Food and beverage manufacturing update — labour shortage and key developments
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A shortage of skilled labour is casting a shadow over Australia’s food and beverage manufacturing sector, with Australia’s top food and industry bodies calculating a shortfall of more than 170,000 workers who are needed to sustain the chain from paddock to plate. Despite steady increases in food and beverage demand, the Australian Government projects that the number of food and beverage factory workers in 2026 will be nearly 30% lower than figures previously recorded in 2020.
Recent developments in the migration space may assist employers in alleviating the pressures of labour shortage, as well as important changes to labour hire laws impacting the use of contract workers.
Introducing the new ‘Skills in Demand’ visa
Migrant workers are integral to Australian industry, but pandemic-related travel disruptions and an outdated migration program have reduced the number of migrant workers in Australia. Released in December 2023, the Australian Government’s Migration Strategy aims to address these issues and failure of the current temporary skills program. A key initiative is the introduction of a new temporary ‘Skills in Demand’ visa.
Set to be implemented in late 2024, this will replace the Subclass 482 Temporary Skills Shortage visa, which has been subject to criticism by Australian businesses for its rigidity and high upfront costs. This new visa will offer a three-tiered system, providing greater flexibility for workers to change employers and more pathways to permanent residency, while still allowing businesses to bring in skilled workers.
The Skills in Demand visa is reported to enable worker mobility across various sectors, acknowledging that skills are transferable across multiple industries.
Further changes in the pipeline
The Government is also exploring a model where employers would pay trailing charges and fees, reducing the hefty upfront costs associated with hiring migrant workers. For example, the Skilling Australian Fund levy would be paid on a periodic basis and after the visa is granted. Details are still being refined, but this approach is expected to reduce cost for employers (especially for smaller businesses).
Labour hire changes explained
Labour hire presents another solution for employers facing challenges in meeting industry demands and has historically played an important role in helping alleviate labour shortages.
The Federal Government’s “Same Job, Same Pay” framework, part of the Closing Loopholes reforms, is significant in this area. Under this framework, employees or unions can apply to the Fair Work Commission for a ‘Regulated Labour Hire Arrangement Order’ (RLHAO). This order requires employers to pay labour hire workers ‘protected rates of pay’ which is an amount not less than the same rate of pay they would receive either under the enterprise agreement or employment agreement covering employees of the host business.
Key points of the RLHAO include:
- Labour hire for the purposes of an RLHAO excludes engagements where the contractor is providing labour and equipment, and a business will not need to comply with an RLHAO where the contractor is covered by a training arrangement or will be performing work for less than three months.
- The Fair Work Commission will consider whether the work involves providing a service or supplying labour and whether making the RLHAO is fair and reasonable in all the circumstances.
While these changes have already started, a RLHAO cannot take effect before 1 November 2024. Businesses should review their labour hire arrangements before this date to understand potential impacts.
We are here to help
If you have any questions about how to tackle labour shortages in the food and beverage manufacturing industry, including the Skills in Demand visa or how the labour hire changes may impact your business, the Employment, Safety and Migration team at Macpherson Kelley are here to help.
The information contained in this article is general in nature and cannot be relied on as legal advice nor does it create an engagement. Please contact one of our lawyers listed above for advice about your specific situation.
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Food and beverage manufacturing update — labour shortage and key developments
A shortage of skilled labour is casting a shadow over Australia’s food and beverage manufacturing sector, with Australia’s top food and industry bodies calculating a shortfall of more than 170,000 workers who are needed to sustain the chain from paddock to plate. Despite steady increases in food and beverage demand, the Australian Government projects that the number of food and beverage factory workers in 2026 will be nearly 30% lower than figures previously recorded in 2020.
Recent developments in the migration space may assist employers in alleviating the pressures of labour shortage, as well as important changes to labour hire laws impacting the use of contract workers.
Introducing the new ‘Skills in Demand’ visa
Migrant workers are integral to Australian industry, but pandemic-related travel disruptions and an outdated migration program have reduced the number of migrant workers in Australia. Released in December 2023, the Australian Government’s Migration Strategy aims to address these issues and failure of the current temporary skills program. A key initiative is the introduction of a new temporary ‘Skills in Demand’ visa.
Set to be implemented in late 2024, this will replace the Subclass 482 Temporary Skills Shortage visa, which has been subject to criticism by Australian businesses for its rigidity and high upfront costs. This new visa will offer a three-tiered system, providing greater flexibility for workers to change employers and more pathways to permanent residency, while still allowing businesses to bring in skilled workers.
The Skills in Demand visa is reported to enable worker mobility across various sectors, acknowledging that skills are transferable across multiple industries.
Further changes in the pipeline
The Government is also exploring a model where employers would pay trailing charges and fees, reducing the hefty upfront costs associated with hiring migrant workers. For example, the Skilling Australian Fund levy would be paid on a periodic basis and after the visa is granted. Details are still being refined, but this approach is expected to reduce cost for employers (especially for smaller businesses).
Labour hire changes explained
Labour hire presents another solution for employers facing challenges in meeting industry demands and has historically played an important role in helping alleviate labour shortages.
The Federal Government’s “Same Job, Same Pay” framework, part of the Closing Loopholes reforms, is significant in this area. Under this framework, employees or unions can apply to the Fair Work Commission for a ‘Regulated Labour Hire Arrangement Order’ (RLHAO). This order requires employers to pay labour hire workers ‘protected rates of pay’ which is an amount not less than the same rate of pay they would receive either under the enterprise agreement or employment agreement covering employees of the host business.
Key points of the RLHAO include:
- Labour hire for the purposes of an RLHAO excludes engagements where the contractor is providing labour and equipment, and a business will not need to comply with an RLHAO where the contractor is covered by a training arrangement or will be performing work for less than three months.
- The Fair Work Commission will consider whether the work involves providing a service or supplying labour and whether making the RLHAO is fair and reasonable in all the circumstances.
While these changes have already started, a RLHAO cannot take effect before 1 November 2024. Businesses should review their labour hire arrangements before this date to understand potential impacts.
We are here to help
If you have any questions about how to tackle labour shortages in the food and beverage manufacturing industry, including the Skills in Demand visa or how the labour hire changes may impact your business, the Employment, Safety and Migration team at Macpherson Kelley are here to help.