The Albanese Government has introduced a series of reforms to shake up the Australian immigration system. While some of these reforms are beneficial to small businesses, others are likely to have a detrimental effect on their workforce.
Many of the changes have come about due to the rental crisis, with the influx of migration after the pandemic being blamed for making this problem worse. International students take the brunt of the blame, resulting in a huge cut to international students at around 63,000 fewer students than last year.
Another important focus of the Migration Strategy is to curb ‘visa hopping’. This means closing the loopholes that currently allow students and other temporary visa holders to repeatedly extend their stay in Australia. Both of these changes will have a significant impact on small businesses that rely on international migration for staff.
How will the changes to immigration affect small businesses?
Shortage of workers in certain industries
63.6 per cent of international students are employed. That’s around 230,348 workers, most commonly employed in industries such as food and beverage services and residential care. These industries, particularly in key student hubs such as Sydney and Melbourne, heavily depend on international students to meet their workforce demands. A reduction in student visas could pose difficulties for these businesses in recruiting enough staff to fill required positions.
Such a crackdown could also impact a host of other jobs popular with temporary visa holders, such as construction and cleaning. This could create a huge problem for small businesses, as ABS data indicates that one-third of businesses are currently facing challenges in finding staff, due to the shortage of job applications. With a shortage of applicants already providing a huge problem for small businesses, a cut to international students, who make up a significant proportion of roles in certain industries, would exacerbate the issue.
Decrease to the part-time workforce
In addition to international students filling essential roles in the workforce, 76 per cent of those employed work part-time, which is the highest percentage of workers among all temporary visa holders. Employing international students on part-time schedules allows businesses to flexibly adjust their staffing levels according to when they need the most support.
For example, industries such as hospitality and retail often experience fluctuations in demand, such as increased customers on weekends or during the holiday seasons. Having a pool of part-time workers enables businesses to efficiently meet this demand without committing to full-time staffing costs year-round. This flexibility not only helps in managing operational expenses but also ensures that businesses can maintain optimal service levels during busy times.
Given that international students make up a substantial segment of part-time workers, a cut to their numbers are likely to result in small businesses encountering difficulties in securing employees willing to work variable hours. This could lead to staffing shortages during peak periods or require full-time personnel to be hired, which typically entails higher expenses and could potentially diminish overall profitability.
How can small businesses prepare?
Overall, if small businesses are unable to hire staff, it will likely result in decreased productivity, poor quality service, and operational disruption. In turn, this could lead to a financial impact and threaten long-term sustainability. Therefore, small businesses must prepare appropriately.
Businesses facing the impact of immigration should consider improving employee compensation packages, exploring automation to streamline operations, and collaborating with local businesses to share workload. They may also review how roles can be filled with local staff. For example, our research found that the popularity of part-time work is increasing, therefore, businesses may want to hire two part-time members of staff to cover a full-time position.
With the appropriate planning, small businesses can reduce the risk of staff shortages from cuts to immigration.
