The Senate Education and Employment References Committee has released a scathing report entitled A National Disgrace: The Exploitation of Temporary Work Visa Holders, which documents the abuses of Australia’s temporary visa system for foreign workers.
According to the report, there are over 1.8 million temporary visa holders in Australia (see Table 2.5 below), with approximately 1.4 million of them having work rights. This means that temporary visa holders comprise around 10% of Australia’s labour force.
Below is a summary of the Committee’s view of the 457 visa system for so-called “skilled” foreign workers:
The committee received evidence that a key indicator of the effectiveness of the 457 visa program in addressing genuine skills shortages is the responsiveness of the demand for 457 visa workers to changes in the general rate of unemployment, and to changes in the supply of skilled labour in particular occupations.
Evidence to the committee indicated that the responsiveness of the 457 visa program to the upturn in the unemployment rate lagged by two to three years. Furthermore, the committee received evidence that the 457 visa program was having a detrimental impact on the employment opportunities for Australian graduates in specific occupations such as engineering and nursing.
The committee acknowledges that it received conflicting evidence regarding the balance between permanent and temporary migration. In theory, the value of temporary migration is that it allows business to meet short-term skills shortages. In this respect, there is an advantage in having some element of temporary migration because addressing skills shortages solely through the permanent migration scheme could result in a skills surplus, particularly if a sector that was booming experienced a sudden down-turn (the resources sector for example). Addressing short-term skill shortages with the 457 visa scheme should be a way of moderating these types of rapid transformations in discrete segments of the skilled job market.
However, the committee is concerned that the broader temporary visa program, and specifically the 457 visa program, is not sufficiently responsive either to higher levels of unemployment, or to labour market changes in specific skilled occupations…
Given the concerns raised in this inquiry, it is therefore appropriate to review the policy settings of the 457 visa program and labour agreements at this juncture to ensure they are set correctly…
The Committee recommends that the minimum income threshold for 457 visa holders be indexed to ordinary weekly earnings, so that it is not eroded over time, along with the implementation of more rigorous, independent, evidence-based, and transparent processes for determining the Consolidated Sponsored Occupations List (CSOL), which it sees as ad hoc and ineffective:
Recommendation 5: The committee recommends that the Temporary Skilled Migration Income Threshold (TSMIT) be indexed to average fulltime weekly ordinary time earnings (AWOTE) as at 1 July 2015 and that indexation occur each financial year.
Recommendation 6: The committee recommends that the Ministerial Advisory Council on Skilled Migration (MACSM) be re-constituted as a genuinely tripartite, independent, and transparent body with responsibility and commensurate funding to provide objective evidence-based advice to government on matters pertaining to skills shortages, training needs, workforce capacity and planning, and labour migration (including Designated Area Migration Agreements and the full range of temporary visa programs with associated work rights). The committee further recommends that the reports produced by MACSM be made publicly available.
The Committee also wants stringent labour market testing of all 457 visa nominations to ensure that employers employ locals first wherever possible:
The committee notes that the vast majority of all occupations available for sponsorship under the 457 visa program are exempt from labour market testing… although the extent to which it is occurring is difficult to quantify, the committee is deeply disturbed by evidence of workers losing their jobs only to be replaced by 457 visa workers. In this regard, the committee is of the view that there should be a prohibition against replacing local workers with 457 visa workers…
Given the current high levels of unemployment and under-employment amongst Australian professionals, however, the committee is of the view that the labour market testing should be further strengthened. In particular, the current exemptions on labour market testing for ANZSCO skill levels 1 and 2 should be removed, and labour market testing should be required prior to all 457 visa nominations.
Further, the committee is of the view that labour market testing should apply to all positions for which a 457 visa holder is nominated under labour agreements and Designated Area Migration Agreements.
Recommendation 7: The committee recommends that the replacement of local workers by 457 visa workers be specifically prohibited.
Recommendation 8: The committee recommends that the current exemptions on labour market testing for ANZSCO skill levels 1 and 2 be removed.
Recommendation 9: The committee recommends that the Migration Regulations be amended to specify that labour market testing applies to all positions nominated by approved sponsors under labour agreements and Designated Area Migration Agreements.
Importantly, the Committee also recommends that employers using 457 visas make explicit efforts to employ and train locals:
Recommendation 13: The committee recommends that employer sponsors of a 457 visa worker (professional) be required to also employ an Australian tertiary graduate in the same enterprise on a one-for-one basis.
