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Skilled Visa for Australia

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									      Occupational targeting in Australia’s
          skilled migration program




                                       Mark Cully
                                  Chief Economist


Centre for the Economics of Education and Training
                    Melbourne, 30 October 2009
                             Outline and Context

• Migration involves a two-stage selection process
    - prospective migrants choose to apply for entry to Australia
    - government sets choice rules for sponsors (employers and State
      governments) and choose independent applicants
• Can test the effectiveness of government rules by comparing migration
  outcomes in several ways to control for rule differences
    - for example, sponsored vs independent vs free movement of labour
• Purpose here is to test effectiveness of occupational targeting rules in selecting
  permanent skilled migrants. This work forms part of the Government’s review
  of the Migration Occupations in Demand List.
• Effectiveness assessed by:
     - how are migrant skills deployed
     - migrant contribution to population, participation and productivity
                                                                                                                                            SLIDE 1



                                This is Australia’s first recession where migrant inflows have risen


                              1.40                                                                                  10.0




                              1.20                                                                                  8.0




                              1.00                                                                                  6.0
Pop increase due to NOM (%)




                                                                                                                           GDP growth (%)
                              0.80                                                                                  4.0




                              0.60                                                                                  2.0




                              0.40                                                                                  0.0




                              0.20                                                                                  -2.0




                              0.00                                                                                  -4.0
                                     1960   1965   1970   1975   1980        1985       1990   1995   2000   2005

                                                                  NOM rate      GDP growth
                                                                                                   SLIDE 2



           Migrant flows are dominated by temporary long-stay movements
                                and free movement

                          Net Overseas Migration, 2008-2009

                                           Other

                          Australian Residents

                                      NZ Citizens

                             Working Holiday

                            Temporary Skilled

                                        Students

                                Humanitarian
       OUTFLOW                                                                      INFLOW
                                          Skilled

                                          Family

-200        -150   -100         -50                 0            50    100   150   200       250

                                                    Movements ('000)
                                                                                                                        SLIDE 3



                        Australia has four broad categories of skilled migration


                                    Sponsored                                   Not Sponsored
                       Employer Nomination Scheme (employer)                       Skilled Independent
                      Regional Sponsored Migration Scheme (Govt)
Permanent Residence

                                  Business Skills (Self)

                                  Not points tested                                   Points tested
                        Capped (dependents count towards cap)             Capped (dependents count towards cap)

                              May be onshore or offshore                       May be onshore or offshore

                                  Priority processing                              Order of processing priority: CSL,
                                                                                   MODL and Remaining applicants


                                                    The broad categories of skilled
                                                        migration in Australia
Temporary Residence




                          Temporary long-stay business                                Skilled Graduate

                                Not points tested                                     Not points tested
                                   Uncapped                                              Uncapped

                           May be onshore or offshore                                  Onshore only
                                                                                                   SLIDE 4



                            Most skilled visa grants in 2008-09 went to temporary migrants.
                             Almost half of visa grants went to people already in Australia.


                                                                          Of the 4 broad categories of
                                     Onshore   Offshore
                                                                          skilled migration, temporary
Group                                 Grants    Grants     Total    %
                                                                          sponsored was the largest in
Primary Applicants                                                        2008-09
 Skilled permanent, not sponsored     8400     16 400     24 800    11
                                                                          Among primary applicants, a
 Skilled permanent, sponsored        17 000     8900      25 900    11    majority were onshore in
 Skilled graduates                   12 500      N/A      12 500     5    Australia when granted a visa.
 Temporary skilled                   22 200    28 500     50 700    22
                                                                          Accompanying dependents
Total primary applicants             60 100    53 800     113 900         count in total, and made up
 Dependents of permanent             23 500    40 600     64 100    28    half of skilled visa grants in
                                                                          2008-09. They have full
 Dependents of temporary             19 700    32 900     52 600    23
                                                                          working rights in Australia.
Total dependents                     43 200    73 500     116 700
Total skilled visa grants            103 300   127 300    230 600   100
                                                                                                         SLIDE 5



