Massive growth in IT student enrolments combined with changes to the Graduate Visa have resulted in the perfect storm for both employers and international students across Australia.
Traditionally, the vast majority of overseas IT students graduated and transitioned from their student visas onto 2-year graduate visas to become part of the Australian IT workforce. They helped to fill the structural tech skills shortfall in the Australian jobs market before transitioning into Permanent Residents. However, the pathway from Graduate Visa to Permanent Resident (PR) appears to have shut and we now have tens of thousands of highly skilled IT professionals potentially heading home and hundreds of employers with workers whose visas will shortly expire. The Government appears to be dealing with the housing crisis using an extremely blunt tool, the effects of which may well be felt for many years after the current IT jobs slump is over.
So, will the potential loss of tens of thousands of highly skilled tech workers from our economy be a disaster for the sector or a well-timed calibration of supply vs demand?
So how much of a problem is this?
Everyone is acutely aware of the downturn in the IT jobs market over the last 18 months. Not only have job ads dropped by almost 60%, the latest enrolment data from Department of Education (from 2022) shows IT enrolment numbers have ballooned over the last few years by over 17,000. The resultant surge in graduates is helping to fuel the current oversupply crisis.
The data shows 58.33% of the 112,000 IT enrolments at Australian Universities are overseas students.
Over the last decade or so, many tens of thousands of IT graduates have stayed in Australia, secured jobs and during a time of significant skills shortage, helped the Australian economy navigate a very difficult period. And that’s after they’d paid our universities over a $100k for a degree.
In good news, we have seen the number of domestic students increase markedly over the 5 years to 2022 with a 33% increase in enrolments. Whilst I remain hopeful that this trend will continue, we are a very long way from producing enough domestic graduates to meet demand.
Why is this such an issue for IT?
This is much more of an issue for IT than it is for other sectors as IT has the highest proportion of international students. By way of comparison, in 2022, student enrolments in Management & Commerce degrees comprised 53% overseas students, the proportion was 38% for Engineering, 15% for Health and 11% for Education.
Changes to the rules on July 1
In December last year, the Government announced changes to the rules requiring an increase in English language skills, an increased minimum amount of work experience and a decrease in maximum age from 50 to 35. Whilst these requirements appear largely reasonable, the bigger problem is that PR applicants with health and education qualifications are being prioritised whilst tech graduates’ applications have stopped being processed resulting in no bridging visas being offered. So, when a Graduate Visa runs out the individual has to leave Australia. Further, States and Territories are no longer able to nominate specific professions who can secure state sponsored PR, closing another pathway.
So why not just hire a Domestic Graduate?
Large corporates run well designed and hugely enticing graduate programs at scale where they recruit straight from campus. The competition for graduate talent is fierce but many of these large programs, including Westpac, CBA, Accenture, and DXC explicitly state they only accept applications from Citizens and PR holders.
Unsurprisingly, most of the domestic graduates are hoovered up by the grad programs, leaving slim pickings for those employers looking to hire an IT worker with only a year or 3 of experience. Traditionally employers looking to fill such roles were left with a choice, hire someone on a Graduate Visa or no one at all.
Michael’s story is fairly typical. He owns a software and engineering company in Sydney’s western suburbs and hired a number of individuals on Graduate visas last year, ‘I was more than happy to hire an Australian Citizen, but there were just none available. So all my hires were on Graduate visas.’
So what do the experts say?
I spoke to Matthew Garvey, Director of immigration specialists 4-Corners Emigration, who noted ‘With all the Covid Visas coming to an end and no PR visas being processed for IT Grads, I would expect a lot of people will have to go home unless they can get sponsored by their employers’.
“From July 1, Graduates are no longer able to go back to a Student Visa and the English language requirements have significantly increased, I’m worried we’re going to say farewell to a lot of talented people.”
What are businesses experiencing?
For those businesses looking for junior Software Developers, they currently receive the applications of hundreds of candidates who are almost exclusively on Graduate Visas. And with those visas now terminating, the words of the Rime of the Ancient Mariner seem particularly salient ‘Water, water everywhere and not a drop to drink’.
It would be crazy brave to hire someone on a Grad Visa, invest vast amounts of time and effort on their training and hope that the landscape changes in 2 years and you don’t lose them.
Those employers who have already expended resources bringing their graduate employees up to speed, are now faced with a changed landscape. As Michael (mentioned previously) noted ‘the rules have changed, and I’m stuck with a huge bill for sponsorship’.
‘I’m not sure what I’ll do next time I hire, what options do I have?’
For those looking for IT Support workers the situation is less difficult. Natalie an HR Director for a Sydney based tech company recently advertised a graduate IT support role. She received around 900 applications in a few days with almost a third having ongoing work rights. She has more than enough candidates to create an excellent shortlist, but these application numbers demonstrate what a mess the system is.
So what now?
Having worked through many boom-and-bust cycles over the last 2 decades, I firmly believe the drop in demand for IT workers is temporary. In the medium to long term, we will need a constant supply of overseas students to staff our growing tech sector. The big concern is that international students may be less inclined to enrol at our universities as the pathway to PR is currently largely closed.
For those students who are coming to the end of their studies, it’s going to be increasingly difficult to find a role. And for those employers with a large number of Graduate Visa holders on their books, it might be time to look at talking to an immigration agency.
For those newly minted graduates, the job search is going to be particularly disheartening. And sadly, we’re likely to have the most skilled Uber drivers in the world.
Whilst in the short term we have an oversupply of talent, when the market starts to heat up again, we will once again be crying out for overseas talent. And these trends take many years to turn around.
Let’s hope we’re not currently legislating our way into another tech talent crisis.