1981 to 1996; and Nana et al (2003) who have endeavoured to measure the fiscal impact of immigration in New Zealand. Boyd (2003) updated the Winkelmanns study using the 2001 census data. More recently, Bryant et al. (2004) have examined the relationship between migration and trade flows, the OECD (2003), in its Economic Surveys: New Zealand, has reviewed the economic impact of migration, and Cochrane and Poot (2005) have scoped a major new study of the economic impact of immigration. It is useful to draw on the OECD study for some general observations on the economic benefits of international migration because they did a comprehensive assessment of New Zealand s economy around the time of the major immigration policy changes in July 2003 (Bedford et al., 2005a). DIMA March

243 The authors of the OECD study (2003: 59) observe that, unusually for an OECD country, issues for the economy and society relate to both immigration and emigration, as the causes and consequences of both these phenomena are important for New Zealand s policy makers. As has been shown earlier in this paper, immigration has been largely balanced by emigration when one takes a longer-term view over the past 30 to 50 years. However, as is clear from Figure A2.1, the net flow has been highly variable, with periods of both large net immigration as well as periods of net emigration. As a consequence the public debate about international migration oscillates between invasion and brain drain (Bedford et al., 2003b, 2003c). Issues for policy include whether and how policy might seek to moderate this variability, the extent to which immigration policy should be linked to the labour market situation or to other factors, and whether emigration of New Zealanders should be seen as a problem or as an advantage (OECD, 2003: 59). In concluding their review of the economic impact of migration, the OECD study (2003: 82-83) suggested that the Government s recent changes to the points-based selection system are likely to improve overall labour market outcomes for immigrants. The results of the pilot for the LisNZ (the Longitudinal Immigration Survey: New Zealand) suggest that skilled migrants already have high employment rates within 18 months of arrival, but improving overall labour market outcomes amongst all immigrants will require attention to the experiences of other migrant categories as well (family sponsored, international and humanitarian, and some of the temporary work categories that lead on to residence) (DoL, 2004c). A word of caution is expressed about a policy that focuses too closely on selecting for particular sectors of the economy this is subject to the same risks as the discredited industrial policy of picking winners : any skills that are currently only narrowly applicable in certain fields risk becoming much less valuable than more general skills (OECD, 2003: 82). They are also dubious about the long-term value of the incentives being offered to migrants willing to take up jobs outside of the Auckland region, unless the movement generated by this policy alters the underlying relative attraction of central and peripheral regions. The authors complete their concluding remarks with two observations on immigration and emigration: Although immigrants labour market experience is fairly well documented through analysis of census data, there is no work on the specific impact of immigration on the labour market in particular their impact on wages and unemployment levels. Current immigration policy settings, with the important weight attached to skills and labour market testing, and the significant capital inflows that tend to accompany immigration, make it unlikely that there are significant short-term negative impacts, such as depressing wages or employment among the existing residents; potentially some of this could be hidden by the response of emigration flows to these same effects, but there is no evidence to support this. 238 Evaluation of the General Skilled Migration Categories

244 Emigration is as important as immigration to New Zealand. But its implications are even harder to establish empirically. Given that most of those who leave New Zealand to acquire OE appear to return, that most people appear to feel that they have acquired valuable experience while abroad, and that the current outflow of skilled people seems to be broadly matched by inflows of people to replace those skills, there is no obvious reason to fear a brain drain. However, the pattern of country origins of immigration does mean that changes in the ethnic make-up of the New Zealand population will continue (OECD, 2003: 83). The changing ethnic make-up of New Zealand society is attracting increasing attention from the Ministry of Social Development (Peace et al., 2005) and Statistics New Zealand (2004) through research into social cohesion. Although New Zealand does not have an official policy to develop a multicultural society, there is considerable interest in the growing diversity of peoples in the society. There is a New Zealand Diversity Action Programme co-ordinated by the Race Relations Conciliator in the Human Rights Commission. Associated with this initiative are the New Zealand Diversity website, a Diversity Advisory Network, and an annual forum for those concerned with addressing the way forward for racial harmony in an increasingly diverse society. Statistics New Zealand produces ethnic projections for the major population components (European, Maori, Pacific, Asian) and these contribute to the debate on New Zealand s demographic future in an era when international migration is becoming an increasingly important driver of population growth (Bedford et al., 2003b; Ministry of Economic Development et al., 2004). The following observations from the conclusion to a recent country paper on international migration and the development of economy and society in New Zealand provides a useful conclusion to this section: Given a two-century history of recruitment of people from a narrow range of Anglo-Celtic backgrounds, it is even more remarkable that the drastic changes in immigration numbers and composition since the late 1980s have led to less political resistance than might be expected, if New Zealand followed the example of the difficulties countries in Western Europe are having in coming to grips with the implications of growing ethnic diversity and resistance to the implications of a multicultural society (Bedford, 2002). It is as if New Zealanders realise that the forces of globalisation, although not without problems, must be embraced by necessity in order for the country to maintain a high level of income, despite its small size and peripheral location. Immigration remains, however, tightly controlled and there is not the mass influx of unskilled workers that are such a dominant feature of immigration to other high income countries. It is therefore perhaps not surprising that a recent survey that monitored New Zealanders lives and opinions during the last decade concluded that the country is witnessing the rise of a tolerant society. (New Zealand Herald, 5 February 2005). The survey found that in Auckland, the city where immigration is most noticeable in many aspects of life (and fewer than half of Aucklanders are locally-born people of European descent) the residents had become less DIMA March

245 concerned about ethnic diversity. In addition, there is a growing pride among Maori in their own culture. It should be noted though, that New Zealand is going through a long phase of economic buoyancy with high economic growth and very low unemployment. The real test of this newfound tolerance will come as the business cycle will move into a recessionary phase, as it inevitably must in a market economy (Bedford and Poot, 2005). A2.8 Skilled migration policy in Australia and New Zealand: similarities and contrasts A comparison of Australian and Canadian immigration policies and labour market outcomes by Richardson and Lester (2004: 1) suggested that Australia is an exception to the generally pessimistic picture of recent trends in labour market success for new migrants. Recent migrants to Australia appear to have performed well in the labour market compared to migrants in the early 1990s and to their Canadian counterparts (and to those in other OECD countries). Although there are not comparable longitudinal survey data available in New Zealand yet to compare with the Australian LSIA2 data, it is clear from research done on labour market outcomes for migrants using census data that immigrants admitted under New Zealand s general skills category in the 1990s had not performed as well in terms of labour market participation and outcomes as their Australian counterparts. Partly in acknowledgement of the limitations of the GSC as an instrument for selecting skilled migrants who had a strong chance of gaining employment in New Zealand, and recognising that the more rigorous skill stream in the Australian Migration Program (AMP) was delivering better labour market outcomes for immigrants, both the points allocation and selection system and the skilled migrant category were significantly re-shaped in The extent to which the re-shaping of the SMC in New Zealand s Immigration Programme has enabled migrants to achieve better labour market outcomes than those achieved by migrants entering under the GSC will not be able to be assessed conclusively until 2011 when the results of the LisNZ are available. In the interim there is a New Migrant Follow-up Survey (NMFS) that has been designed to capture a range of information about the early settlement experiences of skilled and business migrants. All migrants who enter under the skilled and business stream receive customized service from the Department of Labour as part of a strategy to support migrants after they take up residence. This customized service includes following up with these migrants on their settlement experiences. Migrants are sent a questionnaire seeking information on their settlement experiences between 3 and 5 months after arrival in New Zealand. A report on the findings from this survey is currently being prepared, and indications are that the labour market outcomes being reported by those who responded are very good 95 per cent of the principal applicants who responded by the end of June 2005 were employed, and 65 per cent of the secondary applicant respondents (spouses/partners, children) were also employed. In the case of the respondents admitted under the SMC, the percentages for principal and secondary applicants were slightly higher: 96 and Evaluation of the General Skilled Migration Categories

