ALP’s strike on offshore labour hire misses real culprit

By Leith van Onselen

Some Labor MPs and senators have called for legislative action to discourage Australian companies from sending jobs offshore if Labor wins the upcoming federal election. They argue that jobs should be subject to labour-market testing before companies are allowed to recruit staff overseas. However, Small Business Ombudsman Kate Carnell cautions that any crackdown on offshoring could give multinationals a competitive advantage over their Australian rivals. Council of Small Business of Australia CEO Peter Strong has also claimed Labor’s policy would make Australian businesses less competitive. From The Australian:

The Labor MPs have called for a new regulatory response to offshoring that would prevent companies from outsourcing jobs overseas, unless they had first conducted labour-market testing aimed at filling positions with Australian workers…

There is support in Labor ranks for laws to force firms to disclose the proportion of overseas workers they employ when invoicing clients or tendering for contracts. This could have an impact on major employers including Telstra­, Optus, National Australia Bank, Westpac, ANZ, Insurance Australia Group and PwC…

The Opposition Leader is already vowing to limit temporary work visas and the use of ­labour-hire firms…

While Labor’s intention here is good, offshoring would be incredibly hard to police and is unlikely to stop the practice.

What Labor should really focus on is substantially reducing the flood of migrant workers into Australia, which are unambiguously lowering wages and working standards, as argued by the ACTU:

The relatively recent availability of a large and vulnerable pool of temporary migrant workers has undoubtedly contributed to current record low levels of wages growth and a growing reluctance by employers to train local workers…

There have been a range of abuses uncovered which have clearly shown that the entire system is broken. From 7-11 and Domino’s to agriculture, construction, food processing to Coles, Dominos and Caltex, it is clear that the abuses occur in a number of visa classes whether they be students, working holiday makers or visa workers in skilled occupations…

Migration intermediaries have a vested interest in inflating demand. Australia has created a massive industry with many migration agents outside of our jurisdiction who cannot be prosecuted for breaches. This mushrooming “migration industry”- a complex and transnational web of agents, lawyers, labour recruiters, accommodation brokers and loan sharks – is currently largely unregulated.

The growth of labour hire operators alongside the migration industry has led to companies seeking to sell temporary migrant workers to employers, creating a fake “Job Network” which preferences temporary workers over Australians.

The ACTU’s claims are wholeheartedly supported by 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.

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.

Indeed, the latest data from the ABS, released last month, revealed that the median income of so-called ‘skilled’ temporary migrants was a shockingly low $1,143 per week or $59,436 per year in 2016.

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.

[email protected]