Why Aussie wages are the weakest in the world

Throughout this cycle, MB has gotten wages right. While everyone else forecast wages booms we predicted they would remain in the gutter. This was one key rationale behind our equally contrarian call that the RBA’s next move was always going to be down. How did we know this when everyone else said otherwise? See Bloomie:

The traditional relationship between inflation and employment has faltered in much of the developed world — nowhere more so than in Australia where it’s seen an unprecedented breakdown in the past few years.

The Phillips Curve suggests tight labor markets should force firms to raise wages, and they in turn raise product prices to cover the costs. That means low unemployment should result in faster inflation, or so the theory goes.

Among developed nations, only Denmark comes close to the divergence seen in the chart above, but nowhere near as pronounced. Part of the reason comes down to the timing of the anomaly’s emergence in Australia, historically an inflation-prone economy.

The answer is very straight forward. There was one unprecedented change to Australian macro conditions in this cycle that made wage growth impossible. Australia has never run mass immigration into material economic slack before but that’s what we did this time:

What does economics 101 tell us happens when a perpetual supply shock lands on weak demand? Prices fall.

This is the smoking gun of weak wages growth. Mass immigration has destroyed Australian labour’s pricing power even as it rewrote industrial relations with floods of cheap foreign workers.

Academic research finally caught up to MB late last year. Below are key excepts from Chapter 13 entitled Temporary migrant workers (TMWs), underpayment and predatory business models, written by Iain Campbell:

This chapter argues that the expansion of temporary labour migration is a significant development in Australia and that it has implications for wage stagnation…

Three main facts about their presence in Australia are relevant to the discussion of wage stagnation. First, there are large numbers of TMWs in Australia, currently around 1.2 million persons. Second, those numbers have increased strongly over the past 15 years. Third, when employed, many TMWs are subject to exploitation, including wage payments that fall below — sometimes well below — the minimum levels specified in employment regulation…

One link to slow wages growth, as highlighted by orthodox economics, stems from the simple fact of increased numbers, which add to labour supply and thereby help to moderate wages growth. This chapter argues, however, that the more salient point concerns the way many TMWs are mistreated within the workplace in industry sectors such as food services, horticulture, construction, personal services and cleaning. TMW underpayments, which appear both widespread in these sectors and systemic, offer insights into labour market dynamics that are also relevant to the general problem of slow wages growth…

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… In all, the total number of TMWs in Australia is around 1.2 million persons. If we include New Zealand citizens and permanent residents, who can enter Australia under a special subclass 444 visa, without time limits on their stay and with unrestricted work rights (though without access to most social security payments), then the total is close to 2 million persons… TMWs now make up around 6% of the total Australian workforce…

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. One result, as temporary migration expands while the permanent stream remains effectively capped, is a lengthening queue of onshore applicants for 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. It is true that many TMWs, like their counterparts in the permanent stream, are highly qualified and in this sense skilled. However, 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

A focus on raw numbers of TMWs may miss the main link to slow wages growth. It is the third point concerning underpayments and predatory business models that seems richest in implications. This point suggests, first and most obviously, added drag on wages growth in sectors where such underpayments and predatory business models have become embedded. If they become more widely practised, underpayments pull down average hourly wages. If a substantial number of firms in a specific labour market intensify strategies of labour cost minimisation by pushing wage rates below the legal floor, it can unleash a dynamic of competition around wage rates that foreshadows wage decline rather than wage growth for employees…

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.37 They suggest an unfolding process of degradation in these labour markets…

And below are extracts from Chapter 14, entitled Is there a wages crisis facing skilled temporary migrants?, by Joanna Howe:

Scarcely a day goes by without another headline of wage theft involving temporary migrant workers…

In this chapter we explore a largely untold story in relation to temporary migrant workers… it exposes a very real wages crisis facing workers on the Temporary Skill Shortage (TSS) visa (formerly the 457 visa) in Australia. 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…

In Australia, these workers are employed via the TSS visa and they must be paid no less than a salary floor. This salary floor is called the Temporary Skilled Migration Income Threshold (TSMIT). TSMIT was introduced in 2009 in response to widespread concerns during the Howard Government years of migrant worker exploitation. This protection was considered important because an independent review found that many 457 visa workers were not receiving wages equivalent to those received by Australian workers…

In effect, TSMIT is intended to act as a proxy for the skill level of a particular occupation. It prevents unscrupulous employers misclassifying an occupation at a higher skill level in order to employ a TSS visa holder at a lower level…

TSMIT’s protective ability is only as strong as the level at which it is set. In its original iteration back in 2009, it was set at A$45 220. This level was determined by reference to average weekly earnings for Australians, with the intention that TSMIT would be pegged to this because the Australian government considered it ‘important that TSMIT keep pace with wage growth across the Australian labour market’. This indexation occurred like clockwork for five years. 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?..