246 per cent respectively. Most (90 per cent) of the principal applicants were working for wages or salary only 9 per cent were self-employed. Responses to this survey are voluntary and a greater proportion (56 per cent) of skilled migrants from the UK especially have replied than might have been expected in terms of their share of the total SMC inflow. This could have contributed to the good results given the stronger points scores and better settlement prospects for migrants from this part of the world. However, INZ notes in the Migration Trends Report, 2004/05 that although there was this strong representation from the UK, which reflects the high proportion of migrants from Great Britain in the SMC, there were over 60 nationalities represented in the respondent population. Good labour market outcomes, and high levels of satisfaction with residence in New Zealand were reported across the board for those new residents admitted under the SMC. On the basis of these early results from the NMFS it seems that New Zealand s new points system, and the more rigorous selection process that prospective migrants need to negotiate, will have the desired impact on migrant characteristics that Richardson and Lester (2004: 40) concluded were the main explanation for the superior labour market outcomes in Australia. The criteria used to assess skilled migrants in New Zealand and Australia are now very similar, with considerable weight in both countries points systems being given to employment experience, qualifications, age and language competence. Two remaining differences between the two systems are in the higher age range for approval as a skilled migrant in New Zealand (points are awarded up to age 55 compared with 45 in Australia), and the formal testing of language capability and qualifications of all skilled migrants seeking residence in Australia (New Zealand exempts people from English speaking countries from IELTS tests, and the qualifications tests may not be quite so rigorous). The differences between Australia s skilled independent category (SIC) and New Zealand s skilled migrant category (SMC) are now much smaller than was the case when the GSC applied in New Zealand. There are some other similarities in the skilled/business streams in the two countries. Both have a scheme whereby approved employers can recruit highly skilled noncitizens/residents directly where they have been unable to fill a vacancy from the local labour market the Talent Visa (Accredited Employer) in New Zealand; the Employer Nomination Scheme (ENS) in Australia. A difference between these is that the Talent Visa (Accredited Employer) is a work to residence arrangement, requiring two years on a temporary permit before application for residence is possible, while the under the ENS employers can recruit on a permanent basis at the outset (DIMIA, 2005a and b). Both have a small category for distinguished individuals with special talents in the sports, arts and culture the Talent Visa (Sports, Art and Culture) in New Zealand, and the Distinguished Talent Visa in Australia (DIMIA, 2005b). DIMA March

247 There are some important differences in the programmes as well. There are several categories in the Australian skilled migration stream that do no exist in New Zealand s skilled/business stream. These include: The Skilled-Australian Sponsored (SAS) category, which is points-based like the Skilled-Independent category, with the additional requirements of family ties and sponsorship. This is a major category for skilled immigration to Australia in ,500 visas were granted under this category (DIMIA, 2004b). The Skilled-Designated Area Sponsored (SDAS) category under which applicants have to settle in a designated area, are not subject to a points test, can have lower work experience and, in some cases, lower English language competencies, than other skilled categories (DIMIA, 2005c). New Zealand does not have provision for this sort of sponsored access in the skilled or business stream, although there are some special access categories for Pacific migrants included in the international/humanitarian stream. These PAC categories, along with the Samoan quota, are a form of designated area migration in terms of sources, rather than destinations, although Auckland is the place where most migrants from the Pacific Islands enter New Zealand. The Regional Sponsored Migration Scheme (RSMS) which enables employers in regional and low population growth areas in Australia to nominate employees for permanent entry where they are unable to fill skilled vacancies from the local labour market (DIMIA, 2005a and b). New Zealand does not have a specific regional migration programme, although applicants for residence under the SMC can get bonus points for accepting job offers in regions other than Auckland. The State/Territory Nominated Independent (STNI) Scheme, which enables state and territory governments to sponsor skilled migrants and their families in the Skilled-Independent category. New Zealand does not have nomination schemes for particular administrative units within the country. The other important component of the skilled migration programme in both countries is the transition to residence arrangements for students and for people on temporary work visas/permits. Both Australia and New Zealand have provisions for students, who have done qualifications that provide them with skills relevant for the labour market, to transition to residence. The detail differs somewhat, but the principle is essentially the same. Australia was more active in this area of recruitment of skilled labour much earlier than New Zealand; it is really only in the past few months that New Zealand s policy relating to students gaining local work experience that can count towards residence has been given more explicit emphasis. In the case of temporary work, both countries have working holiday migrant schemes, and current policy in both allows for a transition to longer-term work permits and eventually to residence. The numbers approved for residence via this route are not large in New Zealand s case; again there is a longer history of this transition in Australia. As far as explicit work to residence schemes are concerned, it appears that these are more prominent in New Zealand than Australia. Australia s equivalent of the 242 Evaluation of the General Skilled Migration Categories

248 Talent Visa (Accredited Employer), the Employer Nomination Scheme, allows for immediate recruitment for residence, while the New Zealand equivalent requires a specified period in work before the transition to residence. Australia s Labour Agreement (DIMIA, 2005b), which enables employers to recruit specified numbers of workers from overseas in response to identified of emerging labour market (or skill) shortages has some similarities to the LTSSL and ISSL work to residence programmes in New Zealand, although it is not employers that do the recruiting in the latter case. In summary, there has been some convergence in several aspects of the skilled migration programmes in the two countries, especially during the past three years. The Australian Government made it quite clear to the New Zealand Government in 2000 that it would not allow the privileged access of New Zealand citizens via the Trans-Tasman Travel Arrangement to persist if the risk of back door migration of new New Zealanders was going to be allowed to grow because of differences in entry requirements for residence. In addressing Australia s concerns, the New Zealand Government had to accept that automatic access to Australian social security payments by New Zealanders who moved across the Tasman from 1 March 2001, after the usual two year benefit stand-down period that applied to all new immigrants, would have to be forfeited (Birrell and Rapson, 2001). Over the subsequent two years steps were taken to tighten up on English language requirements for immigrants in New Zealand (November 2002), to require applicants for residence in the general skills category to have a firm job offer (July 2003), and to revamp the points system and the process by which immigrants were approved for residence (second half of 2003). These developments brought the quality standards for residence approval in the respective skilled/business streams into closer alignment. It cannot be said that New Zealand is now a soft touch for residence approval via the skilled migration categories. With the passing of the Citizenship Amendment Act in 2005, gaining citizenship in New Zealand involves a much longer period of apprenticeship (5 years) than is the case in Australia (2 years). An important difference that could emerge between the two countries is in the extent to which onshore work to residence programmes become an important route to residence. The OECD study (2003: 82) hinted at this when they observed in their concluding remarks about New Zealand s immigration programme that: The increased use of temporary entry as a qualifying period may put pressure on the annual quota in future if large numbers of temporary entrants successfully prove themselves. DIMA March

249 A2.9 A concluding observation There has been a fundamental shift in thinking by policy makers in New Zealand about international migration in recent years. At the time of the national Population Conference in 1997, the discourse about immigration was overwhelmingly couched in terms of permanent or long-term movement for residence. Temporary migration was considered to be a different process and topic altogether. Eight years later, there are virtually no reports being produced by the Department of Labour, or by the significant academic and private sector research providers who specialize in international migration, that do not make reference to temporary as well as permanent movements. The domain of international migration for policy makers, at least in New Zealand, has come to encompass a much wider array of movements than was common in the past. In this sense, the official discourse has caught up with the realities of migration, as these play out in the lives of new residents, workers, and students in the two countries. A recent study of absenteeism overseas by migrants approved for residence between January 1998 and December 2004 reveals some fascinating patterns of movement after arrival in New Zealand (DoL, 2005b). This is not the place to examine these findings, but the evidence from an examination of over 1.43 million moves in and out of New Zealand by 257,230 recent immigrants trends to support Hugo s (1999) argument in favour of a new paradigm of international migration. The old distinction between permanent and temporary movement is not a particularly useful one, especially when most of the socalled permanent movers continue to be engaged in various forms of temporary movement out of and back to their new host countries. Just over 4,000 (1.6 per cent) of the 257,230 migrants approved for residence between 1998 and 2004 in New Zealand had made no subsequent overseas moves after taking up residence. The links between temporary and permanent movement are inextricably interwoven in the lives of those approved for residence, and policy makers concerned about their settlement and labour market experiences need to be fully aware of this interconnectedness between forms of movement that tend to get treated separately for policy purposes. Acknowledgements Assistance with information on New Zealand s current immigration policy, provided by Stephen Dunstan, Mary Adams, Betty-Ann Kelly, Paul Merwood and Anthony Moss of the Department of Labour, is gratefully acknowledged. The views expressed here are, however, those of the author. The research that underpins this paper was supported by the Foundation for Research, Science and Technology through the Strangers in Town programme that is being carried out by the Migration Research Group, University of Waikato. Assistance provided by my colleagues in the MRG Dr Elsie Ho and Ms Muriaroha Muntz is also gratefully acknowledged. 244 Evaluation of the General Skilled Migration Categories

