Let’s recall the damning indictment of Australia’s defacto low-skilled immigration system in the book entitled The Wages Crisis in Australia, which was released last month by a group of labour market academics:
Official stock data indicate that the visa programmes for international students, temporary skilled workers and working holiday makers have tripled in numbers since the late 1990s…
Decisions by the federal Coalition government under John Howard to introduce easier pathways to permanent residency for temporary visa holders, especially international students and temporary skilled workers, gave a major impetus to TMW visa programmes.
Most international students and temporary skilled workers, together with many working holiday makers, see themselves as involved in a project of ‘staggered’ or ‘multi-step’ migration, whereby they hope to leap from their present status into a more long-term visa status, ideally permanent residency…
Though standard accounts describe Australian immigration as oriented to skilled labour, this characterisation stands at odds with the abundant evidence on expanding temporary migration and the character of TMW jobs… the fact that their work is primarily in lower-skilled jobs suggests that it is more accurate, as several scholars point out, to speak of a shift in Australia towards a de facto low-skilled migration programme…
Increases in labour supply allow employers in sectors already oriented to flexible and low-wage employment, such as horticulture and food services, to sustain and extend strategies of labour cost minimisation… The arguments and evidence cited above suggest a spread of predatory business models within low-wage industries. They suggest an unfolding process of degradation in these labour markets…
This crisis has been precipitated by the federal government’s decision to freeze the salary floor for temporary skilled migrant workers since 2013… the government has chosen to put downward pressure on real wages for temporary skilled migrants, thereby surreptitiously allowing the TSS visa to be used in lower-paid jobs…
TSMIT’s protective ability is only as strong as the level at which it is set… But since 1 July 2013, TSMIT has been frozen at a level of A$53 900. ..
There is now a gap of more than A$26 000 between the salary floor for temporary skilled migrant workers and annual average salaries for Australian workers. This means that the TSS visa can increasingly be used to employ temporary migrant workers in occupations that attract a far lower salary than that earned by the average Australian worker. This begs the question — is the erosion of TSMIT allowing the TSS visa to morph into a general labour supply visa rather than a visa restricted to filling labour market gaps in skilled, high-wage occupations?..
Put simply, temporary demand for migrant workers often creates a permanent need for them in the labour market. Research shows that in industries where employers have turned to temporary migrants en masse, it erodes wages and conditions in these industries over time, making them less attractive to locals…
Combined, then, with the problems with enforcement and compliance, it is not hard to conclude that the failure to index TSMIT is contributing to a wages crisis for skilled temporary migrant workers… So the failure to index the salary floor for skilled migrant workers is likely to affect wages growth for these workers, as well as to have broader implications for all workers in the Australian labour market.
Given the widespread abuses of Australia’s visa system by Australian employers to obtain low paid foreign labour, it is hard to believe that the Morrison Government has announced a brand new permanent migration pathway for low skilled and low paid foreign workers. From The ABC:
The Government has opened a gateway for foreigners with basic farm or hospitality skills to move permanently to Australia on a work visa.
New regional migration agreements for the Northern Territory and south-west Victoria will lower the criteria for skills, language and income for migrant workers.
And they will provide a pathway to permanent residency to these workers that previously did not exist.
However the Government is demanding migrants commit to living in these regions for at least three years before a permanent residency pathway is available…
Manuela Seiberth, a migration agent based in Darwin, said the new offer of permanent residency was “huge”…
Typically, employment visas must be for workers with competent English and pay of at least $53,900 per year.
However, under the previous Northern Territory DAMA, a visa may be approved for a baker, barista or hairdresser with language or income less than these thresholds.
Under the new DAMA these workers will likely be given a chance to move to Australia permanently.
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The ridiculously low pay floor of $53,900 for ‘skilled’ migrants will be lowered even further, as will English language proficiency. Sure, these workers will have to spend three or four years in these regions, but after they have qualified for permanent residency they will very likely just move to the big cities, just like all the other migrants.
Indeed, state-based migration programs have been systemically rorted, with migrants temporarily settling in places like the ACT and Tasmania purely to get the required number of points for permanent residency before moving to Sydney and Melbourne. So this type of ‘gaming’ of the immigration system will only intensify under this program.
Let’s be honest. Australia’s immigration system is one giant rort that’s all about lowering labour costs for employers by crushing wages and abrogating their responsibility for training, while also feeding the growth lobby more consumers.
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It needs root-and-branch reform, starting with dramatically lowering the overall permanent migrant intake, as well as setting a wage floor for migrants at the 80th to 90th percentile of earnings, thus ensuring the scheme is used sparingly by employers on only the highest skilled migrants, not as a general labour market tool for accessing cheap foreign labour.
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.