But why would employers go to all the effort of hiring a temporary migrant worker on a TSS visa over an Australian worker?

Renowned Australian demographer Graeme Hugo observed that employers ‘will always have a “demand” for foreign workers if it results in a lowering of their costs’.  The simplistic notion that employers will only go to the trouble and expense of making a TSS visa application when they want to meet a skill shortage skims over a range of motives an employer may have for using the TSS visa. These could be a reluctance to invest in training for existing or prospective staff, or a desire to move towards a deunionised workforce. Additionally, for some employers, there could be a belief that, despite the requirement that TSS visa workers be employed on equivalent terms to locals, it is easier to avoid paying market salary rates and conditions for temporary migrant workers who have been recognised as being in a vulnerable labour market position. A recent example of this is the massive underpayments of chefs and cooks employed by Australia’s largest high-end restaurant business, Rockpool Dining Group, which found that visa holders were being paid at levels just above TSMIT but well below the award when taking into account the amount of overtime being done…

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…

A national survey of temporary migrant workers found that 24% of 457 visa holders who responded to the survey were paid less than A$18 an hour.  Not only are these workers not being paid in according with TSMIT, but they are also receiving less than the minimum wage. A number of cases also expose creative attempts by employers to subvert TSMIT. Given the challenges many temporary migrants face in accessing legal remedies, these cases are likely only scratching the surface in terms of employer non-compliance with TSMIT…

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.

The evidence on the ground has been overwhelming for years:

  • For years we have seen Dominos, Caltex, 7-Eleven, Woolworths and many other fast food franchises busted for rorting migrant labour.
  • The issue culminated in 2016 when the Senate Education and Employment References Committee released a scathing report entitled A National Disgrace: The Exploitation of Temporary Work Visa Holders, which documented systemic abuses of Australia’s temporary visa system for foreign workers.
  • Mid last year, ABC’s 7.30 Report ran a disturbing expose on the modern day slavery occurring across Australia.
  • Meanwhile, Fair Work Ombudsman (FWO), Natalie James, told Fairfax in August last year that people on visas continue to be exploited at an alarming rate, particularly those with limited English-language skills. It was also revealed that foreign workers are involved in more than three-quarters of legal cases initiated by the FWO against unscrupulous employers.
  • Then The ABC reported that Australia’s horticulture industry is at the centre of yet another migrant slave scandal, according to an Australian Parliamentary Inquiry into the issue.
  • The same Parliamentary Inquiry was told by an undercover Malaysian journalist that foreign workers in Victoria were “brainwashed” and trapped in debt to keep them on farms.
  • A recent UNSW Sydney and UTS survey painted the most damning picture of all, reporting that wages theft is endemic among international students, backpackers and other temporary migrants.
  • A few months ago, Fair Work warned that most of Western Sydney had become a virtual special economic zone in which two-thirds of businesses were underpaying workers, with the worst offenders being high-migrant areas.
  • Dr Bob Birrell from the Australian Population Research Institute latest report, based on 2016 Census data, revealed that most recently arrived skilled migrants (i.e. arrived between 2011 and 2016) cannot find professional jobs, with only 24% of skilled migrants from Non-English-Speaking-Countries (who comprise 84% of the total skilled migrant intake) employed as professionals as of 2016, compared with 50% of skilled migrants from Main English-Speaking-Countries and 58% of the same aged Australian-born graduates. These results accord with a recent survey from the Bankwest Curtin Economics Centre, which found that 53% of skilled migrants in Western Australia said they are working in lower skilled jobs than before they arrived, with underemployment also rife.
  • The Australian Bureau of Statistics (ABS) latest Characteristics of Recent Migrants reportrevealed that migrants have generally worse labour market outcomes than the Australian born population, with recent migrants and temporary residents having an unemployment rate of 7.4% versus 5.4% for the Australian born population, and lower labour force participation (69.8%) than the Australian born population (70.2%).
  • ABC Radio recently highlighted the absurdity of Australia’s ‘skilled’ migration program in which skilled migrants have grown increasingly frustrated at not being able to gain work in Australia despite leaving their homelands to fill so-called ‘skills shortages’. As a result, they are now demanding that taxpayers provide government-sponsored internships to help skilled migrants gain local experience, and a chance to work in their chosen field.
  • In early 2018 the senate launched the”The operation and effectiveness of the Franchising Code of Conduct” owing in part to systematic abuse of migrant labour.
  • Then there is new research from the University of Sydney documenting the complete corruption of the temporary visas system, and arguing that Australia running a “de-facto low-skilled immigration policy” (also discussed here at the ABC).
  • In late June the government released new laws to combat modern slavery which, bizarrely, imposed zero punishment for enslaving coolies.
  • Over the past few months we’ve witnessed widespread visa rorting across cafes and restaurants, including among high end establishments like the Rockpool Group.
  • Alan Fels, head of the Migrant Workers Taskforce, revealed that international students are systematically exploited particularly by bosses of the same ethnicity.

