Australia is increasingly squandering the benefits of temporary skilled migration. Temporary skilled migration is unpopular, and politicians have responded to this by restricting sponsorship to fewer, often lower-skilled jobs.

Employers can sponsor fewer high-wage migrants than they could in the past, and sponsorship is now both more costly and less certain. Today, more than half of sponsored workers earn less than the typical full-time Australian worker, up from 38 per cent in 2005. The freezing of the minimum salary threshold at $53,900 a year since mid-2013 means employers are sponsoring a growing number of low-wage workers with few skills. Exploitation of sponsored workers abounds, which further undermines public confidence in the program. Australia has been left with the worst of both worlds.

To get a better deal, Australia must rethink its approach. Temporary skilled migration sponsorship is currently restricted to jobs in occupations classified as ‘in shortage’. Yet it is practically impossible to quickly and reliably identify skills shortages in individual occupations. Targeting skills shortages also opens the door to sponsoring many low-wage workers at risk of exploitation.

This report calls for a new visa, the Temporary Skilled Worker (TSW) visa, to replace the existing Temporary Skill Shortage (TSS) visa. Employers would use the Temporary Skilled Worker visa to sponsor workers in any occupation, provided the job pays more than $70,000 a year and the worker is paid at least as much as an Australian doing the same job. Labour agreements, which permit sponsorship for lower-wage jobs, would also be abolished.