China FTA to open labour floodgates?

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By Leith van Onselen

Yesterday, it was revealed by The ABC that the Australia-China Free Trade Agreement, signed earlier this month, could open the flood gates to some Chinese workers, who under the deal will no longer be subject to a mandatory skills assessment.

Under a letter signed between Australian Trade Minister, Andrew Robb, and his counterpart, Chinese Minister for Commerce, Gao Huncheng, 10 occupations will no longer be required to prove they have the requisite skills to work in Australia. These occupations are:

  • Automotive electricians;
  • General electricians;
  • Specialist electricians;
  • Cabinetmakers;
  • Carpenters;
  • Carpenters and joiners;
  • General motor mechanics;
  • Diesel motor mechanics;
  • Motorcycle mechanics; and
  • Joiners.

The decision, which was reportedly made without consultation with unions or employers, has enraged the Electrical Trades Union (ETU), which claims that the Australian community will be placed at risk:

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“It’s going to create significant workplace dangers, not only just for electricians, but all those people who use electricity”…

“Australia leads the way in electrical safety. We’ve got some of the best electrical workers in the world. A lot of countries aspire to have the same level of safety standards that we do”…

“We’ve got a licence system right across the country no matter which state or territory you work in, you’ve got to be licensed to carry out the work and those sorts of systems aren’t in place in other countries like China”.

“And China has a woeful workplace health and safety record. They have over 70,000 workplace deaths a year, so we are genuinely concerned”.

…the mandatory assessment requirement was designed to protect people from unsafe electrical work, and that the change would create significant workplace dangers.

The Fire Protection Association (FPA) has agrees:

[FPA] chief executive officer Scott Williams said his organisation was deeply concerned by the removal of the skills assessment under the FTA.

“Obviously anywhere where there is a potential impact on life safety and particularly in the electrical area, what we know in Australia as the peak organisation is that obviously there is a very high rate of electrical fires that occur in Australia,” he said.

“So if there is an attempt there to erode, dilute or certainly dumb down the skills, we can only see that leading to what will be increased outcomes in regard to fire events in Australia.”

Meanwhile, Labor Party leader, Bill Shorten, has stated that there is a concerted lack of concern for Australian jobs and standards in the China FTA:

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“I want the government to come clean on potential downside for Australian jobs and Australian safety and labour standards,” he told reporters in Melbourne on Monday.

However, Andrew Robb claims that Labor and the unions are running a xenophobic scare campaign, and argues that standards are not being lowered under the FTA:

“What they’re doing is running another agenda to destabilise the Government,” he said.

“They’re anti-trade some of them and they’re looking to lay the ground for the future election next year.”

“The FTA does not, I repeat does not, change the skills and experience requirement that needs to be met by a skilled worker applying for a visa to work in Australia.

“Applicants will still be required to demonstrate to the Immigration Department that they possess the requisite skills and experience to work in this country.

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It is worth pointing out that the China FTA also permits Chinese companies building projects in Australia to bring in Chinese workers on 457 visas, effectively continuing its program of deregulating labour migration.

The agreement also allows up to 1800 chefs, martial-arts coaches, Mandarin language tutors and ­traditional Chinese medicine practitioners to apply for 457 visas.

Five thousand Chinese visitors a year will also be given the right to work under a new Work and Holiday program.

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Regular readers will know that I strongly oppose the loosening of immigration visas at this time. Unemployment is already high, with youth unemployment much worse. Moreover, the Australian economy is about to undergo its biggest adjustment since the early 1990s recession as the one-in-a-century mining investment boom unwinds and the local automotive assembly industry shutters by 2017.

The skills shortages report from the Department of Employment, released in March, also revealed that “employers continued to recruit skilled workers with little difficulty”, “consistent with the softness in the labour market”. Further, “with the demand for skilled workers relatively subdued over the past few years, and historically high numbers of graduates entering the labour market from both higher education and vocational education and training, long standing shortages across many occupations have been addressed”.

Given such a weak labour market, where is the sense in making it easier to import labour from China rather than using local workers, in turn adding to the pool of under/unemployed and depriving our youth of employment opportunities?

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And don’t forget, this will not just be an issue in far-flung major mining projects. The new wave of big investment projects is in urban property and tourism.

The China FTA, therefore, smells like another sell-out by the Government of Australian workers.

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About the author
Leith van Onselen is Chief Economist at the MB Fund and MB Super. He is also a co-founder of MacroBusiness. Leith has previously worked at the Australian Treasury, Victorian Treasury and Goldman Sachs.