                       Australia’s points test places most weight on occupational targeting


            Criteria                                           Points awarded   Up to 115 points are available
            Occupation, Age and English-language proficiency                    in the three threshold criteria.
            Occupation                                            40 - 60
Threshold                                                                       The current pass mark for an
 criteria   Age                                                   15 – 30       independent skilled migrant is
            English Language Proficiency                          15 – 25       120.
            Other                                                               There are between 40 to 80
            Australian Educational Qualifications                  5 – 25       points for occupation.
            Family Sponsorship                                       25
            Migration Occupations in Demand                       15 – 20
            Australian Work Experience                              10
 Bonus
 factors    Work Experience                                        5 – 10
            State or Territory Nomination                           10
            Designated Language                                      5
            Regional Study in Australia                              5
            Partner Skill Qualifications                             5
                                                                                               SLIDE 6



                 Australia uses three occupational lists to target independent
                             skilled migrants with particular skills

                                                  Skilled Occupation List
                                                           (SOL)




Migration Occupations in Demand List
              (MODL)


                           Critical Skills List
                                 (CSL)




        60 point occupations                      50 point occupations      40 point occupations
                                                                                                                                                    SLIDE 7



                            The Migration Occupations in Demand List responds to the
                                         economic cycle, but with a lag


                                             Decreasing
                               120         unemployment                                                                                             8.0
MODL identifies
occupations in national                                                                                                                             7.0
                               100
skill shortage
                                                                                                                                                    6.0

The number of                   80
                                                                                                                                                    5.0
occupations on the
MODL is inversely
                                60                                     Increasing                                                                   4.0
related (with a lag) with                                              number of
Australia’s                                                          occupations on
                                                                                                                                                    3.0
                                                                       the MODL
unemployment rate.              40

                                                                                                                                                    2.0
                                                                                                             Number of occupations on the MODL
                                20
                                                                                                             Unemployment rate                      1.0


                                 0                                                                                                                  0.0
                                Jul-1999   Jul-2000   Jul-2001   Jul-2002   Jul-2003   Jul-2004   Jul-2005   Jul-2006   Jul-2007   Jul-2008   Jul-2009
                                                                                                                                                                                                                                                                                            SLIDE 8



                                                                                      Applications for temporary skilled sponsored visas closely track
                                                                                                          advertised job vacancies


                        450
                                                                                                                        This spike is attributable to
                        400                                                                                             applicants lodging prior to                                                                                                                      This migration flow is
                                                                                                                        the 1 July 2007 revision of
                        350                                                                                                the English language                                                                                                                          pro-cyclical, serves as an
                                                                                                                               requirements                                                                                                                              automatic stabiliser in
                        300
                                                                                                                                                                                                                                                                         times of labour market
Index (Base Jan 2003)




                        250                                                                                                                                                                                                                                              adjustment
                        200

                        150

                        100
                                                                                                                                                                                                                     Ads Index                Lodged Index
                        50

                         0
                                                         Oct-03




                                                                                             Oct-04




                                                                                                                                  Oct-05




                                                                                                                                                                      Oct-06




                                                                                                                                                                                                          Oct-07




                                                                                                                                                                                                                                              Oct-08
                                       Apr-03




                                                                           Apr-04




                                                                                                               Apr-05




                                                                                                                                                    Apr-06




                                                                                                                                                                                        Apr-07




                                                                                                                                                                                                                            Apr-08




                                                                                                                                                                                                                                                                Apr-09
                                                Jul-03




                                                                                    Jul-04




                                                                                                                         Jul-05




                                                                                                                                                             Jul-06




                                                                                                                                                                                                 Jul-07




                                                                                                                                                                                                                                     Jul-08
                              Jan-03




                                                                  Jan-04




                                                                                                      Jan-05




                                                                                                                                           Jan-06




                                                                                                                                                                               Jan-07




                                                                                                                                                                                                                   Jan-08




                                                                                                                                                                                                                                                       Jan-09
                                                                                                                   SLIDE 9



                  In 2007-08, 2 out of 3 independent skilled visas were granted to
                      applicants who nominated an occupation on the MODL


100%
                                                                                         60 poi nt occupa ti ons , wi th
90%                                                                                      MODL
                 24
                                                                                         60 poi nt occupa ti ons , no
80%                                                                                      MODL
                                      48
                                                                                         40 - 50 poi nt occupa ti ons
70%                                                        61                   63

60%

50%

                 68
40%


30%                                   42
                                                           31                   25
20%

10%
                                      10                                        13
                 9                                         9
 0%
              2004-2005            2005-2006            2006-2007            2007-2008


       The proportion of applicants using the MODL has increased from 24 per cent in 2004-
       2005, to 63 per cent in 2007-2008.

