Previously unpublished data from The Australian Population Research Institute (TAPRI) reveals that many of the imported IT workers are Indians on 457 visas earning base salaries significantly less than the Australian average for Australian IT professionals.
The report's lead author is Dr Bob Birrell from TAPRI, and it is co-written by Ernest Healy and Bob Kinnaird.
TAPRI has also lambasts the Indian IT lobby group — the National Association of Software and Service Companies (NASSCOM) — for statements that Indian IT services companies are paying well above the mandated income threshold for 457 wages.
According to the TAPRI study — "Immigration Overflow: Why it Matters" — most Indian nationals are sponsored as intra-company transfers by Indian IT services companies, who have been successful in winning a major chunk of Australia’s IT consulting work for 457 visa holders.
“They have succeeded in part because they are paying these professionals much lower salaries than the market rate for comparable IT professionals in Australia,” TAPRI says.
According to the study, the majority of the imported workers (three-quarters) are Indian nationals, making up the largest single occupation group in the 457 programme. They are mostly working in the heart of Australia’s IT industry in Melbourne and Sydney.
The 457 minimum salary "floor" is set at $53,900 per year, almost the same as the median starting salary for Australian ICT graduates under age 25 ($54,000).
The TAPRI study says that between 2014-15, 61% of the Indian 457 IT professionals had a nominated base salary below $70,180 – some $30,000 below average Australian IT professionals’ salaries in 2014 as measured by the ABS (around $100,000 pa).
“According to the ABS, the average Australian salary for full- time non-managerial employees in professional level IT occupations in 2014 was around $100,000,” TAPRI notes.
“For the 5722 of the total of 7329 who were Indian nationals in these two occupations in 2014-15, the salary level was very low. Some 61.4% had a nominated base salary below $70,180 – some $30,000 below average IT professionals’ salaries.
“Even more disturbing is the relatively high proportion of these Indian IT professionals (28%) whose 457 visas were approved at the extremely low base salary of $53,900 or less.
“This is despite the fact that only 8% of the 457visas granted to Indians in the two ICT occupations — business and systems analysts and software and applications programmers — in 2014-15 were aged less than 25.
And, data for the first six months of 2015-16 shows little change in the low wage profile for Indian IT professionals on 457 visas, according to TAPRI.
Describing the situation as “The IT invasion via the 457 programme”, the TAPRI report makes the point that the Australian ICT industry has to compete with multinational corporations like IBM and Accenture in tendering for business – and now the industry is under greater threat from the importation of workers from India.
“For over a decade they have had to cope with a new competitor. This is the Indian IT service companies. They are now a major force around the globe, led by firms like Tata Consulting Services and Infosys.
“The Indian IT service companies have been very successful in winning IT consulting work in the design and implementation of new IT software systems for Australian businesses and governments.
“One of the reasons for this success is that they import their own staff on temporary visas to do much of the work.”
TAPRI points to the fact that "some 76% of the 7,542 457 visas issued in the three IT occupations listed in the report were to Indian nationals, and the great majority of these were sponsored by Indian IT service companies as intra-company transferees".
The institute is critical of the Indian IT lobby group – the National Association of Software and Service Companies (NASSCOM) – saying that the unpublished 457 salary data “clearly undermines” claims of the association that it its constituent IT service companies “pay well above the government’s income threshold for 457 wages (the TSMIT)”.
TAPRI points to statements by NASSCOM that “Given current and future salary rates in our industry, TSMIT in its current form does not present an issue to our membership, and it is largely redundant to consideration of nomination applications lodged by our members”.
The TAPRI report recommends several measures, including removing ICT occupations currently in oversupply in Australia from the 457 visa programme’s Consolidated Sponsored Occupation List (CSOL) – the 457-eligible occupation list.
“If that is not done, or cannot be done because of Australia’s ‘international trade obligations’ under FTAs which the Coalition has entered into”, the report recommends:
• More rigorous enforcement of the 457 employer’s legal obligation to pay the "457 market salary rate", meaning the salary rate of the "equivalent Australian worker", before 457 visas are granted to IT professionals.
• 457 sponsors must have a legal obligation to undertake rigorous labour market testing (LMT) when applying for 457 visa workers in ICT professional occupations. This can be simply done by a Legislative Instrument issued by the Immigration Minister. ICT professional occupations are currently LMT-exempt in the 457 programme only due to Coalition government decisions in November 2013 which can be reversed.
• The 457 minimum salary "floor" (or TSMIT) for ICT occupations should be increased from the current standard minimum ($53,900 pa) to $75,000 per year in 2016 and indexed annually in line with wage movements for ICT professionals in Australia. A higher 457 ICT minimum salary previously applied under both the Coalition and Labor administrations.