MB has argued, harassed and harangued to get this noticed. But the simple truth has run up against an extraordinary conspiracy of silence bringing together corporate interests, especially those in the urbanisation sectors, and fake left commentators and economists obsessed with racial politics. The latter include, bizarrely, the ACTU leadership.

The truth is that Australian wages will not lift while the mass immigration economic model prevails. The OECD expects Australia’s output gap to close by 2020 but it isn’t going to happen. Indeed, now that the housing market and economy has run out of puff, the output gap will widen again even as undiminished cheap foreign labour pours in. Capacity utilisation has already begun to trend lower in the NAB business survey (see the blue line below):

Wages growth is about to weaken materially threatening an intensified house price unwind.

Labor be warned. If it does not get over itself and cut immigration when it takes power then the endless income recession will kill its government in record time as sure as the Sun rises in the east.

Houses and Holes
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Comments

  1. Meanwhile…

    Australia’s immigration level soars to a record high in 2018 – with 832,560 new arrivals calling the country home – after the Government promised cuts

    https://www.dailymail.co.uk/news/article-6719517/Australias-permanent-immigration-rate-soars-new-record-high-832-560-months-PM-vowed-cut.html

    Australia’s immigration levels have soared to a new record high – months after Prime Minister Scott Morrison promised to slow down the rate of population growth. In 2018, a record 832,560 permanent and long-term migrants decided to call Australia home, marking a 7.1 per cent increase compared with 2017. With the number of people leaving Australia for good taken into account, the nation’s annual net immigration rate stood at 291,250, the highest in four-and-a-half years.

    • 291,000 immigrants per year now? So much for the immigration rate being cut to 160k.

      Neos Kosmos is against mass immigration too:

      article posted 18 hours ago

      https://neoskosmos.com/en/129831/australia-immigration-levels-hit-record-highs-for-2018/

      —-

      And here is a Neos Kosmos article from 19 Feb

      82% of the people in Greece are against more immigration.

      82 per cent opposed to more immigrants. This was followed by Hungary (72 per cent), Italy (71 per cent) and Germany (58 per cent).

      Outside Europe, opposition was just as high, with the countries with the largest majorities of people opposed to immigrants being Israel (73 per cent), Russia (67 per cent), South Africa (65 per cent) and Argentina (61 per cent).

      https://neoskosmos.com/en/129788/immigrants-are-not-welcome-worldwide-and-greece-tops-the-list/

      • As a Greek dual national, that’s a potential escape plan for me however Europe is a turbulent mess. Which part of the world now isn’t plagued with uncertainty and instability? Every country has it’s own unique and common issues.

        The people of Greece may voice their concerns and utter contempt for the EU, ECB, geopolitical machinations, foreign meddling BUT their elected officials will continue to dance to the tune played by said powers.

  2. Interesting graph by Bloomberg. In 2017, The Economist also published a graph on the same topic – employment vs inflation. And it showed that the link between the unemployment rate and the inflation rate was broken in 1985:

    https://www.economist.com/graphic-detail/2017/11/01/the-phillips-curve-may-be-broken-for-good

    a growing number of economists now say that the trade-off, known as the Phillips curve after an economist who described it in a 1958 paper, no longer holds. Until the mid-1980s, unemployment and wage inflation in America and other advanced economies did indeed appear to be inversely correlated. Since then, however, the relationship has weakened (see chart).

    Australia is also unique because it has basically no factories. So products will not become more expensive if the mass importation of cheap third world labour is stopped. Ban the unskilled wives of 457 visa staff from working here – USA had that ban until Obama came along. Allowing the wives of foreign “students” to work here is insane.

    • Because America got millions of illegal immigrants pouring in from Mexico and South America, and the European Union was formed allowing all the low skilled workers to migrate anywhere they liked within the EU.

    • Agree, stop the working rights for partners on temporary visas.

      We shouldn’t have to compete with Ms Sari who gets a leg up with the ‘diversity’ angle, who will end up spending the bulk of the day talking on WhatsApp to her partner and or family, who will not interact with other staff and spend the lunch hour in the kitchen on the phone speaking a non-English language whilst eating up their heated up food (and not cleaning up the messed up communal microwave), who wont offer help to their collegues but demand help when they haven’t done their own work, who has no qualms in leaving early to catch the earlier train so they can get a seat on a packed train (and who will then speak on their phone for the entire train journey in Hindi or Punjabi or other non-English language), who will want to know how many sick days they are entitled too and max this out as a right, and then make claims of racism when someone calls out their lazy ways.

  3. The massive Third World immigration program is the root cause of almost everything that is wrong with Australia today.
    It needs to be wound down, say 50,000 a year, until the net immigration program is zero.

    • Agree. Successive governments have had low expectations for Australia and as such have flooded the country with third-world mass migration, a people who also posses low expectations to start with.

