Essential Skills Pathway

Background: the Essential Skills Pathway in the Migration Strategy

When the Migration Strategy was released in December 2023, employers wanting to gain access to a temporary skilled migrant outside of the standard visa rules, including for migration below the TSMIT, they did so using labour agreements. At that time there were more than 1,800 unique labour agreements in effect. Visa grants under labour agreements then made up approximately 5 percent of the temporary skilled migration system. Yet, many of these agreements do not contain the protections that would be expected in lower paid sectors and occupations ‘who are most at risk of exploitation and displacing Australian workers with similar skills’. This is a sign that the migration system is not working as intended.

The Government will further evaluate how to develop a third pathway, the Essential Skills Pathway, a more regulated pathway for lower paid workers with essential skills, in consultation with state and territory governments, unions, businesses and migrant workers. In defining essential skills, the Government may give consideration to sectors and occupations that are vital to supporting the living standards of Australians and where persistent shortages exist. Improvements in wages and conditions in such occupations, where they have occurred, have not proven sufficient to meet these labour shortages in the short term.

The Government is primarily considering the pathway in the context of the care and support economy, which has become essential to the quality of life of Australians. In doing so, the Government will maintain the primacy of our relationships with the Pacific as a guiding principle.

The Aged Care Industry Labour Agreement and the pathways for aged care workers through the PALM scheme will provide strong lessons for the Government, unions and employers for any future design of more regulated pathways for lower paid workers with essential skills. More than 20 Aged Care Industry Labour Agreements have been signed since its introduction in May 2023, which provides for up to 9,000 direct care workers over 5 years. We will look to examine lessons of these programs and their settings, through tripartite consultation, to inform the design of any new pathway.

This pathway would be distinct from the Core Skills Pathway and the Specialist Skills Pathway. These arrangements would be sector-specific, capped, embedded with stronger regulation and minimum standards and subject to further advice from Jobs and Skills Australia and its tripartite mechanisms. With this approach and these principles in mind, and acknowledging that there will always be a role in the system for labour agreements, the Government will evaluate existing labour agreements for below-TSMIT migration and will rewrite guidelines for future labour agreements to provide stronger worker protections. The Government will further consider how best to enshrine these guidelines in legislation.

Within sectors, the distinction between the Core Skills Pathway and Essential Skills Pathway could be defined by occupation and pay.

For example, in the care and support economy, Aged and Disabled Carers would have access via the Essential Skills Pathway, but most Registered Nurses or Allied Health Professionals would have access via the Core Skills Pathway. Both pathways, however, will be regulated to ensure that Australia is receiving the skilled workers it actually needs and the employees concerned are protected from exploitation.

The Government will further consult on how best to regulate migration for lower paid workers with essential skills in early to mid-2024.

The Government will index the new Core Skills and Specialist Skills Thresholds in line with annual movements in Average Weekly Ordinary Time Earnings. This indexation requirement will be specified in legislation to provide clarity and predictability for migrants and employers, as recommended in the Migration Review.

The Government has established a formal role for Jobs and Skills Australia in defining skills needs. Its approach will be evidence-based and draw on advice from tripartite mechanisms. Coordination of the education, training and migration systems will all feed into this process to ensure identified labour shortages are dealt with in a holistic manner.

What happened next

The Skills in Demand visa started on 7 December 2024 with the Specialist Skills, Core Skills and Labour Agreement streams. The Essential Skills Pathway was not included, and as at 2026 no general stream for lower paid essential workers has opened. Labour agreements, including the Aged Care Industry Labour Agreement, remain the main way to sponsor workers below the Core Skills Income Threshold. The thresholds have been indexed each year as planned: from 1 July 2026 the CSIT is $79,423 and the SSIT is $146,576.