250 A3 Skilled Migration: The UK and Australia John Salt University College London A3.1 Introduction Labour immigration policy is currently in a state of flux. For long it has been the Cinderella of migration policy. From the 1950s most Government interest and concern focused on family settlement and the integration of ethnic minorities. From the late 1980s, asylum took centre stage. Since the late 1990s, economic migration has climbed the political agenda, culminating in a proposal for a new migration management strategy in Its objective is twofold: to provide the skilled labour deemed important to the UK economy and to enhance control over entry and return in order to deter abuse. This paper will review the policy background to the latest developments as a prelude to reviewing the literature on the economic impact of migration in the UK. It will then present a brief analysis of the European dimension considered a key contextual difference in the operating environments of UK and Australian immigration policies - including the provision of free movement of labour in the EEA and the effects of the enlargement of the EU in May The current work permit system and other routes of entry for skills will be discussed, including statistical evidence of the resulting selectiveness. Next, the proposed new five-tier system will be described, along with the issues still to be resolved. Finally, a comparison with the Australian situation will be attempted. A3.2 The policy background in the UK When the Labour Government came to power in 1997 it inherited a migration policy the principal objective of which had been to reduce immigration to the irreducible minimum. During the period of Conservative government ( ), for the most part migration was interpreted as settlement migration, although latterly asylum came to dominate policy making. Labour migration scarcely got a look in. Partly this was because the freedom of movement provisions within the EU meant there could be little control from that source. There was also uncertainty over GATS Mode 4 negotiations and their likely impact on work permit arrangements. Mainly, however, it was because labour migration was not perceived to be a problem. Numbers entering through the work permit system were still relatively modest and in any case, those who came through this route were DIMA March

251 deemed to be assets to the economy, providing relief to the temporary needs of employers for certain skills. Successive reviews of the work permit system in the 1980s and early 1990s had produced a route of entry that was frequently criticised for its tardiness but on the whole seemed to be working. Furthermore, while overall immigration policy was in the hands of the Home Office, along with some schemes of labour entry (notably the Working Holidaymakers Scheme (WHMS) and the Seasonal Agricultural Workers Scheme (SAWS)), operation of the Work Permits Scheme, the main labour route of entry, lay with the Department for Education and Skills (DfES). It was thus not surprising that the first migration White Paper of the new government (Fairer, Faster and Firmer) laid much emphasis on family settlement and asylum seeking but said almost nothing about labour immigration. Also worthy of note is that this White Paper, along with most of its successors, was silent on the subject of emigration, either of British citizens or of other nationalities. The debate about both skilled migration and migration generally was thus couched almost entirely in terms of immigration. Again, this was in large part due to departmental responsibility within government. The DfES operated the work permit system for managing labour immigration but had neither responsibility nor much interest in labour emigration. Since 1998 the UK government has been reviewing and developing its policies towards labour migration, both to deal with existing and anticipated skill shortages and increase economic competitiveness. A speech by the then Minister in charge of migration issues, Barbara Roche, in September 2000 is generally credited with opening up for the first time overt government support for higher levels of skilled immigration. In its general economic and social overview of migration policy and trends a Home Office paper (Glover et al, 2001) pointed to some basic problems in bringing about a better management system for economic migration. These were: the lack of information on migrant characteristics and on the consequences of migration; the lack of co-ordination across the different routes [of entry] or with broader economic policy objectives; migration policy and the entry control system was not sufficiently joined up with other areas of Government policy; migration policy was poorly integrated with other Government policies. In 2002 a HO White Paper (Secure Borders, Safe Haven: Integration and Diversity in Modern Britain) outlined proposals for a co-ordinated labour migration system driven by and responsive to labour market needs. The competitiveness of the UK economy was at the heart of these developments. It was the subject of a DTI White Paper in 1998 (Our Competitive Future: Building the Knowledge Driven Economy) and another in 2000 (Excellence and Opportunity) in which the importance of attracting scientists and engineers to the UK was emphasised. Action already taken included making it easier for foreign students to enter the UK labour market on graduation and for foreign academics to take supplementary work and consultancies in the private sector The economic competitiveness theme was developed by the Treasury in its pre-budget report in 1999 where it was recognised that the UK needed to attract the most skilled and enterprising people from abroad to add to the skill pool of resident workers. Hence, the Government was going to make it easier for skilled foreign workers in key 246 Evaluation of the General Skilled Migration Categories

252 areas to come and work in the UK, where they have the skills and attitudes to help generate an enterprise economy by extending the skill shortage list for work permit purposes, reviewing work permit arrangements and investigating ways of attracting foreign entrepreneurs and small investors to come and start businesses in the UK (HM Treasury, 1999). In his budget speech in March 2000, the Chancellor of the Exchequer mentioned in addition the importance of making the UK an attractive location for talented overseas students. The budget also emphasised the importance of employers being able to recruit through the work permit system without any artificial limits or quotas. At the same time, the Department for Education and Employment (DfEE) announced the results of its review of the work permit system, confirming that it would continue to be market driven and giving a specific commitment to identifying shortages in information technology, communications and electronics (ITCE). New skills criteria were set out which enabled foreign graduates at UK universities to receive work permits upon graduation. The training aspects of the Training and Work Experience Scheme were incorporated into the main scheme, enabling those completing their professional training to remain as work permit holders. Labour market testing through advertising was no longer required for permit extensions or changes of employment. Although future problems arising from demographic ageing were mentioned, replacement migration was never a serious driver behind the skilled immigration policy. However, the high levels of migration overall, including asylum seekers and family migrants, attracted substantial adverse comment from (mostly) right-wing pressure groups and media and continue to do so. DIMA March

253 A3.3 The economic effects of migration in the UK The development of a skilled migration management policy in recent years has taken place in an information vacuum. Despite the growing political interest in labour migration, there have been few systematic attempts to estimate its economic impact on the UK. There appear to be two main reasons. First, until recently Government and academics have shown little curiosity in this regard. Second, statistical data sources are extremely limited. We are thus only in the early stages of quantifying the effects of migration as a whole, let alone breaking them down according to skill categories and routes of entry. In addition, policy developments have occurred in a context of overall economic growth (albeit relatively modest) and falling unemployment. Government resolve has yet to be tested in an overall downturn, although a few clues may be found in its response to the ITCE recession of the early millennium years. This saw an initial fall in work permit applications and issues within the sector but nothing like the scale commensurate with labour oversupply in the sector. Fiscal effects The first attempt to assess the net fiscal contribution of first generation immigrants to the UK was made by Gott and Johnston (2002) for the period Described by the authors as a tentative original analysis, they estimated that migrants in the UK contributed 31.2 billion in taxes and consumed 28.8 billion in benefits and state services, a net fiscal contribution of about 2.5 billion (equivalent to around one penny on the basic rate of income tax. As a rider, they added that the figures need to be treated with caution. The analysis was extended to take qualifications into account, in effect using educational attainment as a proxy for skills. Results suggested that migrants with higher educational qualifications had a higher probability of being employed and were less likely to claim state benefits. The relationship was complicated by the interaction of other factors that may be related to the level of education, such as English language fluency, which make it difficult to isolate the specific effects of qualifications. These results are corroborated by Shields and Wheatley-Price (1999) who found a positive relationship between qualifications and occupational success among ethnic minority males. The Gott and Johnston study came under some criticism, notably that It was highly dependent on the years chosen. Their figure of a net fiscal gain of 2.5b. is meaningless unless seen in the context of the overall budgetary position. Lilley (2005:24) points out that the data refer to a year when the public finances were in surplus, so the nation as a whole and not just immigrants were paying more taxes than the cost of benefits and services they were using. It failed to apportion the whole cost of the immigration system to immigrants themselves. Rowthorne (2004) argued that any assessment of the fiscal 248 Evaluation of the General Skilled Migration Categories

