The Rising Cost and Time of Hiring New Employees in Australia: Why Sponsoring a Migrant Worker could be a Better Option

12 Feb The Rising Cost and Time of Hiring New Employees in Australia: Why Sponsoring a Migrant Worker could be a Better Option

Hiring new employees can be a time-consuming and expensive process in Australia. In recent years, the cost and time required to bring on a new hire have increased significantly, causing many businesses to re-evaluate their recruitment strategies. With a growing demand for skilled workers, the competition to attract and retain the best talent is becoming increasingly intense, and this is reflected in the rising cost and time associated with hiring new employees.

According to recent statistics, the cost of hiring a new employee in Australia can be up to $23,860, taking into account recruitment and selection costs, where it usually takes 40 days to fill a vacant position, onboarding and training, and wage costs. The process of hiring a new employee can also take several months, from the initial advertisement of the role to the final selection and onboarding process.

The comprehensive report by ELMO software, in partnership with the Australian HR Institute, found that the cost to hire a new employee has increased from the $10,500 seen in the 2020 survey and can be attributed primarily to the increased cost of hiring mid-level managers and mid-level individual contributors. In its 2022 Workplace Trends Report, Gartner suggested the role of mid-level managers has changed throughout the pandemic and is now more important than ever – but employers will need to salary match their competitors to hold onto these workers. Similarly, the 2021/22 Salary Guide by Hays found that more skilled professionals will find their knowledge and extensive skills in strong demand. 67% of the employers surveyed by Hays suggested they will increase salaries to retain employees.

One solution to the increasing cost and time of hiring new employees is to sponsor a migrant worker who will be able to work permanently for your business for 2-4 years (duration varies between occupations). This option provides businesses with access to a larger pool of skilled workers, including those from overseas, which can increase the chances of finding the right candidate for the role. Additionally, sponsoring a migrant worker can reduce the cost and time associated with the hiring process, as the process of obtaining a visa and sponsoring a worker is usually quicker and more cost effective than hiring a local employee, and it provides businesses with access to a larger pool of skilled workers, including those from overseas.

One of the key benefits of sponsoring a migrant worker is that it can help businesses to reduce their recruitment costs by hiring and locking them in the role for 2-4 years. According to a report by the Department of Home Affairs, the cost of recruiting and hiring a migrant worker can be up to 40% lower than the cost of recruiting and hiring a local worker. This is because the cost of obtaining a visa and sponsoring a worker is usually lower than the cost of advertising a job, conducting interviews, and onboarding a new hire. The sponsored migrant employee can only leave your business if (a) they find a new employer willing to pay the costs to transfer their nomination or (b) if they decide to return to their home country.

Another benefit of sponsoring a migrant worker is that it can help businesses to reduce their training costs. Many migrant workers come to Australia with the skills and experience necessary to perform their job, which can reduce the need for costly training programs.

In addition to reducing recruitment and training costs, sponsoring a migrant worker can also help businesses to reduce their wage costs. Many migrant workers are willing to accept lower salaries than local workers, which can help businesses to reduce their overall labour costs. This is especially important for businesses in industries that are facing a skills shortage, as it can help to reduce the pressure on wages and increase the competitiveness of the business.

The cost-effectiveness of sponsoring a migrant worker is also reflected in the growing popularity of this option among businesses in Australia. According to the Department of Home Affairs, in the 2021-2022 financial year, there were over 32,062 approved employer-sponsored 482 TSS visas in Australia, a significant increase of 38.4% from the previous year, 29,365 approved visa applications for 491 skilled regional (provisional) visa from December 2019 to October 2022. This trend highlights the growing popularity of sponsoring migrant workers as a solution to the rising cost and time of hiring new employees. The 482 Visa is called the Temporary Skill Shortage visa and processing times in 2023 are much more practical than they have been in previous years.

However, it’s important to note that there are also potential disadvantages to consider, such as the complexity of the visa process, language and cultural barriers, and the need to comply with immigration laws and regulations. Businesses should carefully consider their needs, resources, and goals when deciding whether to hire a migrant worker or a local employee.

Pros and Cons of Hiring Migrant Workers

Pros of Hiring Migrant Workers:

• Lower costs: The cost of obtaining a visa and sponsoring a migrant worker is usually lower than the cost of hiring a local employee, taking into account recruitment and selection costs, onboarding and training, and wage costs. Being able to have a worker locked in the role for 2-4 years (depending on the visa class) will allow the business to lower recruitment and training-related costs.
• Access to a larger pool of skilled workers: Sponsoring a migrant worker provides businesses with access to a larger pool of skilled workers, including those from overseas, reducing the pressure on the local workforce.
• Lower wage costs: Many migrant workers are willing to accept lower salaries than local workers, which can help businesses to reduce their overall labour costs.

Cons of Hiring Migrant Workers:

• Complex visa process: The visa process can be complex and time-consuming, requiring businesses to comply with immigration laws and regulations.
• Language and cultural barriers: Migrant workers may have difficulty adapting to the local language and culture, which can create communication difficulties and slow down the onboarding and training process.
• Compliance with immigration laws: Businesses must comply with immigration laws and regulations when sponsoring a migrant worker, which can increase the risk of non-compliance and result in costly fines and penalties.

In conclusion, the cost and time associated with hiring new employees in Australia have increased significantly in recent years, making it a challenge for businesses to attract and retain the best talent. One solution that has emerged as a cost-effective alternative to hiring local employees is the sponsorship of migrant workers. With the ability to reduce recruitment and training costs, lower wage costs, and provide access to a larger pool of skilled workers, sponsoring a migrant worker is a great option for businesses looking to expand and grow. With the growing popularity of this option, it is clear that many businesses in Australia are recognizing the benefits of hiring migrant workers and the cost-effectiveness that this option provides.

If you are an Australian business owner or a skilled migrant worker, who wants to explore more about employer-sponsored visas, give us a call and our principal migration agent Evan Bishop MARN 1679414 of Worldly Migration will be happy to provide more in-depth information and guidance on your visa options.