       However, MODL points may not be needed to pass points test. We estimate that around
       one in ten onshore applicants with MODL points did not require them to pass. For
       offshore applicants, the proportion is much lower, at around one in four.
                                                                                                                                                                  SLIDE 10



                           Sponsored migrants are most likely to make use of their skills.
                              The MODL is highly effective in occupational targeting.
                                                         100%
18 months after arrival:
                                                         90%
                                                                     19
• almost 4 in 5 sponsored
                                                                                                                             29
skilled migrants in a skilled                            80%
                                                                                                                                                      30

job
                                                         70%                                  56
• half of those nominating
                                                                     33                                                                               7
a MODL occupation were                                   60%
                                                                                                                             13

employed in the exact
                                                                                                                                                      11
same occupation                 Unemployed               50%

                                                                                                                             20
• only 2 in 5 of those with     Employed in other job    40%
lower occupational points                                            19
                                                                                              17
were in a skilled job           Employed in other        30%
                                skilled job                                                                                                           48

                                Employed in same skill   20%
                                                                                                                             34
                                level                                28                       20

                                                         10%
                                Employed in the same
                                job                                                           5
                                                          0%
                                                                No points test   less than 60 point occupation   60 point non-MODL occupation   MODL occupation
                                                                                                                                                                                       SLIDE 11



                                Is Australia’s skilled migration program succeeding in bringing in
                                       younger migrants, who work more and earn more?

                  Are they younger?                                                                                                                         Are they earning more?
                  (yes, very much so)                                                                                                                       (some are, some aren’t)
             50                                                                                                                                70


             45
                                                                                                                                               60             NP
             40                        G
                  NP
                                                                                                                                               50                   60




                                                                                                                       Median Income ($000s)
             35
                                                                                                                                                                                   G
                                                                                                                                                                         M
             30
                  NZ
                       60
                                 <60   F                                 Are a greater proportion in full time work?                                          NZ             <60
                                                                                                                                                                                   F
Median Age




                            M                                                                                                                  40
                                                                                     (yes, very much so)
             25
                                                                        100
                                                                                                                                               30
             20
                                                                         90
             15                                                                       NP        M                                              20
                                                                         80                         <60
                                                                                           60
             10
                                            % in full time employment




                                                                         70
                                                                                                                                               10
              5                                                                       NZ
                                                                         60
                                                                                                          G
              0                                                                                                                                 0
                                                                         50
                                                                                                          F
                                                                         40
                                                                                                                                                    (F) Family entrants
                                                                         30                                                                         (NP) No points test
                                                                         20                                                                         (M) MODL occupation
                                                                                                                                                    (60) 60 point non-MODL occupation
                                                                         10
                                                                                                                                                    (<60) Less than 60 point occupation
                                                                          0                                                                         (NZ) New Zealand Born
                                                                                                                                                    (G) General population
                                                                                                   SLIDE 12



                      Tighter occupational targeting would have labour market benefits



                                       Independent migrants
                                                               Sponsored
                                     Priority     Other jobs    migrants   Skills Australia has suggested
                                      jobs                                 an approach to workforce
Employment status (%)                                                      planning that identifies priority
                                                                           occupations for which Australia
                                                                           needs to guarantee a future
 Employed in nominated occupation      39             20          26       supply.
 Employed in other skilled job         28             25          49
                                                                           Targeting these occupations for
 Employed in other job                 25             44          18       independent migrants is likely
 Not employed                           7             12          7        to have participation and
3Ps measures
                                                                           productivity benefits relative to
                                                                           the status quo.
 Median age                            28             29          38
 Full-time employment to pop ratio     81             75          82
 Median earnings                     46000          40000       60000
                               Summary Messages

• Australia’s processes for selecting independent skilled migrants are, at an
  aggregate level, effective
     - especially relative to non-selected migrants (family stream and NZers)
     - but less effective than when sponsors choose

• The role of specialised assessing authorities is a complementary mechanism in
  identifying independent skilled migrants who have the skills and competence
  to operate in the Australian labour market

• Occupational targeting (through a MODL style instrument) is effective for
  meeting specific skills in demand, but sponsored migration is more effective in
  putting skills to use

								
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