254 contribution of migrants should take account of the cost of administering the immigration programme and providing for the special needs of immigrants. Rowthorne (Ibid) argues that the HO study fails to apportion corporation tax revenues correctly because it fails to recognise that a large proportion of this revenue comes from overseas shareholders. As migrants age and retire they will become net recipients (Lilley, 2005). It fails to account for the extra pressure on public services by immigration. While immigrants share of expenditure on health, education and public services is an inherent part of the analysis, critics have argued that the study does not take account of such issues as congestion and competition for public services. Sriskandarajah et al (2005) revisited the Gott and Johnston study, extending it to cover the period from 1999 to 2004, using the same basic methodology in order to achieve comparability but making certain changes to deal with some of the criticisms. Thus, they argued that: By extending the period of analysis the single year issue was nullified. That the rationale for an immigration policy is as much about furthering the interests of the existing population as it is about facilitating migrants into the country, so costs should be shared. Corporation tax data were adjusted in the new analysis to combat earlier criticism. That assessing the likely future effects is impossible in light of the lack of information on how long migrants stay. Congestion is an issue but is to some extent ameliorated because immigrant labour is disproportionately employed in public sector work, notably health. The analysis of Sriskandarajah et al concludes that the contribution of immigrants to public finances is growing and is likely to continue to do so in the near future. In , immigrants accounted for 8.8 per cent of government tax receipts and 8.4 per cent of government spending. By the respective figures were 10 and 9.1 per cent. Total revenue from immigrants grew in real terms from 33.8b. in to 41.2b. in , this 22 per cent increase comparing favourably with the six per cent increase for the UK-born. Their overall conclusion was that immigrants contribute more than their share fiscally. However, the authors point out that the situation may vary when immigrants are disaggregated by skill and qualification, although no research has been carried out in this way. They and others have also pointed out that net fiscal impacts represent only part of the economic impacts of immigration and that other aspects, such as economic dynamism, labour market flexibility and capital formation should be considered ultimately these may be more important than fiscal contributions. However, no research has been carried out. DIMA March

255 Labour market effects Most research on the effects of immigration on wages and the employment prospects of domestic workers find them small or absent. Most of the analysis relates to the US with a few studies of European countries (Coleman and Rowthorne, 2004). The first empirical study of the effects of immigration in the UK on local labour markets wages and employment was by Dustmann, Fabbri and Preston (2003). The authors looked at immigrants as a whole, not broken down by skill or education levels. The methodology was spatial correlation between immigrant inflows and local changes in labour market outcomes for natives. Their main finding was that if there is an impact of immigration on employment then it is statistically poorly determined and probably small in size and that Higher immigration appears to be associated with higher wage growth in the currently resident population (p4). Hence, The perception that immigrants take away jobs from the existing population, thus contributing to large increases in unemployment, or that immigrants depress wages of existing workers, do not find confirmation in the analysis. In a second study (2005), the same authors disaggregated the labour force by education and skill level. Results show that immigration effects are not clear cut, depending on the skill mix of the resident population and the way the economy may adjust to changes in the skill mix. They concluded that there was that little evidence of overall adverse effects of immigration on native outcomes, that there was some evidence of negative effects on employment of those with intermediate education level but that this was offset in the aggregate by positive effects on employment among the better qualified. Wage effects, based on a shorter data run, tended towards positive but were statistically poorly determined. 250 Evaluation of the General Skilled Migration Categories

256 A3.4 The UK and freedom of movement within the EEA In the spring of 2005 the Labour Force Survey (LFS) recorded million foreign nationals living in the UK, million of whom were working. Over the last decade or so, the trend in both has been upward (Figure A3.1). Figure A3.1: Foreign Nationals Foreign Nationals (Living in the UK) Foreign Nationals (Living and working in the UK) Source: Labour Force Survey The provisions for freedom of labour movement within the EEA constitute one of the main differences between the UK and Australia with respect to the acquisition of skills. Member state governments are powerless to control or select migrants within the common labour market. In fact, the proportion of total labour migration within the EEA accounted for by the nationals of fellow member states has been fairly constant over a couple of decades. The main increases and fluctuations in moves have been accounted for by non-nationals. There is no direct count of the numbers and skills coming to the UK from other EEA countries (except for the A8 countries see below) comparable with data from the work permit system. In 2003 the International Passenger Survey recorded 12,000 professional and managerial immigrants from European Union states and 15,000 emigrants. Small sample size prevents any more detailed occupational breakdown. A fuller, though still partial, picture may be derived from the Labour Force Survey. In 2005, 962,000 EU/EFTA nationals lived in the UK, 487,000 of whom were working. Proportionately, this is just under a third of all foreigners in both groups. Of those working, Ireland was the main source, with 175,000, although the number has been DIMA March

257 going down as the Irish economy has boomed. A breakdown by socio-economic class shows that EU(15) nationals were more likely to be highly skilled (Professionals, employers, managers) than citizens of either the UK or non-eu countries (Table 1). Table A3.1: Living and Working in the UK by SEC, 2005 Numbers (thousands) Proportion of total (per cent) Group Group Group Group Group Group A B C Other Total A B C Other Total All nationalities UK/GB Foreign nationals of which: Non-EU EU EU 15 (exc. Rep. Ire.) Irish Republic : France and Germany : Northern EU : Southern EU : Africa Middle East : : 12 : Indian Sub-Continent South East Asia : Other Asia : : 11 : North America : : Caribbean/West Indies : Other Americas : : Australia & New Zealand : Source: Labour Force Survey, Office for National Statistics Notes: Group A: Professional, employers, managers Group B: Intermediate Group C: Routine Northern EU: Austria, Benelux, Denmark, Finland and Sweden Southern EU: Greece, Italy, Portugal and Spain : Less than 10,000. Row totals include relevant estimates for these cells. 252 Evaluation of the General Skilled Migration Categories

258 Within the EU, those from northern countries were much more likely to be highly skilled than those from the south. Highly skilled workers from the EU entering the UK (measured on the basis of address a year ago) numbered under 10,000, a figure not inconsistent with that recorded for 2003 (the latest year for which statistics are available) in the IPS (Table 2). Table A3.2: Living in UK now and outside UK 1 year ago, by nationality and SEG, 2005 Absolute Figures (thousands) Group A Group B Group C Other Total Group A Proportion of Total (per cent) Group B Group C Other Total All nationalities UK/GB : Foreign nationals Non-EU Countries Source: Labour Force Survey, Office for National Statistics Socio-economic groups based on Standard Occupational Classification (SOC 92), defined by ONS: Group A: Professional, employers, managers Group B: Other non-manual Group C: Skilled manual, semi-skilled manual, unskilled manual Notes: : Less than 10,000. Row totals include relevant estimates for these cells. Figures rounded to nearest '000 In sum, the LFS suggests that the stock of highly skilled workers from the EU is just under a quarter of a million and the inflow is of the order of a few thousand per annum. Conversely, just over a quarter of a million EU nationals living and working in the UK were in intermediate and routine occupations and fewer than 10,000 in each of these categories entered in Both the IPS and LFS underestimate total flows because they omit those who come and go within a year. A fuller picture of occupational structure of those born in EU/EFTA states is available for 2000 (Dobson et al, 2001). The occupational groups with the largest numbers were managers and administrators (110,000), associate professionals (89,000) and professionals (86,000). Where sample size allowed, EU/EFTA states were calculated to have more than their share (the ratio between the proportion in the occupational group compared with the proportion of the total) in only a small number of occupations: construction trades; health associate professionals; managers in transport and storing; teaching professionals; catering; and artistic and sportspeople. Low shares were in: road transport operatives; clerks; and sales assistants. A major development in foreign labour flows to the UK in 2004 resulted from the accession of ten new states in May of that year. Unlike most of its Union partners the UK allowed citizens of the new eastern European members (the A8 group) immediate access DIMA March