    • It would fix next to nothing.

      Not corruption.
      Not increasing wealth and income gaps.
      Not attacks on, and undermining of, workers rights.
      Not privatisation of public services.
      Not selloffs of public assets.
      Not monopolies and oligopolies.

      Etc.

      • It will begin to fix;

        stagnant wages,
        high unemployment,
        underemployment,
        unaffordable housing,
        high rentals,
        road congestion,
        overcrowded schools,
        shortage of hospital beds,
        urban sprawl,
        state budget debt and deficit,
        environmental destruction/land clearing,
        carbon footprint,
        etc,

        but the most important thing it will do – throw a spanner in the works of the ‘brown man’ nation, ideologists.

  4. Surely someone here has a line to Bowen and whomever the shadow immigration person is and can email them this (no doubt MB is already doing this)

    Andrew Leigh has some serious brainpower soesnt he? Surely he’s across this

    • You don’t get to the top of politics by being stupid. The government and opposition are aware of this. Ask yourself why they continue down this path despite knowing this and you will achieve inner peace, or a desire for rope and lampposts.
      Dealers choice on that one.
      Of course to work this out, you need to forget the propaganda you have been fed since childhood that politicians are there to represent your interests.

    • In his recent Chifley oration Bowen pushed the pathetic and well worn line that there is only immigration at its current level or no immigration. Anyone opposed to current levels automatically wants zero immigration and that would be a bad thing is what he inferred.

      • “wants zero immigration and that would be a bad thing is what he inferred.”

        I’d like to have had the chance to ask,’ in the current circumstances, why?’

    • yea, it’s something that people aren’t thinking about Wiley. And when 50% of incomes go, where do the taxes come from? Add to this state taxes taking a dive with housing transactions and stamp duty.

      How are we going to afford pensions, medical and social security? Can defined benefit retirement schemes and super even survive what is coming?

      There is so much poop piled on top of itself, waiting to hit that proverbial fan – it’s going to be a mess.

  5. Never really understood why economists failed to understand why the Phillips Curve is no longer working. Back in the 1950’s when it was formulated, it presupposed a closed labour market, not one with open borders and a steady stream of low wage workers flooding the market. In order for prices to rise you need demand to increase while supply remains constant.

  6. Temporary workers should be restricted to temporary jobs. Eg. you get a 3 month visa to come in and do harvest work in horticulture, a 6 month visa to work in a ski resort over winter, or do development work on a 6 month IT project. And when thats finished they have to leave the country. Any job that will continue for 12 months or more shouldnt be considered temporary and employers should be forced to hire and train local workers. Using temporary workers to displace full time permanent workers is a complete rort.

    • Correct. And to attract foreigners to make the temporary move to Australia, employers should be paying a premium (in the same way that project casual work gets a higher hourly rate than a permanent salaried person). That way, it would be in the interest of industry to fill jobs locally as much as possible.

      At the moment, foreigners are willing to take the low pay for such work as a stepping stone to permanent residency.

    • It is fascinating to see people, on the one hand complaining about “leftists” and high taxes, but on the other clearly favouring “leftist”, big government policy.

      • Actually I see it as the opposite – favouring letting the free market determine labour supply and wages, while only interfering in the smallest way (ie. limited number of temporary visas for limited jobs and a limited time period). However, this presupposes a closed labour market, not the Leftist open borders policy that encourages unlimited immigration and the personal economic and utility destruction that unleashes.

      • Actually I see it as the opposite – favouring letting the free market determine labour supply and wages, while only interfering in the smallest way (ie. limited number of temporary visas for limited jobs and a limited time period).

        If pursued as described, this would simply result in endless “temporary” jobs and short-term visas. The actual *numbers* wouldn’t change.

        Which is basically what we see in the job market anyway – the crapification of jobs, destruction of long-term employment (along with its accompanying benefits like superannuation, sick leave, etc), abandonment of employer obligations like training, etc.

        Job insecurity (both in terms of employment security and the jobs shortage) underpins our decline. High immigration is certainly making this problem worse, but it is not the cause.

        And it is all the result of right-wing, neoliberal, market-driven policies designed to benefit the greedy.

        However, this presupposes a closed labour market, not the Leftist open borders policy that encourages unlimited immigration and the personal economic and utility destruction that unleashes.

        Except in reality the high immigration situation has been entirely driven by right-wing, neoliberal, free market ideology.

        The fact remains you are proposing a left-wing, interventionist, big-government, centralised approach to employment (dictating what is and is not a permanent vs part-time job, forcing employers to employee people full time, etc).

  7. Survey any Aussie young person looking for a job and what I hear, they get an interview and rarely hear back, or get the call and it’s cancelled as the employer has already found someone. First job the employer ask for years of experience which rules them out. The person can have multiple quals, but still not good enough.

