Future of working holiday visa unclear

Working holiday makers (WHM) have been a key part of Australia’s immigration arrangements since at least the 1970s.

They became significantly more important from the late 1990s when agreements started to be put in place with a much wider range of countries.

WHMs contribute to net migration, and thus population growth, either by securing a second or third WHM visa or another temporary or permanent visa.

The absolute contribution of WHMs to net migration initially began falling from 2012-13 and was negative in 2020-21. With international borders now open to WHMs, and the Government strongly promoting Australia as a destination for WHMs, numbers are resurging but will they return to pre-pandemic levels?

In percentage terms, the contribution of WHMs to net migration grew from 6.6% in 2004-05 to a peak of 16.8% in 2011-12. It fell to 10.6% in 2018-19 and then to 8.4% in 2019-20 before net migration became negative in 2020-21.

Australia’s working holiday program consists of two types of visas:

Working holiday maker (WHM) sub-class 417 is based on mainly longstanding reciprocal agreements with a range of developed nations including the UK, Ireland, France, Canada, Germany, South Korea, Taiwan and others. This visa is uncapped; and
Work and Holiday (W&H) sub-class 462 is for a range of more recent agreements including with the US (which is uncapped) and capped agreements with other countries such as China, Argentina, Chile, Indonesia. Other than for the U.S., this visa requires applicants to have functional English and to have completed at least two years of undergraduate studies. Negotiations are proceeding for agreements with a range of other countries including India.

WHM and W&H visa holders must be 18-30 years of age at time of application. Both WHM and W&H visa holders can access a second or third visa if they complete three months of specified work (for example in agriculture, mining, construction, tourism and hospitality). This is significantly broader than when this provision was first introduced for the agriculture sector.

UK citizens on a WHM visa will be eligible for three years stay without being required to undertake any specific type of work. The agreement for the UK also increases the age range to 18-35. These changes will increase pressure on Australia to offer something similar to other WHM agreement countries.

While WHM and W&H visas were traditionally confined to working for only three months with a single employer, this is no longer the case. At least during 2022, WHMs and W&H visa holders will be able to work for the full 12 months with a single employer.

This effectively makes the WHM/W&H visa an unsponsored work visa with the holiday and travel component becoming incidental.

These changes, together with the increased allocation of places for the Pacific Island worker program, the new Agriculture Visa and the surge in asylum seekers working on farms, will mean that fewer WHMs and W&H will be doing farm work.

October-December trends

Closure of international borders from March 2020 led to a sharp decline in the number of WHM and W&H visa holders in Australia from 141,142 at the end of December 2019 to 19,324 at the end of December 2021.

At the encouragement of the tourism industry, the Government is investing in promoting Australia in various WHM nations. This will be assisted by a High Court decision that found the special higher tax rate for WHM/W&H visa holders was discriminatory as well as a Fair Work Commission decision that farm workers must be paid a minimum hourly wage.

With the opening up of international borders to WHMs and W&H visa holders from 15 December 2021, and after almost no first WHM and W&H visas were granted in 2020-21, there was a sharp rise in first WHM/W&H visas granted in the October-December quarter of 2021.

In the October to December quarter of 2021, 13,107 first WHM visas were granted compared to 33,055 in the same quarter of 2019 and 36,424 in the October to December quarter of 2018.

In the October to December quarter of 2021, 1,643 first W&H visas were granted compared to 6,957 in the same quarter of 2019.

In terms of WHM source countries, Ireland was almost back to pre-pandemic levels while for most other WHM source countries, visa grants were still around half pre-pandemic levels.

In terms of W&H visa source countries, there was a sharp increase in visa grants to U.S. citizens in the Oct-Dec quarter of 2021 to 1,006 visas compared to 31 in the same quarter of 2020 and 1,679 in the same quarter of 2019.

For W&H source countries where visa numbers are capped and subject to an English test, there were no visas granted to Chinese citizens in the Oct-Dec quarter of 2021 or 2020 compared to 1,230 in the same quarter of 2019 and 2,159 in the same quarter of 2018. This may just be a function of slow visa processing.

The main rebound in W&H visas was from Chile (236 in 2021 compared to 513 in 2019), Peru (59 compared to 109), Thailand (43 compared to 57), Vietnam (86 compared to 151) and Singapore (61 compared to 49).

Media reports suggest WHM and W&H visa grants in January of 2022 were larger again than in December 2021.

Conclusion

While WHM and W&H visa numbers will rise strongly over the next 12 months, assuming we emerge from the pandemic during 2022, the long-term outlook is less clear.

Global competition for WHMs and W&H visa holders will rise as population ageing increasingly impacts a growing number of developed nations.

Much will depend on the strength of the Australian labour market and measures to genuinely address the exploitation and abuse of migrant workers, especially as WHM and W&H visas, as well as student visas, are now effectively unsponsored work visas.

The draft legislation the Government has been consulting on to address migrant worker exploitation is limited in scope – few employers would be concerned about being caught by its provisions – and is unlikely to be accompanied by additional resources for the Fair Work Ombudsman.

The legislation has been more than three years in development since recommended by the report of the Migrant Worker Taskforce and is unlikely to be introduced before the Election.

The risk of WHMs and W&H visa holders and student visa holders becoming part of a growing cohort of people in immigration limbo, partly due to a weak labour market, is significant.

Major changes to visa design and administration are required, although the prospective increase in the size of the skill stream to offset a smaller family stream once the partner backlog is cleared should help.

Whether the labour market remains strong following the withdrawal of monetary and fiscal stimulus, and a return to more normal levels of household savings as well as resolution of supply chain disruptions, is a major unknown.

Former U.S. Treasury Secretary Larry Summers argues we will return to the era of "secular stagnation" as the long-term underlying effects of population ageing continue to bite.

Australia will waive the cost of a working holiday visa for young British tourists in a bid to encourage them to visit Down Under  https://t.co/teZcJc40L8
— Evening Standard (@standardnews) February 3, 2022

Dr Abul Rizvi is an Independent Australia columnist and a former Deputy Secretary of the Department of Immigration. You can follow Abul on Twitter @RizviAbul.