259 to its labour market. All they had to do was register and pay a small fee ( 50). By June 2005 there had been 180,000 registrations (around 40,000 registrants were already in the UK at the time of accession). It is thought a large proportion of these have stayed only temporarily, although there are no statistics. Their occupational structure is quite different from that of work permit holders (Table A3.3). For the most part, the new member nationals are not entering highly skilled occupations, which remain in the domain of the work permit system. In total, it appears that over the last year or so the WRS has brought in more foreigners to work in lower skilled jobs (although the workers themselves may have been highly qualified) than the work permit system has done for the higher skilled. Table A3.3: Occupational Breakdown (percentage), Worker Registration Scheme and Work Permits Occupations WRS WPs Managers and Administrators Professionals Associate Professionals Clerical Craft Personal and Protective Sales Plant and Machinery Operatives Other Unknown Source: Work Permits, UK; Accession Monitoring report A3.5 The work permit system The main mechanism for managing labour immigration to the UK is the Work Permits system. This UK-based employer-sponsored route applies only to citizens from outside the European Economic Area. Restrictions on foreigners seeking work in the UK were first introduced during the First World War. In a system of work permits was brought in which laid down conditions to regulate the employment of foreigners. To obtain permits, employers had to show that the proposed employment of a foreigner was reasonable and necessary, that the proposed employee had the skills and experience necessary to do the job, that adequate efforts had been made to find indigenous labour and that wages and conditions were not less favourable than those accorded to British employees for similar work. These conditions have remained extant to the present. 254 Evaluation of the General Skilled Migration Categories

260 The story of work permit issues between the Second World War and the present has been something of a roller-coaster (Figure A3.2). Until the late 1960s there was a fluctuating upward trend. Most work permits went to unskilled and semi-skilled workers: during the 1950s the largest category was domestic service, 44 per cent of the total in The introduction of a voucher scheme in the 1960s heralded a change in the flow of work permits. There followed a prolonged period of decline in work permit issues to around 15,000 in the early 1980s. From the middle 1980s issues began to rise significantly, reaching 30,000 in Figure A3.2: Number of Work Permits and First Permission issued, * Source: Department of Employment (1977), Overseas Labour Service/Work Permits (UK) Notes:* 31 March - 31 December only. In the late 1990s, growing international competition for skills, particularly from North America, Australasia and elsewhere in Europe, led to further consideration of the competitiveness of the UK economy. It was felt that the work permits system should be more flexible in order to respond to the changing demands of the labour market. In light of this, an internal review in 2000 resulted in the implementation of a simpler, more transparent, more cost efficient system which was more responsive to employers needs and requirements. Changes included a simplified list of details required from applicants, electronic applications, greater flexibility in the level education or experience required and the incorporation of key workers into the main scheme. A major consequence of this was that the turnaround time for applications became a matter of days rather than weeks, thus giving the UK a competitive edge over other countries in this regard. DIMA March

261 Management and Administration of the Work Permit System The employment of people who are subject to immigration control is regulated by the granting of work permits by Work Permits (UK), formerly the Overseas Labour Service within the Department of Employment/DfES. After the 2001 election, WP(UK) was transferred to the Home Office, a move designed to integrate the work permits system more closely with other migration systems such as immigration control. The Shortage Occupation List was introduced in 1991, alongside the new two-tier system. Tier 1 covered intra-company transfers, shortage occupations and those connected with incoming investment and did not require domestic labour market testing by employers. It did, however, require employers to attest to the same principles of non-displacement and additionality that pertain to the other Tier of entry. Tier 2 covered all other occupations, usually at NVQ3 educational level and above. The Shortage Occupation List was criticised for its slow response to changes in demand, especially in technology-driven sectors. In an effort to improve the situation the new government introduced Sector Skills Advisory Panels to review shortages on an ongoing (quarterly) basis. These Panels included representatives of employers, professional bodies, intermediaries (such as recruitment agencies) trades unions and government. The task of these Panels is to review the labour market conditions in their respective economic sectors and to monitor the degree and nature of skill shortages and make appropriate recommendations: for example, to add a particular occupation to the published shortage list or to remove it. Currently, there are six panels covering Health, ITCE, engineering, education, finance and hospitality. In September 2002, driven by falling employment among IT professionals, layoffs and slack demand, the ITCE panel recommended the removal of all IT-related occupations from the shortage list, although the expected sharp drop in work permit issues in the sector did not materialise (see below, section 5.3). A number of different work permits are available: Business and Commercial Work Permit to allow employers in the UK to recruit people from outside the EEA to fill a vacancy that might otherwise be filled by a resident worker. Training and Work Experience Scheme to enable people from outside the EEA to undertake work-based training for a professional or specialist qualification, or a period of work experience. Sports and Entertainments arrangements which allow employers in the UK to employ established sportspeople, entertainers, cultural artists and some technical/support people from outside the EEA. Student Internship arrangements which allow students from outside the EEA studying first or higher degree courses overseas to undertake an internship with an employer in this country. General Agreement on Trade in Services (GATS) which allows employees of companies based outside the EU to work in the UK on a service contract awarded to their employer by a UK-based organisation. This is an exceptional arrangement to meet rules made under the General Agreement on Trade in Services. 256 Evaluation of the General Skilled Migration Categories

262 Work permits can be issued initially for up to five years and those admitted in this category may qualify for settlement after four years. Criteria for the issue of a work permit include a skills requirement and a requirement that the employer has made a genuine attempt to fill the vacancy from the resident workforce. There are distinct provisions within the work permit arrangements for sportspersons and entertainers, intra-company transfers and those coming for training and work experience. Work permit holders seeking admission for more than six months require entry clearance which is obtained after the granting of a work permit. There are four basic categories of work permit: Work permit. This is granted to an employer when the foreign worker is residing outside the UK. First permission. This is granted to an employer when the foreign worker is already residing in the UK. Extension. This is granted to an employer who wishes to extend the period of employment of a foreign worker. Change of employment. This is granted to an employer who wishes to employ a foreign worker for whom there is already a work permit with another employer (most cases) or where the existing employer wishes the foreign worker for whom it already has a permit to engage in a different occupation (few cases). Trends in each of these over the last decade are shown in Figure A3.3. Broadly speaking, work permit numbers have gone down since 2001 while those for the other categories have increased. Figure A3.3: Work permit applications approved by type, Other (1) Changes of Employment Extensions First Permissions Work Permits Source: Work Permits (UK) Notes:1. Includes "Supplementary Employment", "Self Certification" and "In Country Technical Change". DIMA March

263 The process for obtaining a work permit is summarised in Figure A3.4. In essence, there is a two-stage process, with the employer first obtaining the permit and then the candidate receiving permission to enter/stay in the country. An employer with a shortage occupation vacancy or one that wants to fill a post from its overseas branch may go directly through Tier 1, submitting Form WP1 to Work Permits UK. If approved, a work permit is issued. If the occupation is one in Tier 2, and no suitable domestic or other EEA candidate can be found, an application is made using Form WP1. Either Tier 1 or Tier 2 may be used for a change of employment, where the candidate already has a work permit from another employer. If the application is for an extension, form WP1X is submitted. If any application is refused, an appeal may be made within 28 days. If the candidate is in the UK, (s)he then applies for Leave to Remain, submitting Form FLR (IED) to WPUK. If the candidate is overseas (s)he applies to an Entry Clearance Officer for a visa. Once approved, the candidate is free to take up the employment. The work permit system is fairly narrowly focused by industry, occupation and nationality. 258 Evaluation of the General Skilled Migration Categories

264 Figure A3.4: Tier 1 DIMA March No Yes If yes Candidate overseas Candidate in UK Candidate applies for Leave to Remain, submits FLR (IED) to WPUK (First Permissions, Extensions, Changes) Appeal within 28 days Approved? If yes Candidate applies to Entry Clearance Officer for Visa (Work Permits or Extensions) If If Else Shortage Occupation? Intra-Company Transfer? Advertise, if no suitable candidate, then Tier 2 No Submit form WP1X to WPUIK UK Employer with Resource Needs Approved? Submit Form WP1 to WPUK Appeal within 28 days WORK PERMIT EMPLOYEE Retain work permit holder? Extension Yes Or with candidate who has a Work Permit from another