  8. The immigration issue aside….(it IS an issue particularly when it has been piled on top of all the rest of this idiocy)
    Australia has run with an overvalued currency for 60 years.
    – This has resulted in foreign ownership of vast parts of our economy on which dividends are now extracted. This is REAL income leaving the economy.
    – huge international debt of around a Trillion dollars (give or take) n which interst now has to be paid. This is REAL income leaving the economy
    – Massively non-productive economy with manufacturing and farming having the life squeezed out of them. Mining only prospers because of the massive shift in demand from China. The parasite industries and sectors have prospered massively. What we have left of productive industry has to pay to keep the parasites in a manner to which they have long become accustomed.
    – parasite industries have generated vast disparities in wages. e.g. Banks Turnover and profits are massive compared to the number of people employed. This has resulted in immoral levels of reward to the upper echelons (including government and especially the damned NGO’s and damned Tribunals.. Contrast the human input of modern banking with, say, an engineering shed. Parasite industries drain an economy. They do NOT add to it despite GDP idiocy.
    We’ve gone down a path from which there is no way back.
    The answers lie back in time.

    • boomengineeringMEMBER

      Speaking of an engineering shed, I haven’t had much resistance to my invoice prices last few weeks, not sure whats going on ?.
      Was on very high hourly rate 10 years ago but it hasn’t changed in that time. Then was dearer than my dentist but now less than half.

      • That’s the thing about modern economies, It’s not really about value of the individuals labour but rather it’s about the collective value of our labour pool along with the forward and backward pricing links that help establish relative value and relative rewards within the production value chain. In Australia there are many companies that have a stranglehold on some aspect of production or materials and they’re happy to exercise the full value of this monopoly position, safe in the knowledge that no one will challenge their dominance in what’s basically a dying industry.
        What we have today in manufacturing are pockets of excellence often held to ransom by the broader industry.
        I know I can buy welding gas and metal stock for half the price in America (even taking into account exchange rates) that means I’m behind the 8 ball before I even get started with any commercial project. I fortunately have the luxury of doing this as a hobby …but if it were a business, well I’d be well advised to find something more skilled and better remunerated such as wiping oap a55es.

  9. I can see the logic in what you write IF your model for wages is Some equitable share of the Mining Revenue stream divided by the number of workers.
    BUT if your wages model requires that Aussie workers compete in the first world markets to earn their way though a combination of skills, knowledge, luck and hard work than I suspect the rational for your position starts to look a little thin.
    Which Australia do we want? Can’t really start the planning until we know the direction that average Aussies want their country to proceed in.
    BTW Have you ever had the pleasure of talking to a pub full of average Aussies about anything more complex than a chook raffle…good luck getting anywhere with that approach.

  10. I wonder at what point the pain of ceasing exceeds the willingness for change of even those suffering under this dynamic?

    • Perhaps the reduction in migration needs to be gradual, so as to allow time for structural readjustment (training ramp up, reallocation of resources etc), to ease the pain?

  11. reusachtigeMEMBER

    One of the great outcomes of our recent massive increase of intake of new vibrants is that it helps keep prices down and quality up, which is ace. Not only can you get smashed avo on toast a little cheaper, and made better by illegal aliens that want to work, but, much more importantly, you can now get special massages done so much better and so much cheaper than the local fat Aussie chicks do them. I love this aspect of vibrancy the best. Why would you pay $300 for a rough as guts Aussie chick when a lovely smiling super pretty Thai girl will do a much better job for $150 (120 bucks for a Chinamen lady if they’re your thing)? Seriously, it’s the best thing to have come out of all this.

  12. This is regarding the TR migrant guestworkers and the impact on Australian wages, taxation & cost of living.

    In March 2018 we had 2.431 million Migrant Guestworkers onshore:

    https://www.vsure.com.au/many-temporary-residents-working-australia/
    The March 2019-March 2019 Yearly growth was 5.7% across all visa categories based on the DHA quarterly updates.
    That is 130,000 extra TR migrant guestworkers in the last year.
    Getting close to the entire PR intake of 190,000.

    🔹 So the March 2019 estimate is : 2,561 million Migrant Guestworkers.

    On growth trend it will be 2.625 million by June 2019 in 3 months time.

    89% or 2.3 million are in Sydney & Melbourne (DHA & ABS estimates)

    That is:
    🔻Sydney 1.3 million, or 1 in 4 people
    🔻Melbourne 1.0 million, or 1 in 5 people.
    And 250,000 elsewhere, mostly other state capitals.

    Wages impact.
    1.4 million are on a visa pretext / working illegally (Eg 672,000 foreign students & partners actoss a rage of visa categories with 75% or 505,000 working illegally – UTS & Syd Uni studies – see more details below).

    The vast majority are of third world origin, adult & unskilled. (DHA tables of origin & visa category at bottom of the link)

    They have high rates of work participation – but many work illegally as well legally due to their visa categories & conditions if entry or COE.

