Labor to hit 457s with “tonne of bricks”

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Via The Australian:

Bill Shorten says he’ll come down “like a tonne of bricks” on employers using 457 visas to fill jobs, rather than training Australians.

He promises to work with the Australian trade union movement and stand up for Australian workers.

“Working people are not commodities to be traded at the lowest possible price,” Mr Shorten says.

“They’re not costs to minimise, they are not anonymous or inevitable casualties of economic and technological change.

“This is not the Australian way, it is not the Labor way, that is why in our first 100 days, we will restore Sunday and public holiday penalty rates for 700,000 workers.”

This will be quite an experiment in labour economics. Labor believes that it can sustain the permanent supply shock of mass immigration and lift wages to boot, largely via greater centralisation of wages bargaining power and increased regulation.

I don’t entirely disagree with Labor’s notions. It is targeting capital misallocation reform to lift productivity as well, which is three decades overdue, and it will sink the Australian dollar with house prices.

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The danger is that during the adjustment the economy will slow and Labor risks making unemployment worse as the jobs market becomes more rigid even as the housing market adjustment deepens. Add its commitment to mass immigration, which it plans to increase by lifting the refugee intake, further likely falls in the terms of trade, and there will be very big headwinds for wages over the long term.

My own view is that it this macro set-up means Labor will fail to lift wages and may actually see further falls.

That is why it should avoid suggestions such as this like the plague, via Domain:

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Federal Labor Party delegates will on Saturday vote on a pledge to replace the 40-hour a fortnight work restriction for international students with tough requirements for course attendance and course completion…

Community legal centres have reported that many migrant workers are required to work more than 40 hours and are reluctant to complain about underpayment over fear of losing their work visas.

What kind of truly lost union would suggest this? International students should not be allowed to work at all or have much stronger limits such as they do in the US. Thankfully this lunacy appears to have been voted down.

Whether Labor’s polling polling slides with wages will depend upon how it sells it to the polity. I suggest it goes early and hard on changing its rhetoric from “fairness” in greater gains for all, to “fairness” in greater shared losses for all!

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About the author
David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific’s leading geo-politics and economics portal. He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.