265 Work permits and first permissions by Industry Table A3.4 shows a breakdown of work permits and first permissions for the UK by industry group for Amongst the categories of applications, work permits and first permissions are of particular interest as they are sought for foreign workers newly entering the labour market and they can be used as an indicator of international labour migration 51. The top five industry groups were: Health and medical services (29.8 per cent); Computer services (15.7 per cent); Administration, business and managerial services (10.9 per cent); Hospitality and catering (10.1 per cent); Education and cultural activities (6.9 per cent). This is quite a different picture from that of 1995: Administration, business and managerial services (16.7 per cent); Financial services (13.2 per cent); Entertainment and leisure services (12.1 per cent); Retail and related services (11.7 per cent); and Manufacturing (8.2 per cent). There has been a shift from the traditional domination of commercial-oriented services to the Health and ITCE sectors. For the most part, this is a response to the skills shortages in the UK over the last few years. Trends in individual industries have varied. Administration, business and managerial services has experienced a continuous decline in its proportion of the total, as has Financial services. On the other hand, Health and medical services has grown strongly and by 2004 was heading towards a third of all issues. Two-thirds of all issues in 2004 were in the top four sectors. Thus, the work permit programme is highly sector specific. In the absence of similar data for Australia, Figure A3.5 presents a broad comparison of the industrial distribution of the foreign-born population of the two countries for It shows that in both cases service industries predominate, with a broadly similar distribution across the different types of service industry. Non-service industry employment of foreign-born is more prevalent in Australia. Figure A3.5: Industrial distribution of foreign workers in UK and Australia 100% 90% 21% 80% 30% Non-service industries ** 70% Other service industries 60% 34% 28% Household workers (UK:1%; AU: 3%) 50% 1% Education 40% 8% 3% 6% Hotels and restaurants 30% 11% 6% Wholesale and retail 20% 12% 17% Health and community 10% 14% 10% 0% UK Australia Source: Home Office Although this is limited to non-eea labour migrants as EEA nationals do not require a work permit and so their movements are not captured in the data. 260 Evaluation of the General Skilled Migration Categories

266 Table A3.4: Work Permits and First Permissions approved by Industry for 1995 and Absolute figures Administration, business and management services 4,041 9,026 10,132 11,209 9,638 9,698 Agriculture activities Computer services 1,827 12,726 15,875 12,453 10,386 14,008 Construction and land services ,515 2,108 1,663 1,467 Education and cultural activities 1,901 3,832 8,003 8,142 6,603 6,187 Entertainment and leisure services 2,919 4,235 4,725 4,471 4,469 4,304 Extraction industries 424 1,044 1,223 1, Financial services 3,194 6,997 7,026 5,019 4,549 5,775 Government Health and medical services 1,774 14,516 20,592 22,271 24,621 26,568 Hospitality, hotels, catering and other services 320 1,751 4,659 10,087 12,116 9,028 Law related services , Manufacturing 1,987 2,747 3,222 3,070 2,779 2,930 Real estate and property services Retail and related services 2, ,265 1,487 1,447 Security and protective services Sporting activities ,267 1,585 1,582 1,891 Telecommunications 458 2,228 1,621 1,660 1, Transport ,207 1,005 1,005 1,113 Utilities: gas, electricity, water Total 24,161 64,575 85,144 88,622 85,786 89,173 Per cent Administration, business and management services Agriculture activities Computer services Construction and land services Education and cultural activities Entertainment and leisure services Extraction industries Financial services Government Health and medical services Hospitality, hotels, catering and other services Law related services Manufacturing Real estate and property services Retail and related services Security and protective services Sporting activities Telecommunications Transport Utilities: gas, electricity, water Total Source: Overseas Labour Service / Work Permits (UK) DIMA March

267 Work permits and first permissions by occupation In the UK, three occupational categories only, Associate professional and technical (56 per cent), Professional (21.5 per cent) and Managers and administrators (13.2 per cent), account for the bulk of work permits issued (TableA3. 5). At a more detailed level, the two main occupational groups are health workers who account for 36.3 per cent of the total and ICT (computer) staff (11.1 per cent). The rationale behind these two is very different. The first group are responding to labour shortages, mainly in the NHS, caused by the substantial government investment in health since It is seldom remarked that such a high proportion of work permits is issued by one government department (Home Office) to employers whose funding is largely derived from another (Department of Health). The number of work permits to ITCE staff grew substantially in the late 1990s in response to actual and anticipated skill shortages but failed to decline commensurately with oversupply in the new millennium. In fact, it appears that work permit issues to ICT staff are now more a reflection of changes to business models and patterns of working in the sector, especially in the form of client-based intra-company transfers, than skill shortages per se. A significant shift in work permit issues in recent years has been the relative growth in numbers of permits issued to foreign workers already in the country (first permissions, change and extensions) compared with those living abroad (work permits). The latter accounted for only 44.7 per cent of issues in The relative importance of the four categories varies according to occupation. For example, only 15 per cent of health professionals (mainly doctors) were outside the UK when their permits were issued, compared with 58.8 per cent of computer analysts and programmers. A number of observations may be made on the basis of these statistics on work permit issues. Over the last decade there have been some fundamental shifts in the nationalities receiving permits, with the notable rise of India (ITCE and nurses) and the Philippines (nurses). The sectoral emphasis has also shifted in response to skill shortages. A relatively narrow range of occupations now dominates the system, with the health sector pre-eminent. Finally, the system is now one which turns foreigners already living in the country, perhaps as visitors or with a work permit already, into permitted foreign workers rather than one bringing in labour currently living abroad. A major component in skilled immigration in both countries continues to be in the ICT sector. Three recent studies, Kinnaird (2005) for Australia and Millar (2003) and Dench and Millar (2005), together with our own research for the UK, allow some comparison of the experiences of the two countries. Kinnaird found both the GSM programme and the 457 visa programme contributed to an excess supply of computer professionals, resulting in higher unemployment and underemployment particularly among new ICT graduates. The study also concluded that available evidence on the 457 programme suggested that a significant number of immigrant workers were paid below market rates, especially in the under 30 age group. Although less forthright, the evidence for the UK is similar. The work permit system has not responded closely to prevailing labour market conditions and survey evidence indicates that companies prefer to use overseas labour which is highly mobile and may be purchased at bargain prices. For both countries, one implication is that the situation may lead to a reduction in firms incentives to create talent pipelines. 262 Evaluation of the General Skilled Migration Categories

268 Table A3.5: Main types of permits approved by occupation, excluding groups and SBS applications, 1 January 31 December 2004 (1) Occupation numbers proportion of all occupations proportion of all occupations total c_emp ic_ext fp wp total c_emp ic_ext fp wp total c_emp ic_ext fp wp All occupations Managers and administrators General managers and administrators in national and local government, large companies and organisations Specialist managers Financial institution and office managers, Civil Service executive officers Managers in farming, horticulture, forestry and fishing Managers and proprietors in service industries Managers and administrators nec Professional occupations Natural scientists Engineers and technologists Health professionals Teaching professionals Legal professionals Business and financial professionals Architects, town planners and surveyors Professional occupations nec Associate professional and technical occupations Scientific technicians Computer analysts/programmers Ship and aircraft officers, air traffic planners and controllers Health associate professionals Legal associate professionals Business and financial associate professionals Social welfare associate professionals Literary, artistic and sports professionals Associate professional and technical occupations Clerical and secretarial occupations Secretaries, personal assistants, typists, word processor operators Receptionists, telephonists and related occupations Craft and related occupations Construction trades Metal forming, welding and related trades Other craft and related occupations Personal and protective service occupations Catering occupations Sales occupations Plant and machine operatives Other transport and machinery operatives Other occupations Other occupations in agriculture, forestry and fishing Other occupations in construction Other occupations in sales and services Source: Work Permits Data

269 TableA3.6: Occupation of the UK work permits approvals and Australian GSM and 457 applicants. UK/WP (1) GSM (2) 457 (3) Occupation numbers proportion numbers proportion numbers proportion total total total total total total All occupations Managers and adminstrators General managers and administrators in national and local government, large companies and organisations Production managers in manufacturing, construction, mining and energy industries. Specialist managers Financial institution and office managers, Civil Service executive officers Managers in transport and storing Protective service officers Managers in farming, horticulture, forestry and fishing Managers and proprietors in service industries Managers and administrators nec Professional occupations Natural scientists Engineers and technologists Health professionals Teaching professionals Legal professionals Business and financial professionals Architects, town planners and surveyors Librarians and related professionals Professional occupations nec Associate professional and technical occupations Scientific technicians Draughtspersons, quantity and other surveyors Computer analysts/programmers Ship and aircraft officers, air traffic planners and controllers Health associate professionals Legal associate professionals Business and financial associate professionals Social welfare associate professionals Literary, artistic and sports professionals Associate professional and technical occupations Clerical and secretarial occupations Administrative/clerical officers and assistants in Civil Service and local government 0.0 Numerical clerks and cashiers Clerks (not otherwise specified) Secretaries, personal assistants, typists, word processor operators Receptionists, telephonists and related occupations Clerical and secretarial occupations nec Craft and related occupations Construction trades Metal machining, fitting and instrument making trades Electrical/electronic trades Metal forming, welding and related trades Vehicle trades Textiles, garments and related trades Priniting and related trades Woodworking trades Food preparation trades Other craft and related occupations Personal and protective service occupations Security and protective service occupations Catering occupations Travel attendants and related occupations Health and related occupations Childcare and related occupations Hairdressers, beauticians and related occupations Personal and protective service occupations nec Evaluation of the General Skilled Migration Categories