    The vast majority on extensive contemporary evidence, plus their DHA documented countries of origin & visa categories are poor to very poor, often in foreign agent procurer loan debt, and also burdened in sending back remittances to their families in their country of origin.
    (World Bank & Western Union / explosion in Australian personal xfer / foreign remittances from $4b to $18b)

    Many have fake ID, multiple jobs, work in the cash economy, or ABN / labor rings with no tax paid.

    🔹TR migrant guestworker income.
    The Treasury estimate is migrant TR yearly earnings of $43.7 each or $24 hour.
    And that’s generous.
    There is much media evidence & exposure that it is closer to $15 or $10 an hour – offset by extreme hours & multiple jobs.

    As one example: the foreign students & partners across a number of visa categories.
    The total declared funds of all TR yearly is $4.2 billion (DHA). The foreign students (non self declared) are $2.8 billion of this. However this is extensively frauded.

    The 672,000 foreign students & partners do form a $29 billion onshore sub economy of economic activity (@$43.7 each average income) but almost all that money was earned here onshore & 75% illegally fake ID or cash in hand.
    So our foreign student industry is NOT an Export industry at all.
    The attending primary students only pay $8.2 billion in fees (Deloitte) which is less than 505,000 jobs they steal costing some $9.2 billion in Centrelink.
    So on any measure, even the foreign student industry is immediately negative and a cost burden import to Australians.

    And it’s the same in the other visa categories.
    So on balance the 2.5 million migrant guestworkers, mostly adult working age displace at least 2 million Australian jobs. As we see later in the unemployment statistics.

    They massively lower Australian wages.

    The average Australian wage ABS May 26th 2017 full-time male weekly earnings $1,631 / females $1388 weekly..
    Or 50/50 gender = $1,500 or $78,000 or $43 a hour.

    So even using the much higher treasury estimates (perhaps the cash rate of $15 -20 hour being a gross rate of $24 hour if they were to pay tax) the migrant guestworkers are working at $24 an hour or half the rate of the $48 Australian average.

    12.7 million (ABS seasonally adjusted Workers Dec 2018) + the migrant guestworkers illegal black economy the ABS has no stats for is 14.1 million.

    12 million at $48 hour & 2.1 million of the 2.5 million migrant guestworkers working at $24 a hour in a full time equivalent week (one or multiple jobs)

    That gives a wages loss or degradation of 6.8% or more.
    Which means every migrant guestworker costs every Australian ($1,500 a week average) at least $102 a week or $5,300 a year lost income.

    That’s just the tip of the iceberg in impact.

    Many migrant guestworkers are working illegally, Fake ID, cash, labor rings so they aren’t paying tax, but they are creating massive cost impacts on public services, transport, education & infrastructure projects – so that is an extra tax burden on Australians subsidising the migrant guestworkers.

    The migrant guestworkers create Australia unemployment.
    We have 1.3 million Australian/PR unemployed (Roy Morgan feb 2019) & lets say half are totally unemployable, but the other half genuinely can’t get a legal job because migrant guestworkers are being hired instead.

    So that’s at least 750,000 Australian/ PR at $18k centrelink / support a year each – costing the Australian taxpayer $13.4 billion or $1,100 per Australian taxpayer.

    We then have another 1.1 million Australians seeking work. No direct taxation outlay impact, but let’s say it’s only part time work at the same rate of $43.7k as the migrant guestworkers.
    That’s $48 billion of lost wages earnings & another 18% tax loss of $9 billion on that potential income & again lowering our GDP per Capita.

    Then add on 116,000 Australian permanent homeless and another 360,000 on housing assistance displaced by the migrant influx – that directly costs us $4.8 billion a year (DHS) – that’s another $400 each taxpayer cost.

    Then add on housing contention (rent or mortgage debt) cost of living impacts – another $3,000 at least of direct tangible costs yearly.

    Then add on degraded our education with exploding costs as the education industry was allowed to sell itself as a migrant guestworker visa alibi – at say a modest $2-3,000 per averaged worker yearly.

    Then add on congestion, contention and overload of services, hospitals, environment, ‘water levies’ tolls etc as the cities population explodes way beyond projectors capacity – $2,000 a year each.

    And it quickly gets to the view that each and every migrant guestworker is costing something like $5,000 a year lost wages growth / income ($60.5 billion) over $20 billion in lost taxation as much of this is at the top rate… plus other taxation loss in the people seeking work but displaced by the migrant guestworkers.
    Plus an added cost of living of some $6,000 each as well..
    So $11k negative to each Australian worker.
    That’s a very conservative estimate.

    -/-

    Or in other words.

    If we exited the 1.4 million migrant guestworkers who are working & living illegally..

    And if we controlled the remaining 1.1 million to be either be no work rights at all, or genuine high quality skilled & high income earners..

