The Growing Divide: Award Rates vs. TSMIT in Australia’s Skilled Migration Program

Australia’s Temporary Skilled Migration Income Threshold (TSMIT) is a minimum salary requirement for employers sponsoring overseas workers through various visa programs, including the subclass 482 Skills In Demand visa. Effective 1^st July 2025, the TSMIT will be AUD $76,515 per annum plus superannuation contributions. TSMIT was introduced on 1^st July 2013 at $53,900 and it stayed at that level for 10 years where hence it jumped to $70,000 on 1^st July 2023 and to $73,150 to 1^st July 2024 and is due to jump to $76,515 on 1^st July 2025. With indexation scheduled to take place every year on 1^st of July we are looking at potentially very high wages for entry level low skilled jobs.

This threshold aims to ensure that skilled migrants receive fair remuneration and are not vulnerable to exploitation, while also preventing the undercutting of local wages. A key criterion for many employer-sponsored visas is that applicants possess at least one year of relevant work experience. However, the obvious question here is, how do you determine the fair remuneration for every occupation when there are more than 450 occupations[1] in the most popular stream of Subclass 482 visas, the Core Skills stream? For example, occupations range from a pig farmer to a finance manager, and from a shoemaker to an ICT project manager.

To solve this problem, the Department came up with a blunt instrument called Temporary Skilled Migration Income Threshold or TSMIT as it is more commonly referred to. It refers to a minimum threshold salary (plus superannuation) an employer is required to pay an employee irrespective of the occupation. They further have to match this salary with Annual Market Salary Rate (AMSR) and select the higher of the two to pay as a salary to the employee they are nominating for the visa. Now, this works well if the AMSR is higher than TSMIT, however, what happens when AMSR is way lower than TSMIT? This is exactly what is happening in the labour market, as TSMIT keeps on increasing every year, especially with the lower skilled jobs (Skill level 3 and 4).

So, is there a better methodology by which we can ensure that the skilled migrants receive fair remuneration while also ensuring that undercutting of local wages does not take place while at the same time ensuring employers are not forced to pay thousands of dollars extra to sponsor employees?

Luckily, we have a mechanism for this, and it has been used for a very long time in Australia! This mechanism is called Award Rates introduced by Fair Work Act 2009. The Fair Work Commission also conducts annual wage review which typically comes into effect on 1^st July each year. Award Rates are highly nuanced and give wage rates across hundreds of occupations at different skill levels.

Currently, a significant discrepancy exists when comparing the TSMIT with the minimum wage rates stipulated in Australian industry awards, particularly within the building and construction and hospitality sectors. These awards, set by the Fair Work Commission, outline the minimum pay and conditions for various occupations. While the TSMIT is a fixed income level intended for skilled workers, award rates are often structured based on experience levels and job classifications, frequently falling well below the TSMIT. This creates a situation where employers may be unable to sponsor skilled workers in certain occupations, even if those workers meet the one-year experience requirement (as required for Subclass 482 visa), because the legally mandated minimum award wage for their role is significantly lower than the TSMIT.

Discrepancies in the Trade Sector

The following table provides a simplified comparison between potential base award rates for selected occupations (with 1+ year experience) and the upcoming TSMIT:

Note: These are indicative rates based on available information and can vary based on specific awards, experience beyond one year, and location.

The Unfair Burden on Australian Employers and Workers

The substantial difference between award rates for workers with one year or slightly more experience and the TSMIT creates a challenging and arguably unfair situation for Australian employers and the broader workforce. Many Australian businesses, particularly in sectors like trades and hospitality, already face significant difficulties in recruiting local workers to fill essential roles. Despite undertaking the mandatory Labour Market Testing (LMT) for a minimum of four weeks to demonstrate genuine attempts to hire locally, and incurring the costs associated with the Skilling Australia Fund Levy, these employers are then compelled to pay overseas workers a salary significantly higher than the prevailing award rate to meet the TSMIT.

This artificially inflates labour costs for businesses, potentially impacting their competitiveness and sustainability, especially for small and medium-sized enterprises operating on tight margins. In some instances, the highest salary stipulated in the relevant industry award is still below the TSMIT, rendering it practically impossible for employers to sponsor skilled migrants in those roles, regardless of genuine shortages. This can hinder genuine employers from sponsoring genuine candidates who possess the necessary skills and experience but whose market salary rate, as determined by Australian standards, falls below the TSMIT.

Furthermore, this discrepancy can inadvertently create opportunities for exploitation of vulnerable migrant workers. While the intention of the TSMIT is to protect migrants from underpayment, the pressure to meet the higher threshold might lead to unscrupulous employers colluding with visa applicants. In such scenarios, employers might agree to pay wages at or above the TSMIT on paper to secure visa approval but then demand “kickbacks” or other forms of under-the-table payments from the migrant workers, effectively negating the intended wage protection. These workers, often desperate for employment and residency, may be coerced into accepting such arrangements, leaving them in a precarious and exploitative situation despite the seemingly high wages.

In fact, the same concerns were raised by Senator Paul Scarr[2] and several industry bodies[3]. These submissions have suggested that the automatic indexation of the TSMIT could lead to migrant workers being paid more than their Australian counterparts who are working under award wages for the same role. This could create resentment among local workers and potentially force employers to increase wages for local employees to match the TSMIT for migrant workers, even without a corresponding increase in productivity, potentially fuelling inflationary pressures.

A Simple Solution

While the problem is complicated the solution is straightforward:

• For skill level 2, 3 and 4 occupations make the nominated salary higher of Award rate and AMSR.

That is, it! No other changes are required. It is ridiculous to have one minimum salary threshold for 456 occupations. These ever-creeping minimum salary is counterproductive for the employers, Australian employees and the skilled migrants! It opens up the vulnerable skilled migrants to exploitation by unscrupulous employers while deterring genuine employers. It also goes against the very ethos of Australian way of living by giving everyone a fair go.

[1] LIN 24/089 – Migration (Specification of Occupations – Subclass 482 visa) Instrument 2024

[2] Additional Comments by Senator Paul Scarr

https://www.aph.gov.au/Parliamentary_Business/Committees/Senate/Legal_and_Constitutional_Affairs/StrengtheningSponsorship/Report/Additional_Comments_by_Senator_Paul_Scarr

[3] Clubs Australia, Submission 4, p. 3; Early Learning and Care Council of Australia, Submission 9, p. 4; Goodstart Early Learning, Submission 13, p. [4]; Chamber of Commerce and Industry WA (CCIWA), Submission 20, p. 2.