270 TableA3.6: Continued Sales occupations Buyers, brokers and related agents Sales representatives Sales assistants and checkout operators Mobile, market and door-to-door salespersons and agents Sales Occupations nec Plant and machine operatives Chemicals, paper, plastics and related process operatives Metal making and treating process operatives Metal working process operatives Other routine process operatives Road transport operatives Other transport and machinery operatives Plant and machine operatives nec Other occupations Other occupations in agriculture, forestry and fishing Other occupations in mining and manufacturing Other occupations in construction Other occupations in sales and services Other occupations nec Occupation Unknown Source: Work Permits (UK) Notes: 1. Data from year Data from program year Data from first half DIMA March

271 Comparison of UK and Australian migrant occupations There are difficulties in making such comparisons because the two countries use different occupational categories and also because the entry schemes are different. In order to produce Table 6 the occupations of migrants to Australia in the GSM and 457 Visa schemes have been coded according to the UK SOC90 classification. In broad terms the distributions are similar, with Associate professionals, Professionals and Managers and administrators being the largest groups. However, both Australian schemes are more likely to accept those in craft and related occupations than the UK work permit system. Given that the UK work permit system is designed to bring in workers temporarily, its outcome might be expected to be similar to that of the Australian 457 scheme. In fact, this does not for the most part appear to be the case, the UK pattern having similarities with elements of both Australian schemes in respect of the proportional distributions. Overall, the main difference between the UK and Australian distributions relates to Health associate professionals, which account for a third of work permits, a tenth of 457 visas and only one in twenty GSM entrants. Computer analysts and programmers are of the same relative importance among UK work permit holders and Australian 457 visas, both considerably less important than among GSM applicants. This pattern among temporary entrants is consistent with current patterns of working and mobility in the sector. The relative importance of Managers and administrators in the UK bears a closer relationship to the GSM than to 457 visas. However, there are difficulties in a more detailed comparative breakdown among this group because of the high proportion in the UK in the category Managers and administrators not elsewhere classified. The Highly Skilled Migrant Programme (HSMP) This was launched in January 2002 as a new initiative to allow individuals with exceptional personal skills and experience to come to the UK to seek and take work or self-employment. The initial period of residence is one year, with the expectation of permission to remain for a further three years, after which settlement may be granted. Successful applicants may bring their families with them. It is established on a points basis. Following criticism that it did not attract the skills the UK needed (it was sometimes referred to as the Highly Paid Bankers Scheme: Rollason, 2004) the scheme was revised in January 2003 with the allocation of points amended, notably by increasing the points available for those with work experience and revising the earnings thresholds for those from the poorest countries. Overall, the scheme rewards those with significant past earnings and work experience and while not involving a labour market test, the applicant is required to demonstrate reasonable prospects of securing work or establishing a business in the UK. 266 Evaluation of the General Skilled Migration Categories

272 The HSMP breaks new ground in economic immigration by non-eea nationals. Unlike the main work permit scheme, no prior offer of employment is necessary, permission being granted to the individual worker and not tied to a post offered by an employer. Furthermore, for the first time, a UK scheme uses a point score system similar to that in Australia. To make a successful application, individuals need to demonstrate that they will be able to continue their chosen career in the UK and also provide evidence that they score 75 points or more in five areas in addition to age: educational qualifications; work experience; past earnings; achievement in the chosen field and husband s, wife s or unmarried partner s achievements; HSMP priority applications (at the moment this is only available to qualified GPs). There is a mandatory entry clearance requirement for this route i.e. an application cannot be made on arrival in the UK, although in certain circumstances an application can be made from within the UK. Comparison with the Australian allocation (Table A3.7) shows some overlaps in attributes, although generally the GSM includes a wider range. TableA3.7: UK and Australia: Points Allocations UK/HSMP Australia/GSM Age Qualifications Work experience Recent earnings Achievement in field General practitioner 50 Spouse / partner achievement 10 Shortage occupation Australian qualification 5-15 Regional 5 Relationship 15 Sponsorship 15 Bonus 5 Number required Source: Websites DIMA March

273 Figure A3.6 compares the relative weighting of the attributes for the two countries, demonstrating some significant differences between them. Figure A3.6: UK Highly skilled migrant program and Australian general skilled migration program. Percentage weighting* of attributes 100% 90% 80% 70% 60% 50% 15% 12% 3% 12% 29% 6% 18% 6% Adaptability / time spent in country Achievement in chosen field Past earnings Spouse skills Secured employment 40% 30% 29% 37% Work experience Age 20% 3% Skills / education 10% 0% 18% UK 12% Australia English (or official language) Source: Home Office 2005 Notes: * Weightings are calculated as the maximum achievable in each category divided by the total maximum achievable points, excluding bonus points. The number of approvals has been rising (Table A3.8) and is likely to continue to do so as there is a substantial backlog of applications to be dealt with. About 24,000 applications were received in the year leading up to March Unfortunately, accurate statistics for the period from mid-2003 on the occupations of those accepted are not available. However, during the period 1 February 2002 to 31 July 2003 four main groups dominated: Finance (including accountancy, banking, investment, etc.); Business Managers (including consultants, directors and executives); ITCE (including software engineers, computer specialists and telecommunications specialists); and Medical occupations. Other important categories were: Science, academic and research; Other engineering; and Sales and marketing. To a considerable extent, these occupations are similar to those coming through the main work permits scheme. Those entering under the programme come from a wide range of nationalities (Table 8). In the first six months of 2004 Indians were the largest group (21.6 per cent), followed by Americans (11.1 per cent), Australians (8.7 per cent), South Africans (8.3 per cent) and Pakistanis (8.3 per cent). 268 Evaluation of the General Skilled Migration Categories

274 Table A3.8: Highly Skilled Migrant Programme applications approved, by nationality, 2002, 2003 and first half of * ** Total Argentina Australia Azerbaijan Bangladesh Belarus Brazil Brit Nat Overseas Bulgaria Cameroon Canada China Peoples Republic Of Colombia Egypt Ghana India Iran Iraq Israel Jamaica Japan Kazakhstan Kenya Lebanon Lithuania Malaysia Mauritius Mexico Nepal New Zealand Nigeria Pakistan Peru Philippines Poland Romania Russian Federation Singapore South Africa Sri Lanka Sudan Tanzania (united Rep Of) Trinidad & Tobago Turkey Ukraine United States Of America Venezuela Yugoslavia Zambia Zimbabwe Rest of World Source: Work Permits (UK) Notes: Table shows all nationalities for which there were 10 or more applications in * The HSMP started on 1 February 2002 and so data for 2002 are for 1 February to 31 December. ** 1 January to 30 June 2004 DIMA March