    Then the average Australian Workers would be $11k or 14% better off.

    That would ‘catch up’ nearly a decade of gdp per Capita, wages and productivity decline.

    Our government wages tax inputs would be much higher, our outlays would be far less – justifying a reduction in taxation rates.

    The cost of living would fall.
    Large white elephant ‘infrastructure projects’ costing tens of billions would not be needed.

    The Net Benefit:
    ▫️A Higher Employment rate,
    ▫️A higher gdp per capita – particularly as most of our economy is based on fixed commodity exports divided by the number of people here. Less people, higher average GDP per Capita.
    ▫️Less taxation,
    ▫️Lower cost of living,
    ▫️Better housing affordability,
    ▫️Better & more affordable education,
    ▫️Less congested trains & buses.
    ▫️Over 500,000 cars / international licence drivers taken off the city roads,
    ▫️A more sustainable use of our infrastructure & environment
    ▫️And a far better standard of living for all Australians and our new PR. (Who we are stuck with btw)

    All by the very simple & legally expected enforcement of the visa conditions of the temporary migrant guestworkers as per their existing COE or condition of entry.

    The TR can’t vote. Low political influence.

    The Australian public / Australian citizens & the new PR who being the lower socioeconomic group are the most impact by the TR migrant guestworkers influx – have had a gutful.
    60% or more of Australians support a major reduction in migrant intake.

    -/-
    So start with the TR migrant guestworkers.

    Strictly enforce their visa conditions.
    Introduce a register or non resident identity pass, enforcement of legal work & housing. Fines / jail for anyone employing or housing migrant guestworkers in visa breach or not to occupancy & Fire & health safety rules.
    Stamp out the migrant guestworker trafficking industry and visa fraud.
    Remove work rights for a broad number of visa categories (672,000 foreign students & partners, 260,000 non NZ born SCV, 183,000 bridging & protection visas, 138,000 working holiday quarantined to non cities, removal of the 140,000 skilled visas excepting only a couple of thousand with much higher than Australia income averages, and so on)
    It quickly adds up to 1.4 million TR migrant guestworkers who should never have been allowed in.

    Shedding.
    They will largely self exit (as they cant work illegally, can’t live illegally, they are poor and are only here to live & work in an illegally black market economy).

    And it’s ethical – as outlined – at least 1.4 million are in illegal visa breach in their COE and should not have been allowed into Australia in the first place.

    ➡️ It’s not a difficult decision to make is it?

  13. Jumping jack flash

    Our wages are the weakest because we have the most (unproductive) debt.

    It is no coincidence.

    The debt sucks all the spare capacity out of the economy.
    The sucking out of spare capacity to pay the interest on the unproductive debt is then used as an excuse for issuing more unproductive debt!

    Incredible amounts of debt shifts people’s attitudes.
    Instead of businesses (who are just made up from people) passing on the benefits of increased productivity as general wage increases for their workers, the top tier keep it for themselves because of the debt – either to acquire unproductive debt because it is “necessary” or to service their existing unproductive debt.
    Contractors must raise their cost to either acquire unproductive debt, or service the unproductive debt they have. This cost is passed directly onto consumers as increased prices. It is also no coincidence that the prices of essential utilities has skyrocketed due to the increased costs of the licensed contractors who are required to do the work in these areas.

    repay the debt and heal the economy.

    If the government was serious they would start investing to earn GDP. This at least could raise money for the country that could then be paid out for people to repay their debt faster.

    • Australian housing debt..

      March 2018 – gross household debt reached $AUD $ 2.34 trillion. Gross household debt relative to disposable income reached 190.1%.
      Even higher now 194%.
      $700 billion wipeout on so far mild downward housing price falls.
      https://mobile.abc.net.au/news/2018-10-30/australia-most-country-to-risks-of-rising-household-debt/10445814

      What drove the housing price bubble & indebtedness ?

      That level of indebtedness wasn’t just driven by easy money, lower rates, FHB grants, NG etc but primarily the expectation of a capital gain or an income yield.
      And that’s driven by demand / contention.

      The Migrant intake – the 1.9 million PR intake was a factor (37% home ownership x 5 average occupants x76% in Sydney or Melbourne so about 105,000 mostly lower end modest dwellings over a decade.
      A factor.

      But the big driver & nutrient in Australia indebtedness is the 2.5 million migrant TR guestworkers.
      They rent.
      Over 92% ‘rent’ in private shared accomodation – ABS code for migrant sublet cram occupancy.

      2.5 million third world low skill poor many illegally working cash in hand, over 90% highly concentrated in Sydney or Melbourne – occupying some 450,000 ex Australian dwellings in those two cities.

      Low end modest old 2 bed units in the CBD & then spreading to old units & small houses – from Mascotto Penrith in a 60km x 10km (600 sq km swathe) of foreign dirty money housing acquisition.