Recommendation 14: The committee recommends that employer sponsors of a 457 visa worker (trade) be required to demonstrate that apprentices represent 25 per cent of the sponsor’s total trade workforce (with the threshold for this requirement being the employment of four or more tradespersons).
Recommendation 15: The committee recommends that the current training benchmarks be replaced with a training levy paid per 457 visa holder employed in the business. The committee recommends that the levy be set at up to $4000 per 457 visa worker and that the levy be paid into existing government programs that specifically support sectors experiencing labour shortages as well as apprenticeships and training programs…
The most damning assessments from the Committee were regarding Australia’s Working Holiday Maker (WHM) and student visa holders, who were “consistently reported to suffer widespread exploitation in the Australian workforce”.
The Committee also noted that undocumented foreign workers were eroding labour standards for Australian employees:
The committee received evidence that undocumented work by migrant labour has resulted not only in the severe exploitation of highly vulnerable workers, but also impacted Australia’s labour markets, including placing downward pressure on the wages and conditions of Australian workers and undercutting the majority of legitimate employers that abide by Australian workplace laws.
Looking at the WHM (417 and 462) visa program first, the Committee noted the following:
A substantial body of evidence to this inquiry demonstrated blatant and pervasive abuse of the WHM visa program by a network of labour hire companies supplying 417 visa workers to businesses in the horticulture sector and the meat processing industry.
It was clear from the evidence that these labour hire companies have a particular business model. There are a number of labour hire companies in Australia with close links to labour hire agencies in certain south-east Asian countries… The scale of the abuse is extraordinary, both in terms of the numbers of young temporary visa workers involved, and also in terms of the exploitative conditions that they endure…
On completion of their ‘training’, the 417 visa workers were given a job where they were required to work regular 12 to 18 hour shifts 6 days a week. They were frequently denied proper breaks and often had to keep working or return to work early after suffering workplace injuries. The pay rates were appalling. Most received around a flat $11 or $12 an hour irrespective of whether this was the night shift, the weekend, or overtime hours. These wage rates are illegal and clearly breach award minimums…
Poor or non-existent record-keeping was endemic across the labour hire companies mentioned in this inquiry. This has serious implications for ensuring compliance with legal minimum conditions of employment. The 417 visa workers never met the head labour hire contractor and only had a mobile number to receive texts about the start time for their next shift. The committee received many documents including fake timesheets and envelopes with a figure scrawled on it instead of a proper timesheet. The workers were paid in cash with no deductions for tax.
When the shift was over, these workers returned to squalid and overcrowded accommodation with no proper facilities, for which they were charged exorbitant levels of rent by the labour hire contractor. The rent payments were deducted straight from the workers’ pay packets, most of the time in clear contravention of the law…
And regarding the student visa system, the Committee noted:
The hearings into 7-Eleven revealed that undocumented work performed in breach of a visa condition (as opposed to visa overstayers and persons in Australia without a visa) is a huge problem in Australia. International students who were legally allowed to work in Australia were required to work hours in excess of their visa conditions precisely so their employers could then exploit the technical breach of their visa conditions in order to underpay them and rob them of their wages and other workplace entitlements…
Working (or being required to work) in breach of a visa condition renders an international student liable to visa cancellation and deportation and effectively excludes such workers from the protections of employment law under the FW Act. This further reinforces the power of unscrupulous employers over their workers and provides a perverse incentive for employers to breach the law by coercing their employees to breach the law…
The committee is particularly concerned about the pressure that certain employers have exerted on temporary visa workers to breach a condition of their visa in order to gain additional leverage over the employee. The committee recognises the reality that unscrupulous employers have exercised their power in the employment relationship and the employee has been rendered vulnerable to exploitation…
The committee particularly thanks the former employees of 7-Eleven who appeared at the public hearing in Melbourne. Their accounts of appalling exploitation and intimidation by their franchisee employers painted a bleak picture of working life in Australia for substantial numbers of temporary visa workers. Their stories were not isolated occurrences to be brushed off as one-off incidents caused by a few rogue employers. Rather, the overwhelming body of evidence indicated that the problem of underpayment at 7-Eleven was, and may remain, widespread and systemic.
The Committee makes a bunch of other recommendations around the rights of temporary visa holders, compliance and enforcement issues, franchising issues, etc. There are 33 Recommendations in total.