275 Working Holidaymakers (WHM) Restrictions in the type of employment include engaging in business or providing services as a professional sportsman or entertainer or pursuing a career. In other words, employment must be in a junior position and temporary. Anecdotal evidence suggests that for those with a university degree or equivalent qualification it is relatively easy to switch from a WHM to a Work Permit and that increasing numbers of WHMs stay legally in the UK to work in the financial and ICT sectors. There is no formal monitoring of working holidaymakers after their entry into the UK. Home Office document HO 2003d on the WHM scheme states that some WHM migrants can help alleviate recruitment difficulties...so it might not be in the UK s economic interests to fully enforce (sic) the current employment restrictions. In the consultation process on the development of the WHM scheme (HO 2003d) employers representatives in sectors with labour shortages argued for expansion of the scheme beyond Commonwealth countries in order to fill gaps. In particular they favoured making it easier for WHMs to switch into work permit employment at the end of their stay. In June 2003 the HO presented the results of its review of the system, with changes effective from August that year. The most significant change was related to the removal of most employment restrictions. Innovators Scheme The scheme is aimed at entrepreneurs with new and creative ideas who want to set up a business in the United Kingdom, especially in the areas of science and technology, including e-commerce. It is designed to attract and select entrepreneurs whose business proposals will lead to exceptional economic benefits for the United Kingdom. Numbers of new innovators (as distinct from those already in the UK in this capacity and applying for indefinite leave to remain) approved between March 2004 and September 2005 totalled only 45. Innovators do not need to invest a set amount of money, but must show entrepreneurial ability, technical skills and a good business plan. Assessment is selective, but highly flexible. Applications, to Work Permits UK, are assessed on the basis of a points system, the scoring areas being: personal; business plan general; business plan: economic benefits. Initial approval is for 18 months which can then be extended and after four years there is the possibility of indefinite leave to remain. 270 Evaluation of the General Skilled Migration Categories

276 Investors Scheme This is for people with more than 1 million to invest in the UK and who want to make the UK their main home. Investment may be in unit trusts or private companies, but not property companies, offshore companies, banks or building societies. Investors may not work as employees but their family members can. Initial permission to stay is for 12 months, renewable for three years if conditions are met, after which there may be indefinite leave to remain. Between March 2004 and September 2005, 176 new investor applications were approved. Science and Engineering Graduates Scheme The scheme, begun in October 2004, allows non-eea nationals who have graduated from UK higher or further education establishments in certain physical sciences, mathematics and engineering subjects with at least a 2.2 class degree to remain in the UK for 12 months after their studies to pursue a career. The DfES has created a list of relevant courses which focuses on subjects and skills identified as being in short supply. Fresh Talent: Working in Scotland scheme This is the only UK scheme targeted at attracting migrants into a specific region and thus comparable (in a very restricted way) to the Regional Australia policy. It is part of the Scottish Executive s Fresh Talent Initiative which encourages people to consider living and working in Scotland. It has been developed in response to the sharp decline in Scotland s population in recent years. The scheme is being implemented jointly by the Scottish Executive and Home Office. It is designed to enable non-eea nationals who have successfully completed higher education at a Scottish university to apply to stay in Scotland for up to two years after completing their studies to seek and take work. There are no restrictions on the type of work taken and a work permit is not required. After two years, scheme participants may stay on as a work permit holder, HSMP participant, business person or innovator. Dependants are also allowed to stay in Scotland provided they meet the requirements of the Immigration Rules. DIMA March

277 Permit-free routes There are a number of permit-free routes under which skilled people can enter in connection with employment in the UK. These include the Working Holidaymakers scheme, with tens of thousands of entries, to much smaller and more specific schemes such as those for representatives of overseas insurance companies, the Japan Youth Exchange Scheme and the provision within the Immigration Rules to allow writers, composers and artists to enter the UK and settle there. Clergy do not require work permits. Students With 319,000 people given leave to enter as students in 2003, this scheme is bigger numerically than any employment route. For entry as a student under the Immigration Rules to be granted, an applicant must have been accepted for a course of study at a publicly funded institute of further or higher education; a bona fide private education institution or an independent feepaying school outside the state sector. The establishment must be included in the DFES Register of Education and Training Providers. The Rules also require that an applicant must be able and intend to follow a recognised full-time degree course at a publicly funded institution of further or higher education; a weekday full-time course at a single institution for minimum of 15 hours a week organised daytime study; or a full-time course at an independent fee-paying school. Applicants must demonstrate that they intend to leave the UK at the end of their studies; that they do not intend to take employment other than part-time or vacation work; and are able to met the costs of their course and accommodation, and maintain themselves and any dependants without having recourse to public funds. In addition to the main student route, the Rules also contain separate categories catering for dependants of students (who may seek employment where the period of leave granted is 12 months or longer); student nurses, and prospective students, for those who intend to study in the UK and who need to spend time here to finalise their study plans. A3.6 Proposed new five tier system The proposed new migration management system was forged predominantly during the run-up to the 2005 General Election. The introduction of new schemes and the development of existing ones in the years before had led to a situation in which the need for better integration of the various components of labour immigration policy had become apparent. This need was thrown sharply into focus by the inflow of labour from the A8 countries before and after May However, the timing of the government s 272 Evaluation of the General Skilled Migration Categories

278 proposed 5-year strategy, unveiled in February 2005, was undoubtedly influenced by the political cycle. Having stressed the urgency of a new management strategy, it is not surprising that the first proposals were put forward soon after the election and a consultation process begun. However, it is evident from the lack of detail about how the proposed system will work that there is still much planning and research to be done before implementation can proceed. The existing system was felt to be too complex, bureaucratic, subjective lacked transparency and with limited action taken to curb abuses by sponsors. The main objectives of the new system are economic and control. The government aims to increase the number of highly productive and highly skilled workers in the UK, fill short term shortages and gaps in the labour market and increase UK exports (e.g. by increasing innovation, productivity and efficiency among UK firms and by students spending money on UK goods and services). At the same time, it wants to improve public confidence in the system of control, prevent those who do not meet the criteria from getting to the UK and ensure that those who are not entitled to be in the country leave. For labour migrants the intention is to move away from the current two-step process where an employer obtains a work permit and then the individual worker applies for entry or stay clearance. Work permits will be abolished and the only role for the employer will be the interview/job offer process and to assure IND that it has a UK base. The strategy is outlined in the recent (July 2005) Home Office Selective Admission: Making Migration Work for Britain, a document containing proposals for a new five tier system for managing labour immigration. The document launches a process of consultation with as wide a range of stakeholders as possible, to conclude in early November In addition to the proposals it contains a list of questions, welcoming comments on the proposals as well as wider contributions to developing an effective managed migration system. More detailed plans will not be published until spring 2006 at the earliest, with phased implementation into Early responses from employers in the consultation process have been largely negative towards the new system, although it is not yet clear how strong has been the engagement of employers with the process. During the consultation period the Managed Migration Customer Services Team within the Immigration and Nationality Department will develop the evidence base, analysing the economic impact of alternative policy options and working in more detail on proposals for streamlined implementation processes for the system. It is intended that further announcements will be made about improvements and proposals for the family reunion arrangements and about the requirements to qualify for permanent residence. The essence of the proposal is to move from the existing two-tier work permit system plus the other entry schemes (WHM, SBS, SAWS, HSMP) to an all-encompassing five tiers which reflect the purposes of different migrants in coming to the UK. DIMA March

279 Tier 1: Highly skilled individuals to contribute to growth and productivity. This is the existing HSMP. Tier 2: Skilled workers with a job offer and workers to meet specific requirements where an overseas national is necessary. This comprises the two current tiers of the work permit system. Tier 3: Limited numbers of workers to fill low skill shortages. Tier 4: Students: increasing exports and improving the education sector (through overseas fees) for the UK. Tier 5: Other temporary categories: visiting workers, selected development schemes and youth mobility/cultural exchange. It is proposed that Tiers 1 and 2 would have a route to permanent residence subject to meeting five years residence and other requirements. The others would not, but in some cases, for instance students graduating and finding work in a shortage area, people on the Fresh Talent: Working in Scotland scheme, or post-doctoral researchers, individuals could move quickly into Tiers 1 or 2. Migrants would have different entitlements according to tier: for example to work with or without restriction; or to be joined by their immediate family. The tier of entry or stay would also affect the possible contribution of a sponsor to making the system work. The application process A two stage process is suggested (Figure A3.7). First, a prospective migrant would make an initial self-assessment, using guidance preferably on the web but also on paper, by answering some simple questions relating to purpose in coming to the UK, length of stay and qualifications and work experience. This would allow them to be routed to the relevant set of requirements to establish whether they would qualify to come to the United Kingdom as a visitor, skilled worker or student or not. Second, if the selfassessment was successful under any of the tiers they could then make their formal application, with supporting documentary evidence, to the relevant post overseas or, if in the UK, to the Managed Migration Directorate in IND. The caseworker would ensure that the applicant qualified under the relevant tier and satisfied the necessary risk and security checks, before telling them whether they qualified and what their status in the UK would be. 274 Evaluation of the General Skilled Migration Categories

280 Figure A3.7: Source: Home Office, 2005 DIMA March