      The foreign dirty money washed by a PR proxy to buy bottom of the market low end Australian housing (migrant friendly councils / near a train line).

      6, 8 or even more migrant guestworkers per dwelling / at three times the National average occupancy rate.

      Each migrant guestworkers paying cash in hand $170 did the stock migrant guestworker deal : a room share bunk, the bag of rice, a toilet roll & wifi access deal.
      $60,000 – $80,000 a year cash income on the Lowe value modest little old dwelling – but only $25,000 declared.
      At yields of 10-15% , 3 times normal yield.

      $22 billion in cash collected & only $9 billion (legal or absolute minimal rent) declared.
      Plus Aust taxpayer funded negative gearing as kicker for the PR proxy.

      Most occupants on Fake ID, transient, not on a lease living illegally.
      Zero controls on housing use, occupancy, rental checks and migrant cram housing / cash in hand subletting.

      Australia a preferred destination to wash in the dirty money, safe haven, no repatriation treaty, no FIRB checks if via a PR proxy, and then rivers of cash in buying old modest Australian dwellings to house the migrant guestworker influx.

      Ok – so you think i am exaggerating.

      Where exactly do people think the 1.3 million migrant guestworkers in just Sydney alone all live?
      And how?
      Go visit the Sydney western suburbs one day.

      The 1.3 million migrant guestworkers in just Sydney alone are 1 in 4 people in Sydney.

      That is 25% of the people living in only 7% of the available housing – more than 3 times ‘normal’ occupancy.

      And the cram illegal housing of cash has driven up housing values & cities and locations exactly matched to the city migrant guestworkers enclaves.
      100% correlation.

      Old grubby units & run down old fibro shacks – 3 times any realistic real value on normal legal occupancy.

      Whole suburbs & now entire sectors of our city gobbled up to be foreign owned & run migrant guestworker enclaves.

      Along the way..
      The voracious demand for the low end established housing in Sydney & Melbourne to wash the dirty money and the golden rivers of cash in housing the migrant guestworkers drove everyone else into massive debt.

      Young couples, first home owners, upgraders all suckered into the housing prices going thru they burdened themselves with huge debt on the promise of further rises.

      🔻There is your price bubble,
      🔻There is your indebtedness,
      🔻There’s your collapse of Australians ability to serve debt (lower wages or job loss – due to the migrant intake & increased cost of living).

      ➡️ What was the underlying nutrient?

      The increase to 2.5 million guestworkers in our 2 Mahir cites requiring housing.
      Poor, third world, working illegally, in foreign agent procurer debt & only able to afford and culturally aligned to live in foreign criminal run illegal third world bunk & mattress share.

      Reality test.
      If Australia ever did a Sydney or Melbourne housimg audit & enforced legal occupancy usage and true rental income declaration..

      2 things would happen.
      ▪️1. Over half of the 2.5 million migrant guestworkers say at least 1.3 million in Sydney and Melbourne would be out on the streets – as no affordable accommodation alternative for them ($175 a week cash in bunk share, bag of rice, toilet roll & wifi deal is about average).
      They would have to be exited.

      ▪️2. The bottom layer of the housing market would immediately fall by some 50% or 60%

      ▫️An old walkup 2 bed unit no parking in broadway would be worth $300,000 (5% return on real rent of $360 a week) and not $600,000.

      ▫️An old 2 bed run down fibro shack in Granville would be worth $420,000 (5% return on real rent of $400 a week) and not $900,000.

      Extrapolate that now across quarter of a million dwellings (240,000 in Sydney or Melbourne alone) that are foreign owned & running the migrant cash in hand subletting.

      Most of the foreign criminal owners and their onshore proxy (mostly PR they have Chinese or Indian or other country nationality) will flee Australia as the ATO then chases them for tens of billions of back tax due on years of false rental income & NG declarations.

      Fire sales – whole suburbs of houses for sale in streets quiet / now cleansed of the migrant guestworker overload.

      A 600 Sq Km swathe of abandoned or for sale property. The trains & buses empty.

      It would crash the entire Sydney & Melbourne market by some 30% / the middle & higher range housing falling slightly less, as the whole bottom collapses out.

      Australians that got suckered into 194% disposable income mortgage debt?
      Full recourse model in Australia.
      Bank sells the property & you still owe the debt.

      Negative equity for at least a third of mortgagee property owners. Far worse than Ireland.
      Decades to recover housing equity if ever at all.

      And that’s the price Australians will pay at some point for allowing the uncontrolled, and ultimately socially & economically catastrophic migrant guestworker intake.

      • Problem with your theory: the property bubble is (/was) Australia-wide, not just Sydney and Melbourne.

        Back in ye olden tymes MB used to run numerous articles on UGBs and such, identifying them as the root cause of the property bubble.

  14. Globalisation… Living standards in the West to meet living standards in the East! Vote for the sexy 64 year old!