The ABS yesterday released a report entitled Insights from the Australian Census and Temporary Entrants Integrated Dataset, 2016, which revealed that there were 1,500,409 temporary residents in Australia on Census night, comprising:
41% Special Category (New Zealand citizen) visa holders – 664,957 persons (634,250 residents and 30,705 overseas visitors).
30% Student visa holders – 487,012 persons (449,883 residents and 37,125 overseas visitors).
10% Temporary Work (Skilled) visa holders – 170,407 persons (165,351 residents and 5,055 overseas visitors).
8% Working Holiday Makers – 129,442 persons (78,763 residents and 50,680 overseas visitors).
11% Other Temporary visa holders (including Bridging visa holders) – 183,677 persons (or 172,155 residents and 11,524 overseas visitors).
According to the ABS, 81% of temporary residents resided in the capital cities (compared with 67% of all Australians), with 27% living in Sydney and 24% in Melbourne:
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Most shockingly, however, is the news that so-called ‘skilled’ temporary migrants were paid a personal median income only $1,143 per week or $59,436 per year in 2016:
In 2016, the median personal weekly income of all temporary residents (aged 15 years and over) was $542 per week…
Temporary Work (Skilled) visa holders had the highest median personal weekly income – $1,143 per week.
Special Category (New Zealand citizen) visa holders had a median personal weekly income of $814.
Working Holiday Makers had a median personal weekly income of $648.
Other Temporary visa holders had a median personal weekly income of $486 a week.
The lowest median income of $236 per week was recorded by Student visa holder who had lower rates of employment and mainly worked part time.
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While this was higher than the $1,000 median weekly earnings of all Australians in 2016, it was below the $1,242 median weekly full-time earnings of Australians (which includes unskilled workers).
It is also worth pointing out that the median employee earnings of all Australians includes every employee in the country – such as young uni students working at Coles, Kmart or Maccas, mums working part-time, etc – which obviously pulls the national median income down.
It’s fair to assume that most temporary ‘skilled’ migrants are not granted visas so that they can pack shelves at Coles, work at 7Eleven, or as cleaners. Rather, they are supposed to be ‘skilled’ and working at high capacity.
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In this regard, the $59,436 median earnings of temporary ‘skilled’ migrants is pathetically low and is unambiguously contributing to Australia’s low wages growth.
Don’t just take my word for it. Recall the damning indictment of Australia’s “defacto low-skilled migration programme” in the book, The Wages Crisis in Australia, released late last year 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 [temporary migrant worker] 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…
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 [Temporary Skilled Scheme] 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.
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Blind Freddy can see that Australia’s immigration system has become a 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.
Australia’s low wages growth won’t be resolved without root-and-branch reform of the immigration system, starting with dramatically lowering the overall permanent migrant intake, as well as raising the wage floor for ‘skilled’ migrants from the pathetically low level of $53,900 to the 80th to 90th percentile of earnings. This would ensure 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 with the carrot of permanent residency.
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.
