Migrant Workers’ Taskforce finds systemic exploitation

By Leith van Onselen

The federal government has expressed in-principle support for the 22 recommendations made in the report of the Migrant Workers’ Taskforce. The report found that “wage underpayment is widespread and has become more entrenched over time”, with as many as half of all migrant workers exploited. The government is set to announce criminal sanctions for “clear, deliberate and systemic” underpayment of workers, despite opposition from employers’ groups. It also intends to establish a national labour-hire registration scheme covering industries where wage exploitation is widespread. From The AFR:

The 141-page report concluded “the problem of wage underpayment is widespread and has become more entrenched over time”, with the most comprehensive survey showing as many as half of temporary migrant workers may be underpaid…

“There needs to be a much stronger enforcement response than has been evident to date,” the report said…

The Morrison government has agreed to introduce unprecedented criminal sanctions for employers who seriously exploit workers and a national registry scheme to crack down on unscrupulous labour hire firms…

It’s amazing that it has taken this long for our politicians to respond.

The 7-Eleven migrant worker scandal broke in 2015, and since then there has been a regular flow of stories emerging about the systemic abuse of Australia’s various migrant worker programs and visa system.

The 2016 report by the Senate Education and Employment References Committee, entitled A National Disgrace: The Exploitation of Temporary Work Visa Holders, also documented the abuses of Australia’s temporary visa system for foreign workers, and found that migrants were “consistently reported to suffer widespread exploitation in the Australian workforce”.

According to the ACTU, the perpetual flood of migrant workers is a direct cause of Australia’s anaemic wages growth:

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.

These views were echoed 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

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.

Australia’s immigration system has become a giant rort that’s all about lowering 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. And this is unambiguously contributing to lower wages growth across the broader economy.

Eliminating migrant abuse and raising wages would be good for the Australian economy. Why? First, because the least productive businesses would lose people, shrink and go bust, transferring workers, land and capital to more productive businesses, thereby raising average productivity across the economy.  Second, because all businesses, observing higher wages, would invest more in labour saving technologies, training and restructuring to raise productivity.

This is how the labour “market” is supposed to work. However, allowing the mass importation of foreign workers circumvents the ordinary functioning of the labour market by enabling employers to pluck cheap foreign workers in lieu of raising wages, and abrogating their responsibility for training.

This is deleterious for both Australian workers and the broader economy, and must be stopped.

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Unconventional Economist

Comments

  1. Wino Shinyface

    Ai Group run by slave trader Innes Willox is currently offering a Workshop on NSW Modern Slavery Laws, lol, probably on how to not get caught with your slaves

  2. “This is deleterious for both Australian workers and the broader economy, and must be stopped.”

    But it’s really really good for business and the wealthy. Decisions, decisions.
    I wonder which way the politicians will go.
    ha ha ha ha ha ha ha.

    • Yes, business have never had it so good, with massive immigration fueling consumption, low wage growth and low interest rates.
      However, the end result of all that is the workers have no money. We are in the death throes of the population ponzi ideology

  3. – Doesn’t one Leith van Onselen like capitalism ? doesn’t like “Supply and Demand” ?
    [Sarcasm off]

  4. – Look on the bright side: It – at least – has surfaced right now. And that’s a positive development.
    – Although I fear that our deteriorating economy will make this systemic exploitation even worse.

  5. I note Bill Shorten promoting a rise in the minimum wage. Nice in theory but expanding enforcement of minimum wage in industries that currently treat it as aspirational also required. Which in turn requires supply side measures such as moderating immigration to produce the shortage in labour required to increase its price. Without this support, we can note Bill’s good wishes but doubt its effect.

  6. Further, given general indebtedness, the only way out without a GFC style crash and recession is to increase labour incomes as the expense of equity returns. Additionally higher incomes permits higher interest rates. Such a path means house prices flatline for a decade, equities take a hit upfront but then get on with life. Note that such a path would need to gradual and in line with the FED more or less to avoid unwanted impacts on the currency. Requires a delicate touch on the tiller, and a fair bit of luck.